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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.

A BOND_YIELD municipal bond yield has a STATE_MUNICIPAL_YIELD tax equivalent yield.


This yield assumes that the interest earned is not subject to federal or state income taxes. If this bond or bond fund is subject to state income taxes, the tax equivalent yield is FEDERAL_MUNICIPAL_YIELD. The federal income tax rate used in this calculation was FED_INCOME_TAX_RATE and you entered your state income tax rate as STATE_INCOME_TAX_RATE.

Results Summary
Federal tax filing status LINE_1_FILING_STATUS
Estimated taxable income ESTIMATED_TAXABLE_INCOME
Federal income tax rate FED_INCOME_TAX_RATE
State income tax rate STATE_INCOME_TAX_RATE
Total effective income tax rate TOTAL_TAX_RATE
Bond yield BOND_YIELD
Tax Equivalent Yield (TEY)
Exempt from federal income tax
Tax Equivalent Yield (TEY)
Exempt from federal and state income taxes

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. 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. You can use the table below to assist you in estimating your Federal tax rate.
Filing Status and Income Tax Rates 2015*
Tax RateMarried Filing Jointly or Qualified Widow(er)SingleHead of HouseholdMarried Filing Separately
10%$0 - $18,450$0 - $9,225$0 - $13,150$0 - $9,225
15%$18,450 - $74,900$9,225 - $37,450$13,150 - $50,200$9,225 - $37,450
25%$74,900 - $151,200$37,450 - $90,750$50,200 - $129,600$37,450 - $75,600
28%$151,200 - $230,450$90,750 - $189,300$129,600 - $209,850$75,600 - $115,225
33%$230,450 - $411,500$189,300 - $411,500$209,850 - $411,500$115,225 - $205,750
35%$411,500 - $464,850$411,500- $413,200$411,500 - $439,000 $205,750 - $232,425
39.6%over $464,850over $413,200over $439,000over $232,425
*Caution: Do not use these tax rate schedules to figure 2014 taxes. Use only to figure 2015 estimates. Source: 2014 Rev. Proc. 2014-61
State income tax rate
Your marginal state income tax rate, if any.

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