1 A Series EE US government savings bond accrues 35 interest

1. A Series EE U.S. government savings bond accrues 3.5% interest each year. The bond matures in 3 years, at which time the principal and interest will be paid. The bank will pay the taxpayer at a 3.5% interest rate each year if he agrees to leave money on deposit for 3 years. What tax advantage does the Series EE bond offer that is not available with the bank deposit?

Solution

The main advantage is the interest earned on EE bonds is tax exempt from state and locla taxes. one more option available is the income taxes can also be deferred until they reach maturity of 30 years.