Just wanted to double check my understanding on selling a treasury bond that has increased in value. (I’ve previously always just held to maturity).
Hold to maturity:
Income is state/local tax free.
Sell the bond for a profit on the secondary market:
Income is effectively a short term capital gain where both state/local and federal taxes apply.
So in California where my state taxes are ~10%, I should only sell the bond if the face value of the bond is 10% lower than the secondary market price.
Is my understanding correct here?