Yes, it is taxable federally, but the interest is exempt from state tax.
There are also exemptions from federal taxation if you use the bonds to pay for education.
You should receive a 1099-INT with an amount in Box 3 if you cashed the bonds in at a bank. If they did not send one to you, you may have to contact them. If you are not a regular customer of theirs, they may have provided you with a form when you cashed the bonds. To report it in TurboTax:
- Go to Federal > Wages & Income > Interest and Dividends > Interest on 1099-INT
- Whether you import or enter it manually, make sure the interest from the bonds is entered in Box 3, not Box 1
