What does red ink on US bills mean?

Most red-seal notes were issued as $2, $5, and $100 bills. Starting in the 1920s that color identified a bill as a "United States Note" rather than being a "Federal Reserve Note".

Federal Reserve Notes are issued under the authority of the Federal Reserve Bank, while U. S. Notes were issued directly by the Treasury. Other than that, they served identical purposes so in the 1960s production was consolidated under the Federal Reserve. The last Red-Seal US Note was the 1966 Red Seal $100 bill.