Like a stock sale, you don't pay taxes on the interest until you cash in the bond (you can, but for most cases you shouldn't). It will be regular income rather than long-term capital gains however. A regular savings account will require you to pay taxes annually as regular income. I-Bond interest is not subject to state or local taxes, so there's a savings there compared to a savings account.

If you really hate paying taxes, you can cash them tax-free if you use them to pay for qualified educational expenses. There are income limits for this that probably eliminate the typical poster to this site but for people in the right situations it can be useful.