All tools

Tax-Equivalent Yield Calculator

Math

Convert between a tax-free municipal bond yield and the equivalent taxable-bond yield given a marginal federal tax rate plus an optional state rate, in both directions

A municipal bond's advertised yield looks lower than a corporate bond's, but that comparison is meaningless until you account for the fact that muni interest is usually exempt from federal (and sometimes state) tax. This calculator converts a tax-free yield into the taxable yield you'd need to match it after tax, or works the reverse direction from a taxable yield you already have. Enter your marginal federal rate and, optionally, a state rate to combine both into one effective rate. It's a closed-form formula over the numbers you supply, not a live bond price or a lookup of your actual tax bracket.

financebondtaxyieldmunicipal-bondinvesting

How to use Tax-Equivalent Yield Calculator

  • 1.Pick a direction: convert a tax-free yield to its taxable equivalent, or a taxable yield back to its tax-free equivalent.
  • 2.Enter the known yield as a percent, plus your marginal federal tax rate and an optional state tax rate.
  • 3.Read off the combined tax rate and the converted yield to compare bonds on an apples-to-apples, after-tax basis.

Frequently asked questions

What tax rate should I use?
Your marginal federal income tax bracket, not your effective/average rate, since the exemption applies to the last dollar of interest income taxed at your top bracket.
Does this account for state taxes automatically?
Only if you enter a state rate yourself; the two are simply summed into one combined rate. It has no built-in state tax tables, since those vary and change by jurisdiction.
Does this use live bond prices or yields?
No. You supply both yields (or the one you want converted), and the tool applies the standard formula: taxable yield = tax-free yield / (1 - combined tax rate). There's no market data lookup.
What if the combined tax rate is 100% or more?
The calculator rejects that input, since dividing by (1 - rate) becomes undefined or negative at that point; a real combined marginal rate should always be well under 100%.

Use via API, SDK, or MCP

cURL# Free: 1,000 req/day · Pro: 10,000 req/day
curl -X POST https://api.utilix.tech/v1/tools/tax-equivalent-yield-calculator \
  -H "Authorization: Bearer utx_live_..." \
  -H "Content-Type: application/json" \
  -d '{"inputYield":4,"federalTaxRatePercent":24,"stateTaxRatePercent":5,"direction":"tax-free-to-taxable"}'

Get an API key from your dashboard · Full API docs →

Related tools

VAT / Sales Tax CalculatorAdd or remove VAT or sales tax from a price in either direction, net to gross or gross to net, given a rateMathAPR / APY ConverterConvert between a nominal annual rate (APR) and the effective annual yield (APY) for a given compounding frequency, in both directions.MathBlended Loan Interest Rate CalculatorCompute the single weighted-average interest rate across a list of loan balances (e.g. credit cards or student loans considered for consolidation), plus total balance and combined monthly and annual interest accrualMath