Taxes on I Bonds
As investors seek to insulate their portfolio from rising inflation and the bumpy stock market, many are turning to Series I savings bonds (I bonds). Right now, I bonds are paying an interest rate of 6.89%. But don't just focus on the investment return. I bonds also have important tax advantages for owners. Interest earned on I bonds is exempt from state and local taxation, but owners can also defer federal income tax on the accrued interest for up to 30 years.