I feel this is more of an investment decision as opposed to a tax question, though I will answer it this way. If you wait until full redemption you will have $100K of I Bonds plus the interest, since interest is automatically paid out when the bond matures or is cashed in. I Bonds were first issued in 1998, and interest can accrue for 30 years from issue date, so the interest could be significant.
While I Bonds are not subject to state tax in most circumstances, they will be subject to Federal tax, so that will be a significant amount of income in a one or two year time period. Depending upon your other income, it could be beneficial to cash in a lesser amount over a number of years, which may result in you paying less in taxes.
The issue with that is can you make the same rate of return or higher without talking on more risk then you are willing to bear. From a tax perspective taking smaller amounts is most likely a better result, but this is not just a tax question, as I stated above.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
