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Do I pay taxes on I-Bonds?
Do I pay taxes on I-Bonds?
Written by Jeff Johnson
Updated over a week ago

Yes. Interest earned on I-Bonds is subject to federal income tax, but not to state or local income tax. You are responsible for reporting interest earned from I-Bonds.

When do I report the interest on my tax form?

You have a choice. You can:

  • Report the interest every year

  • Put off (defer) reporting the interest until you file a federal income tax return for the year in which the first of these events occurs:

    • you cash the bond and receive what the bond is worth, including the interest

    • you give up ownership of the bond and the bond is reissued

    • the bonds stops earning interest because it has reached final maturity

How do I report the earned interest?

Whether you are reporting interest at the end of the bond's life or every year, you report the interest from your bonds on your federal income tax return on the same line with other interest income.

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