Tax Equivalent Yield Calculator
Compare a tax-free investment with a taxable one. This page shows the taxable yield you would need to keep the same amount after tax.
- Free
- Works offline after your first visit
- Saves on this device
- No sign-up
- Updated
How it works
The tax equivalent yield is the tax-free yield divided by one minus your tax rate, with the rate written as a decimal. The extra yield needed is the taxable yield minus the tax-free yield.
Only the rates you type are used. Which investments are tax-free, and at what rate, depends on the rules where you live and on your own tax situation.
Worked example
A tax-free yield of 3.5% matches a taxable yield of 5.15% at a tax rate of 32%. The taxable yield has to be 1.65% higher to leave the same amount after tax.
Questions
Which tax rate should I use?
Use the rate that would apply to the extra income from this investment, which is often your top rate. Your tax preparer can confirm it.
Does this include state tax?
Only if your rate includes it. Add state and local tax to the rate if they apply to this income.
Is a higher tax-free yield always better?
Not always. Compare risk, the term, fees and how easily you can get at the money, as well as the yield.
More like this
- Rental Yield CalculatorGross and net rental yield from price, rent and costs.
- Investment CalculatorGrowth from a start amount and monthly deposits.
- Retirement CalculatorProjected savings from a balance, yearly saving and a return.
- 401k CalculatorBalance with pay, your share, employer match and return.
- Dividend CalculatorDividend yield and yearly income from a stock.
- Investment Return CalculatorTotal return and yearly rate from a start and end value.