Of course you need a 1099 for cashing in your savings bonds. How does it effect your taxes? Does it make a huge difference?

You just add that amount to your income come tax time.  

It depends on how much you made, plus your income bracket.

The 1099 says how much of what you got was interest, and you pay tax on that much, so the tax can be a lot or a little depending on what you cashed in.

You owe taxes on income. 

Whatever interest your bonds earned is counted as income. It makes the same difference -- large or small -- in your federal taxes as if you had gotten that amount of interest from a bank account. However, it makes no difference in your state taxes.