A change in federally-backed Series EE savings bonds now makes buying them tax-free if redeemed by parents for an offspring’s college tuition.

In the past, a purchaser had to pay a federal tax on any bond redeemed, including Series EE. However, starting Jan. 1 parents can redeem a Series EE and pay no tax upon redemption.

“It’s a good solid investment since it’s backed by the federal government,” said Paul Nolan, DeKalb Bank personal banking department. supervisor.

Nolan said interest rates on Series EE bonds are adjusted semi-annually and reach maturity in ten years. However, this is figured on a six percent annual percentage rate. And with the annual percentage rates being typically more than seven percent, they reach face value in less time, he said.

U.S. Savings Bonds are purchased for one-half the mature value. Series EE bonds once had a federal tax to be paid upon redemption. With the new law there is no federal tax on them if redeemed for college tuition.

They are tax-free only if purchased by parents. Relatives purchasing the bonds still will have to pay the federal tax when redeeming them.

The tax-free advantage is limited to married couples who have an adjusted gross income of $60,000 a year or less and single parents with an adjusted gross income of $40,000 a year.

There is a graduated tax scale for couples making from $60,000 to $90,000 each year and singles making from $40,000 to $55,000 each year. Those making more than this may not participate.

Series EE bonds do not have to be purchased through banks only. Like other bonds, they can be purchased through payroll deductions. Minimum costs for the bonds are around $25.