Thread.isInterrupted() returns false after thread has been terminated

This has been fixed in Java 14.

Thread.isInterrupted returns true if the thread was interrupted, even if the thread is not alive. See Oracle's release notes and JDK-8229516.

The specification for java.lang.Thread::interrupt allows for an implementation to only track the interrupt state for live threads, and previously this is what occurred. As of this release, the interrupt state of a Thread is always available, and if you interrupt a thread t before it is started, or after it has terminated, the query t.isInterrupted() will return true.

The following paragraph has been added to the javadoc of Thread#interrupt:

In the JDK Reference Implementation, interruption of a thread that is not alive still records that the interrupt request was made and will report it via interrupted and isInterrupted().

So the test in the question runs successfully on:

openjdk version "14.0.2" 2020-07-14
OpenJDK Runtime Environment (build 14.0.2+12)
OpenJDK 64-Bit Server VM (build 14.0.2+12, mixed mode)

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The interruption flag is stored as a field in the Thread class:

/* Interrupt state of the thread - read/written directly by JVM */
private volatile boolean interrupted;

and isInterrupted method simply returns the flag:

public boolean isInterrupted() {
    return interrupted;
}

previously it delegated to a native isInterrupted(boolean) method

what we see is that interrupted status of a thread is cleared when that thread finishes. It is not documented in http://docs.oracle.com/javase/7/docs/api/java/lang/Thread.html, so can be considered as a spec or implementation bug.