I Bonds - is the 3 mo. interest early withdrawal penalty tax deductible like bank CD penalties are?

agletdave — Tue, 24 Feb 2026 06:54:24 GMT

I Bonds - is the 3 month early withdrawal penalty tax deductible like bank CD's are?

Re: I Bonds - is the 3 mo. interest early withdrawal penalty tax deductible like bank CD penalties are?

KarenL4 — Wed, 26 Jul 2023 18:55:47 GMT

Hi, Agletdave,

You will only be taxed on the interest you receive (not the three months of forfeited interest). Taxing on I-bonds may either be as earned, or typically, when the interest is paid out (which is when the Treasury Dept issues a 1099).

This article does a good job of explaining taxes on I-Bond interest.

Please give a thumbs up below to cheer this answer if it helps.

Best,

Karen

topic I Bonds - is the 3 mo. interest early withdrawal penalty tax deductible like bank CD penalties are? in Get your taxes done using TurboTax

I Bonds - is the 3 mo. interest early withdrawal penalty tax deductible like bank CD penalties are?

Re: I Bonds - is the 3 mo. interest early withdrawal penalty tax deductible like bank CD penalties are?