! Munis vs. Taxables: How to Determine the Taxable Equivalent Yield
Maria Crawford Scott is the former editor of the AAII Journal.


Donald from MI posted over 7 years ago:

Is there a formula to actually calculate your marginal tax rate or is it simply where your taxable income falls after you find your AGI and remove all deductions and exemptions?

C from FL posted over 6 years ago:

The paragraph starting with "While alternative minimum tax and Social Security tax considerations may diminish the aftertax benefits of tax-exempt interest income" is misleading.
Social security tax considerations does NOT diminish the aftertax beefits of tax-exempt intrest income.
Take an example of an investor trying to choose between investing $10,000 in 10 bonds. According to table 2, he will receive $372 in treasury bond and $332 per year in tax-exempt.
If treasuries, the $372 is part of the Social security calculation. If tax-exempt, the $332 would be part of the Social Security calculation.
So, tax-exempt investment results in a very slight advantage over treasuries.

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