Tax Equivalent Yield Calculator
Compare municipal bond yields to taxable bond yields based on your tax bracket. This calculator helps you determine the taxable equivalent yield needed to match the after-tax return of a tax-free municipal bond, taking into account federal, state, and local tax rates.
Municipal Bond
Your Tax Rates
Tax Equivalent Yield Analysis
Municipal Yield
3.50%
Tax-free yield
Effective Tax Rate
0.00%
Combined applicable rate
Tax Equivalent Yield
0.00%
Taxable yield needed to match
Additional Yield
0.00%
Extra yield needed on taxable bond
Comparison
Municipal Bond
3.50%
Tax-Free Yield
Taxable Bond
0.00%
Pre-Tax Yield
Tax-Free Yield
After-Tax Yield
Tax Paid
What This Means
A taxable bond would need to yield 0.00% before taxes to match the after-tax return of a municipal bond yielding 3.50%.
This is because the taxable bond's interest would be subject to a combined effective tax rate of 0.00%, while the municipal bond's interest is tax-free at the federal level and state level.
Formula: Tax Equivalent Yield = Municipal Yield ÷ (1 - Effective Tax Rate)