Tax-Equivalent Yield Calculator
See what a taxable investment would need to yield to match a tax-free or tax-advantaged rate of return, at your marginal tax rate.
Uses the standard tax-equivalent-yield formula with one marginal rate — real effective rates depend on total income, filing status, and state taxes, which this does not model. Educational illustration only, not tax advice.
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Equivalent taxable yield needed
8.97%
Formula: tax-equivalent yield = tax-free yield ÷ (1 − marginal tax rate). This is a standard, widely-used formula — see Investopedia's explanation for more detail.
Why it matters: the higher your marginal tax rate, the more a taxable investment has to earn just to match a tax-advantaged one — this is one reason tax diversification (see the Tax Basics module and the Taxable vs. Tax-Deferred vs. Potentially Tax-Free comparison) is worth understanding.
Sources & further reading