Using the interest income to fund higher education may allow you to be exempted from the Federal income tax on the interest. The interest income is not taxable at the State & local level, though is taxable at the Federal level. The rate of interest is adjusted twice per year based on the CPI-U. Interest is paid semi-annually & any I bonds bought through October 2022 I bonds pay an APR of 9.62% for the first 6 months. Each person which onws I bonds is required to have a TreasuryDirect account. Parents who have purchased the limit can also create minor-linked accounts to purchase bonds for young children, or purchase bonds for adult children. Each EIN can purchase up to $10,000 per year. citizens & green card holders can invest in up to $10,000 worth of I bonds per year on TreasuryDirect. While the Federal Reserve has lifted interest rates aggressively in 2022 most commercial banks have been slow to follow suit, with many of them parking their depositor's money at the Fed as excessive reserves & earning the interest you could have earned directly.
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