Tax-Equivalent Yield Calculator - Compare Tax-Free vs Taxable Returns
Calculate the taxable equivalent yield of tax-exempt bonds. Compare municipal bond returns against taxable investments based on your federal and state tax bracket.
Tax Equivalent Yield Calculator
Compare the yield of tax-free investments (like Municipal Bonds) to taxable investments based on your tax bracket.
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Tax Equivalent Yield (TEY)
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A taxable investment must yield this much to match your tax-free option.
Combined Tax Rate—
Yield Boost—
Tax Savings (per $10k)—
Yield Comparison by Tax Bracket
| Federal Bracket | Effective TEY | Yield Advantage |
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How to Use Tax-Equivalent Yield Calculator - Compare Tax-Free vs Taxable Returns in 3 Easy Steps
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Step 1
Enter the tax-free bond yield percentage.
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Step 2
Select your federal marginal tax bracket.
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Step 3
Optionally toggle state tax benefit for a combined analysis.
Frequently Asked Questions
It is the yield a taxable bond must offer to equal the after-tax return of a tax-exempt municipal bond, based on your marginal tax bracket.
Investors in higher tax brackets (24%+) benefit most because the tax exemption provides a larger effective yield advantage.
Yes. If your state exempts in-state muni bond income, toggling on state tax in our calculator shows an even higher tax-equivalent yield.
Generally no. Tax-advantaged accounts already shelter income from taxes, so the muni bond tax benefit is wasted there.
At a 0% rate, TEY equals the bond nominal yield, meaning tax-free bonds offer no advantage over taxable bonds.