The $20 interest is added to your other income and taxed at your marginal rate. So. for example, if you your other income puts you in the 15% tax bracket, the additional $20 of income (regardless of source*) will be taxed a 15%.
piece of income is taxed individually. All your income, including savings bond interest,
is added together at tax filing time. The tax is calculated on that total
(after adjustments, deductions, exemptions and credits). Then withholding is
subtracted to determine if you owe more or get a refund.
*Interest is considered "ordinary income". Long term capital gains and qualified dividends are taxed at lower rates than ordinary income.