Retirees, Plan for the Tax Hit From Savings Bonds

The federal tax consequences for Series EE and I U.S. savings bonds are anything but straightforward. Here's how interest from savings bonds is taxed in four common situations for retirees.

Several savings bonds
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The federal tax consequences for Series EE and I U.S. savings bonds are anything but straightforward. Although the interest on these bonds is fully exempt from state and local taxes, the federal tax treatment varies depending on who owns the bonds and, in some cases, how they are used.

Here are four common scenarios that retirees may encounter for how and when the bond interest is taxed.

Joy Taylor
Editor, The Kiplinger Tax Letter

Joy is an experienced CPA and tax attorney with an L.L.M. in Taxation from New York University School of Law. After many years working for big law and accounting firms, Joy saw the light and now puts her education, legal experience and in-depth knowledge of federal tax law to use writing for Kiplinger. She writes and edits The Kiplinger Tax Letter and contributes federal tax and retirement stories to kiplinger.com and Kiplinger’s Retirement Report. Her articles have been picked up by the Washington Post and other media outlets. Joy has also appeared as a tax expert in newspapers, on television and on radio discussing federal tax developments.