Wondering which deposit accounts offer the opportunity to defer interest income beyond the current tax year. The ones I'm most familiar with are EE or I savings bonds, TBills that mature in the next rather than current tax year, and some brokered CDs that pay interest only at maturity in the following tax year. Zero coupon bonds wouldn't qualify as imputed interest needs to be paid annually. Also, I'd exclude any insurance product/annuity/cash value life insurance from the discussion. Are there any other deposit accounts beyond savings bonds, some TBills, and certain brokered CDs that offer the possibility of tax deferral of interest at least one tax year into the future?
Answers
Also note that Pelican pays interest on each first of the month, so a CD opened with them in December will not have any interest credited until January 1st of the next year.
I'm afraid our best hope is that Congress acts before then to ensure that our federal taxes stay roughly the same - but it may not. (I'd like to see them drop, but that seems unlikely.) If Congress doesn't act, a tax deferral into 2026 may not be wise if the additional tax due outweighs the benefits from the "float".
Interest on certain CDs with short terms that straddle two calendar years is taxable only when “constructively” received, which may be only in the second year. It is not really tax deferred if the investor cannot access the interest until that second year without penalty.
Capital appreciation realized on the sale of bonds (and CDs sold via a broker) is taxed only in the year of sale.
Other than those situations, the only other tax deferred fixed income options are fixed annuity products and Series EE and I Savings Bonds.
