Tax-Equivalent Yield Calculator

How to use this calculator

1. Enter the muni bond yield.
2. Enter your federal tax rate and state tax rate.
3. Indicate if the muni is taxable at the state level (out-of-state muni).
4. Review the taxable-equivalent yield and combined tax rate.

Inputs explained

Federal tax rate

Use your marginal federal bracket.

State tax rate

Your marginal state rate; set muni taxable toggle to No for in-state munis.

State taxes apply?

In-state munis are often state tax–free; out-of-state munis may be taxable.

When to use it

• Comparing muni yields to taxable corporate/treasury/CD yields.
• Deciding between in-state vs out-of-state muni holdings.
• Evaluating if a taxable bond/CD is better after taxes.

Tips & cautions

• Use your marginal tax rates (not effective) for accurate comparisons.
• If you’re in a high tax bracket, muni yields can be more attractive than the headline rate suggests.
• Treasuries are state tax–free; set state tax to 0 or mark muni as non-taxable for comparison to Treasuries.
• Assumes constant tax rates and that the muni is fully tax-exempt at the federal level.
• Does not account for AMT or special tax treatments.
• Ignores fund expenses; compare net yields when possible.

Worked examples

Deep dive

FAQs

Use marginal or effective tax rate?

Use your marginal rate to compare incremental investment returns.

State tax treatment for in-state munis?

Often exempt. Toggle state taxable to No if exempt.

Are Treasuries state tax–free?

Yes. Use a 0% state rate for Treasuries in comparison.

Does this include fund fees?

No. Adjust yields for fund expenses to compare net returns.

AMT impact?

Not modeled. Some munis may be subject to AMT; check the bond/fund details.

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