Municipal Bond Tax Equivalent Yield

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The Municipal Bond Tax Equivalent Yield Calculator has been designed to help users estimate the additional usable profit that municipal bonds generate based on the assumption that the muni won't be taxed by the federal government. To use this tool you will need to enter the bond's yield amount, your total estimated taxable income, your federal tax filing status, and your state income tax rate. After entering this information click on "Calculate." This will create a Tax Equivalent Yield bar graph that compares fully taxable, federally exempt, and state and federal exempt investment yields.

Municipal Bond Tax Equivalent Yield Overview

If you are interested in investing in the securities market then you may want to consider investing in municipal bonds. Municipal bonds, also referred to as munis, are usually issued by governmental organizations like local governments, states, cities, and even school districts. These organizations issue municipal bonds in order to raise needed funds for a specific capital development project. In exchange for cash the entity agrees to repay the bond holder within a specific period of time with interest. Most municipal bonds mature between 20 and 40 years; however, some municipal bonds have shorter maturity rates.

There are a lot of advantages of investing in a municipal bond. One of the most popular advantages is that the interest earned on a municipal bond investment is usually exempt from federal taxation. This makes municipal bonds a possible tax shelter option for your income.