What is tax-equivalent yield?
Tax-equivalent yield (TEY) converts the yield of a tax-free or tax-advantaged bond (such as a municipal bond) into the equivalent yield a taxable bond would need to offer for an equal after-tax return.
The formula
Tax-Equivalent Yield = Tax-Free Yield / (1 − Marginal Tax Rate). This lets investors directly compare a tax-free bond’s yield against taxable alternatives on a fair, after-tax basis.
This calculator is for general investment education, not tax or investment advice.
Last reviewed August 2026