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Equivalent Taxable Yield Calculator Online

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The Equivalent Taxable Yield (ETY) Calculator is designed to help investors understand what their tax-exempt income would be equivalent to if it were taxed at the normal rate. This calculation is vital for comparing different investment options on a level playing field, ensuring that decisions are made with a clear understanding of potential returns after taxes.

Formula of Equivalent Taxable Yield Calculator

To calculate the Equivalent Taxable Yield (ETY) for a tax-exempt investment, use the following formula:

Equivalent Taxable Yield


  • ETY is the Equivalent Taxable Yield
  • TEY is the Tax-Exempt Yield of the investment
  • TR is the Tax Rate

Steps to use this formula:

  1. Determine the Tax-Exempt Yield (TEY) of the investment. This is the yield you receive from the investment without considering any taxes.
  2. Find out your Tax Rate (TR). This is the percentage of your income that you pay in taxes.
  3. Plug these values into the formula to calculate the Equivalent Taxable Yield (ETY).

Table of General Terms and Conversions

Below is a table of general terms that are commonly search in relation to tax-exempt yields and their equivalent taxable yields. This table serves as a quick reference to understand and convert these yields without needing to perform calculations each time.

TEYTax-Exempt YieldThe percentage yield from a tax-exempt bond.
TRTax RateThe tax percentage applied to your income.
ETYEquivalent Taxable YieldThe yield of a tax-exempt bond as if it were taxed.

Example of Equivalent Taxable Yield Calculator

Consider a municipal bond with a tax-exempt yield (TEY) of 3%. If your tax rate (TR) is 30%, the Equivalent Taxable Yield (ETY) would be calculate as follows:

ETY = 3% / (1 – 30%) = 4.29%

This means the tax-exempt bond’s yield is equivalent to a taxable bond yielding 4.29%.

Most Common FAQs

Q1: Why is it important to calculate the Equivalent Taxable Yield?

A1: Understanding the ETY allows investors to make informed comparisons between tax-exempt and taxable investment options, ensuring better financial decisions based on potential after-tax returns.

Q2: Can I use the ETY formula for any tax rate?

A2: Yes, the ETY formula can be apply for any tax rate, making it a versatile tool for financial analysis across different tax scenarios.

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