[tbirdz]

It's worth noting that I bonds are exempt from state income tax, and you pay federal income tax at the time you redeem the bond, not at the time you get interest, so it's federal income tax deferred. You could potentially hold onto the I bond for up to 30 years before being forced to redeem, so you could wait until you're in a lower tax bracket, which makes it better.

[nullc]

Indeed. But consider: except for very high income households, the LTCG tax rate is never more than 15%-- and federal income tax brackets don't go lower than 10% and even just social security payments will move people into 12%. Many ibond alternatives yield qualified dividends (=LTCG rates). For anyone with income under 41k (81k married) long term the LTCG rate is 0. A rate of 0 is wayyy better than a rate of 12% but deferred.

State taxes are a bigger difference but really just for the few states that have higher income tax rates... and even those they're only really high for high incomes.