Tax-Equivalent Yield
Compare tax-free municipal bond yields to taxable bond yields. See what a taxable bond must yield to match a muni after tax, and how attractive your current taxable yield is on an after-tax basis.
Yield Inputs
Enter the yield of the tax-free muni and the taxable bond you're comparing. This tool assumes annualized yields and ignores price volatility.
Tax Profile
This uses a simplified combined tax formula assuming state taxes are deductible against federal/NIIT where applicable. It's a planning approximation, not a full tax engine.
Tax-Equivalent Yield
Taxable Bond Comparison
• If your muni yield is higher than the after-tax yield of the taxable bond, the muni may be more attractive strictly on a yield basis (ignoring credit risk and liquidity).
• If the taxable bond's after-tax yield beats the muni yield, you're getting more compensation for the tax burden—again, ignoring risk differences.
Quick Summary
- • With your current tax settings, each 1% of taxable bond interest turns into about 76.00% after tax.
- • Your municipal bond yielding 4.00% is equivalent to a taxable bond yielding about 5.26%.
- • Your taxable bond at 5.00% behaves like a tax-free yield of 3.80% after taxes.
- • This ignores AMT, local taxes, and the impact of deductions/credits. Use it as a comparison framework, not tax advice.
Notes: This model assumes interest is fully taxable at your stated marginal rates (for taxable bonds) and fully exempt at the federal level for municipal bonds. Some in-state munis may also be exempt from state income tax; toggle "Muni interest is subject to state tax" based on your situation. NIIT may apply only above certain income thresholds.