Compare tax-exempt income with the taxable yield needed to leave the same after-tax income.
Tax Equivalent Yield Calculator
Form
Results
Taxable equivalent yield
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Table of Contents
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What is Tax Equivalent Yield?
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How to Use This Calculator
- Enter or select Bond yield, Marginal tax rate.
- Check the unit beside each measurement. For a percentage or rate, use the scale and time period stated in the form.
- Choose Calculate, then compare the output with the formula and example below. If you change a value or option, calculate again to update the result.
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Formula Used
Equivalent yield = tax-exempt yield/(1−marginal tax rate)
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Variables Explained
| Input | What it means |
|---|---|
| Bond yield | Use the measured or stated value for this item, with the unit or category shown beside the field. |
| Marginal tax rate | The stated rate or percentage, entered using the scale and time period shown in the form. |
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Worked Example
A 3% exempt yield at a 25% marginal tax rate equals a 4% taxable yield.
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Why Use This Calculator?
Compare the result with the underlying statement, budget or proposed transaction. It is most useful when every amount uses the same reporting period and the same accounting definition.
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Common Mistakes
- Use the relevant marginal tax rate and verify that the investment is actually exempt from that tax.
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Frequently Asked Questions
Should I use monthly or annual figures?
Use one consistent period for every amount and rate in the relationship. If a form specifies an annual rate or a monthly amount, follow that label rather than mixing time periods.
Does the result include fees and tax?
Only the costs and taxes represented by the inputs and formula are included. A real transaction can include other charges, so compare the estimate with the underlying agreement or statement.
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Sources & References
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