Interest on US Savings Bonds is taxable. This should surprise no one, but Anthony Vennard Hitchman, T. C. Sum. Op. 2023-18, filed 5/2/23, thought the bond he inherited from his late father got a step-up in basis for the interest accrued thereon, so he only owed the interest accrued from when he inherited until when he cashed it in.

STJ Diana L (“Sidewalks of New York”) Leyden puts Anthony wise.

“Interest on U.S. savings bonds is fully taxable. Treas. Reg. § 1.61-7(b)(3). A taxpayer who owns a U.S. savings bond can elect to report the income on his federal income tax return. Id. Under section 454(a) a bond owner for whom the entire interest is includible in income at the maturity of the bond may elect to treat the annual interest as income. An election is made simply by including the interest as income on a tax return, and that election is binding for all subsequent years. I.R.C.  § 454(a). If no such election is made, the interest accumulates, and when the bond matures, the accumulated interest is taxable in the year the bond matures or is redeemed. I.R.C. § 454(c) (flush language).” T. C. Sum. Op. 2023-18, at p. 5.

His late father never having so elected (Taishoff says “who does?”), Anthony gets hit for the whole boat.