EDIT: Thanks for the replies. TIL.
https://www.thebalance.com/tax-advantages-of-series-i-saving...
1) No state tax on I-bonds
2) You can defer and pay tax on the interest only when you sell the bonds (which means you can time the sale to when you have lower income)
> or do they retain the 8% for however long you hold the bond?
No, the interest rate is updated every 6 months, see the sibling comment.
As the parent comment stated - this isn't meant to get anyone rich. This is the government providing a service that allows (working-class) individuals to keep a rainy-day fund relatively insulated from risk. If you're able to save more than 10k per year, you're not the primary target for this service.
There's some rules on if you cash out before 5 years (you give up the last 3 months of interest) and you MUST hold for 12 months.
You can ladder them too and have different amounts / times of purchase.
I like it for planned emergency funds that would otherwise be cash, ladder into it so you always have your EF available.