Tax-Equivalent Bond Yields Calculator

Municipal bond interest is typically federally tax-exempt and may also be free of state tax. Depending on your tax bracket, a tax-exempt municipal bond with a lower yield may offer a higher after-tax return than a higher yielding taxable bond.

If you enter the yield for a taxable bond, this calculator will determine the yield that a tax-exempt bond would have to earn to be equivalent to the yield of the taxable bond. If you enter the yield for a tax-exempt bond, this calculator will determine the yield that a taxable bond would have to earn to be equivalent to the yield of the tax-exempt bond.

· Choose Taxable or Tax-exempt

· Enter the yield of the bond

· Choose your federal income tax rate

· Choose or enter your state income tax rate

· Choose whether the tax-exempt bond is exempt from state tax

Is the bond yield you are entering taxable or tax-exempt?

Enter the yield on the bond [0% to 12%]	%

Federal income tax rate

Choose your state of residence and associated tax rate
Select "Other" if you wish to enter a different tax rate below.
Enter tax rate [0% to 15%]	%

Is the tax-exempt bond exempt from state income tax?
Select "No" if the tax-exempt bond is subject to tax in your state (for example, if a municipal bond from another state is subject to tax in your state).

Note: There are certain municipal bonds that are subject to tax, and some are subject to Alternative Minimum Tax (AMT). Be sure to check the description of the bonds for these notations.