I have several paper EE bonds that I want to cash in. Is the interest a capital gain?

If interest on U.S. savings bonds, series EE or I, hasn’t been reported annually, then the accrued interest becomes fully taxable when the bonds are redeemed. This income is ordinary interest income; it is not a capital gain. The financial institution at which you cash in the bonds will issue Form 1099-INT to report the interest income to you (and to the IRS).