Tax-Equivalent Yield
A tax-free bond's real advantage depends on your bracket. See the equivalent taxable yield.
Your numbers
Tax-free (muni) yield
%
Federal tax rate
%
State tax rate
%
Tax-equivalent yield
Equivalent taxable yield
,
Tax-equivalent yield = tax-free yield ÷ (1 − combined tax rate). It's the taxable yield you'd need to match a tax-free bond after taxes.
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