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> that works out to about $500 after taxes in a year.

https://www.thebalance.com/tax-advantages-of-series-i-saving...

1) No state tax on I-bonds

2) You can defer and pay tax on the interest only when you sell the bonds (which means you can time the sale to when you have lower income)

> or do they retain the 8% for however long you hold the bond?

No, the interest rate is updated every 6 months, see the sibling comment.



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