Ten-year series EE bonds are issued at a discount and earn a variable rate of interest. Tax on interest is not paid until the bond is redeemed unless the owner opts to pay taxes each year. Interest is paid each year and taxes must be paid on earned interest. Treasury Securities . These securities can be purchased from a broker or financial institution or directly from the Federal Reserve.
Yields are usually higher than that paid for savings bonds.
Interest earned is not subject to state or local taxes, but federal income tax must be paid. Treasury securities can be sold at any time in a secondary market, but their value rises and falls throughout the time before they mature. Government Agency Securities . Government agencies also issue notes and bonds. Interest paid is generally higher than that paid for treasury securities.