As I prepare our 2025 Federal Tax return, I decided to compare what we earned in taxable interest in 2021 with 2024 on those tax returns. Recall, interest rates on savings, bonds and CDs were very low prior to 2021.
I was shocked to learn about the growth in taxable interest rates in that time frame. If our taxable interest was X in 2021, the taxable interest in 2024 was 16X. In 2024, interest was 40% of our adjust gross income (AGI), while in 2021 interest was 3% of our AGI.
Since late 2023, interest rates have been declining. I used to be able to get around 4-5% for 5+ years CDs. Now the best I can do is about 4% and many are callable in the first few years.
In the next few weeks, I will be working lock in some interest rates at around 4% for about 10 years using Treasuries and Agency bonds.
This is not financial nor investment advice. Please consult a professional advisor.
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