Methodology
Divides the entered tax-exempt yield by one minus the combined marginal tax rate, where the combined rate is the sum of the entered federal, state, and local percentages. The calculator also shows comparable taxable-equivalent yields across common bracket scenarios.
Limitations
- Uses a simplified additive marginal-rate model and does not adjust for state-specific municipal exemptions, deductibility interactions, AMT, NIIT, or other tax-law edge cases.
- Assumes the tax-exempt yield entered is the correct yield measure to compare, but tax-equivalent analysis can be distorted if one side uses coupon rate and the other uses yield to maturity or yield to call.
- Does not evaluate bond credit risk, duration, call structure, liquidity, or issuer-specific tax treatment.
- This is a comparison estimate, not individualized tax advice or a portfolio recommendation.
Disclaimer
Use the output as a first-pass after-tax yield comparison only. Before relying on it for buying or selling decisions, confirm the right yield measure, the right marginal tax rate, and the bond-specific tax treatment that applies to you.
