Tax Playbook · Investment tax wins
Buying Treasuries at a discount
Some bonds sell for less than face value, and that price gap is called a discount. If the gap is bigger than the cutoff, the IRS treats it as regular income taxed at your normal rate. The cutoff is 0.25% of face value times each full year until maturity. For example, a $10,000 bond with 5 years left has a $125 cutoff, so a $300 discount is taxed as ordinary income, not at the lower capital-gains rate.
Good for: Anyone buying bonds below face value.
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Recent articles & guides
- De Minimis Dilemma — Fidelity Capital Markets
- 2025 Tax Guide — BNY Pershing
- De minimis tax rule explained — Accounting Insights
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Educational summary, not tax advice. Limits and rules change — confirm current law with your tax adviser.