A Major Tax Refund Option Is Disappearing in 2025: Will You Be Affected?
Written by
Marc Guberti
Edited by
Zuri Anderson
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About two-thirds of Americans receive a tax refund, but one tax refund option is disappearing in 2025. The Tax Time Savings Bond program expired this year. It gave taxpayers the opportunity to turn their tax refunds into paper I bonds, but it’s no longer available.
Here’s what you need to know about this program being discontinued. Also learn about these issues that could delay your tax refund.
How Did the Tax Time Savings Bond Program Work?
What was the purpose of the Tax Time Savings Bond program?
“The tax time savings bond program was designed to encourage lower-income taxpayers to save their tax refunds by making it easy to convert the refunds into paper Series I Savings Bonds,” explained Mark Luscombe, principal analyst for Wolters Kluwer’s Tax and Accounting Division in North America.
The Tax Time Savings Bond program was introduced in 2010. The idea was to earn a return on your tax refund and convert it into an investment without much effort. The extra interest can accumulate and move you a little closer to your long-term financial goals. This program was the last viable way to receive paper bonds.
Why the Program Was Cancelled
Ultimately, it came down to demand and cost. Not many people capitalized on it, and it was expensive to maintain. Luscombe offered more context.
“The Tax Time Savings Bond program was little used and, in part due to lack of use, relatively expensive to operate. Taxpayers might be better off working to reduce the amount of tax refunds they receive so that they have larger take-home pay during the year,” he said.
“For taxpayers who feel that they need the tax refund as sort of a forced savings program, savings bonds may appear to be more difficult to own and utilize than other alternatives such as a money market account or a Roth IRA account without any clear greater financial benefit in return.”
The difference between rates is minimal, and you will end up with more liquidity if you put your money into a high-yield savings account or a money market account. A Roth IRA is another great option to consider since the funds in that retirement account grow tax-free.
Another key detail is that the program sent physical bond papers to a recipient’s address. This paper delivery method increased the risk of fraud and theft. The tax refund would also take longer to arrive at someone’s door than an electronically delivered tax refund.
An Alternative to the Tax Time Savings Bond Program
Although this program has been discontinued, you will still receive a tax refund if you qualify. Luscombe explained that you have a lot of flexibility with how you invest your tax refund in bonds.
“Taxpayers would still be able to use their refunds to purchase savings bonds electronically,” he said.
However, you have more options if you receive your tax refund as cash instead of getting a Series I Savings Bond. Investors can now put the tax refund into assets like stocks and crypto to potentially generate higher returns than bonds. They can also head over to TreasuryDirect to buy electronic savings bonds.
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