Are Savings Bond payroll deductions pre-tax?

Friday, February 4th, 2005
Categorized as: Buying US Savings BondsSavings Bond taxes

If you purchase bonds through payroll deduction at work can the deductions be taken pre-tax?

Tom’s response

Wouldn’t it be nice if the amounts you invest in Savings Bonds through a payroll savings plan could be deducted from your income for tax purposes.

As you know, other payroll deductions, such as retirement fund and traditional IRA investments, have this benefit.

However, Savings Bonds don’t. Savings Bond investments are always after-tax, even when purchased through payroll deduction.

They do have the same tax-deferral feature as retirement funds and traditional IRAs, but that applies to the earnings, not the original investment.

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FDIC Insured Certificates of Deposit can pay 1 or 2% more than savings bonds when held for a similar length of time. See top CD Rates Below:

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June 1, 2010

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Tom Adams

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