Municipal Bond Tax Equivalent Yield

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This calculator will estimate the tax-equivalent yield (TEY) for a municipal bond. Income generated from municipal bond coupon payments are not subject to federal income tax. In addition, if the bond was issued in your state of residence, you can also avoid state income taxes. Use this calculator to determine the yield required by a fully taxable bond to earn the same after-tax income as a municipal bond.

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Municipal Bond Tax Equivalent Yield Definitions

Bond yield: This is the annual yield of your municipal bond or bond fund.
Estimated taxable income: This is your total income, after exemptions, adjustments, and deductions. The tool uses this, along with your filing status, to determine your marginal income tax rate. You can use last year's tax return as a guide to what your taxable income will be for the current year. Your taxable income can be found on your income tax form 1040 or 1040A. Make sure to increase or decrease the amount to compensate for any changes to your current year's income.
Federal tax filing status: This is used, along with your taxable income, to determine your federal marginal income tax rate. The table below lists the federal income tax rates by income and filing status. The tool uses this table to determine your marginal federal income tax rate. **TAXTABLE_CURRENT_DEFINITION**
State income tax rate: Your marginal state income tax rate, if any.