Patriot bonds are paper Series EE Bonds purchased through financial institutions. They are specially inscribed with the words "Patriot Bond." The Patriot Bond series began December 11, 2001 as a response to the events of 9-11. Bonds increase in value every month, and interest is compounded semiannually. You can cash your bond in after 12 months (the minumum holding period since 2003). Bonds cashed before they are five years old are subject to a three-month interest penalty. EE bonds stop earning interest at 30 years. These bonds are free from state and local income taxes. Federal tax on interest earned can be deferred until you cash the bond or until it reaches maturity (whichever occurs first). Patriot Bonds can be purchased online. These bonds cannot be purchased through payroll savings plans due to the fact that bonds bought through a payroll savings plan are processed by many different organizations using a variety of inscription techniques.
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