Is there a penalty incurred for not cashing in E bonds when they mature? Tom's response There are two penalties. Once a savings bond matures it no longer earns interest. So you're losing the money you'd get if you reinvested in a new savings bond that's earning interest. Also, the IRS considers the income tax to be due in the year the savings bond matures. If you don't cash it that year, you won't get a tax form to help you declare this. When you declare it later, the IRS can penalize you for not declaring it in the right year.