Government Securities

You are on the right track!!! If you have already reported the full interest income from the 1995 Series I bond on your 2024 tax return, then there is no need to report it again now.

So for now you can ignore the 1099-INT for 2025, but still you need to enter it and deduct the amount you previously reported on your 2024 return. If you do this, the IRS will get to know that you have already paid the tax on that interest.

Tax-exempt municipal bonds and US Treasury bonds are good options for safe income. Municipal bonds offer tax-free interest, and Treasury bonds are taxable but exempt from state taxes. They offer consistent income without touching your principal.

A Texas municipal bond priced at 102 signifies you're paying $1,020 for a $1,000 face value bond, known as buying at a premium. This typically means the bond's yield is below its coupon rate.

Factors Influencing Pricing:

Several elements affect this pricing, including prevailing interest rates, the bond's credit quality, its maturity date, and market supply and demand. The bond's tax benefits also play a crucial role, as they can enhance its appeal.

Your ultimate after-tax return hinges on both the bond's tax-exempt status and its yield to maturity relative to its purchase price.