What is tax-equivalent yield?

Tax-equivalent yield is the pre-tax return a taxable bond must provide to equal the after-tax return of a tax-free municipal bond. It helps compare muni bonds to taxable alternatives like corporate or Treasury bonds by accounting for tax benefits.

When do municipal bonds make sense?

Munis are most attractive for investors in high tax brackets (24% or higher federal). Calculate the tax-equivalent yield and compare to taxable alternatives. If you're in the 32-37% brackets and buy in-state bonds, munis often win despite lower stated yields.

Are all municipal bonds tax-free?

Most muni bonds are federally tax-free. In-state bonds are usually state tax-free too. However, some munis are subject to AMT, and capital gains from selling munis at a profit are taxable. Interest from out-of-state munis may be state-taxable.

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Tax & WithholdingVerifiedFeb 2026

Tax-Equivalent Yield Calculator

Name: Tax-Equivalent Yield Calculator
Author: Biggest Calculator Hub

Calculate the pre-tax yield needed from taxable bonds to equal the after-tax return of tax-free municipal bonds.

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How to Use the Tax-Equivalent Yield Calculator

This free tax-equivalent yield calculator helps you quickly calculate tax-equivalent yield. Simply enter your values in the fields above and click "Calculate" to see your results instantly.

Understanding Your Results

After entering your information, the calculator will display your results including tax-equivalent yield, federal tax-equivalent, taxable bond break-even, tax savings (per $10k). Each result is calculated using standard formulas used by financial professionals and experts in the field.

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