Municipal Bond Tax Equivalent Yield
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.
- 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. We use 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. We use this table to determine your
marginal federal income tax rate.
Filing Status and Income Tax Rates 2010 Tax rate Married filing jointly
or qualified widow(er)
Single Head of household Married filing separately 10% $0 - 16,750 $0 - 8,375 $0 - $11,950 $0 - 8,375 15% $16,751 - 68,000 $8,376 - 34,000 $11,951 - 45,550 $8,376 - 34,000 25% $68,001 - 137,300 $34,001 - 82,400 $45,551 - 117,650 $34,001 - 68,650 28% $137,301 - 209,250 $82,401 - 171,850 $117,651 - 190,550 $68,651 - 104,625 33% $209,251 - 373,650 $171,851 - 373,650 $190,551 - 373,650 $104,626 - 186,825 35% over $373,650 over $373,650 over $373,650 over $186,825Source: http://www.irs.gov/pub/irs-drop/rp-09-50.pdf
- State income tax rate
- Your marginal state income tax rate, if any.
Information and interactive calculators are made available to you as self-help tools for your personal independent use and are not intended to provide investment advice. We can not and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.