As interest rates rise, Americans turn to fixed-income investments like bonds and money market funds. However, experts warn that higher taxes may be a consequence. The increase in interest rates benefits savers but hurts borrowers. Fixed-income investments are generally low-risk and provide regular payouts, but they are taxed at higher rates than stocks. Investing in government-backed securities or municipal bonds can help minimize tax impact. Investing in fixed-income assets through nontaxable retirement accounts can also avoid taxes.