Tax Equivalent Yield Calculator
Compare tax-free municipal bond yields to taxable bond yields by accounting for your federal and state tax rates. Determine whether munis or corporates offer a better after-tax return.
What is tax equivalent yield?
Tax equivalent yield (TEY) converts a tax-free yield — like a municipal bond paying 3.5% — into the pretax yield a taxable bond would need to match it after taxes. If you're in the 24% federal + 5% state bracket, a 3.5% muni is equivalent to roughly a 4.93% taxable bond. The higher your tax bracket, the more valuable tax-free income becomes.
How it works: TEY = tax-free yield / (1 − combined tax rate). The calculator also shows your after-tax yield on taxable bonds and the break-even tax rate — the rate at which both options produce the same after-tax return.
Tax Equivalent Yield Calculator — Municipal vs Taxable Bonds
Free tax equivalent yield calculator. Compare tax-free municipal bond yields to taxable bond yields. Adjust for federal and state taxes with AMT consideration.