I believe [Savings Bonds] are also exempt from state and local taxes.It's worse than that. If Savings Bonds (or any Treasury instrument) are held in a regular account, the interest is exempt from state and local taxes. However, if held in a retirement account, when the money comes out of that retirement account, the money will be taxed as per rules of that account, e.g., in a Traditional IRA it would be taxable at the federal, state, and local levels.Most states also exempt direct debts of the federal government ("agency bonds") which, if held in a retirement acocunt, likewise become subject of the rules of that retirement account.I don't know if Series I Savings Bonds or Series EE Savings Bonds can be held in an IRA. The usual advice I hear is to hold TIPS or TIPS funds in retirement accounts and Series I Savings Bonds outside of retirement accounts.
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