Tax Equivalent Yield (TEY) Calculator
It is an online tool for tax calculation and used to calculate the tax-equivalent yield on tax-exempt investments.
Tax Equivalent Yield Formula
Tax-equivalent yield is a way to measure the return on a taxable bond or other investment to make it equal to the return associated with a tax-exempt bond or investment.
To calculate the taxable equivalent yield of a tax-free municipal bond, use the following formula and be sure to include any state taxes along with your federal tax rate.
ReturnTEY = ReturnTX ÷ (1 - t)
ReturnTEY - Return on fully taxable equivalent yield
ReturnTX - Return on tax exempt investment
t - Investors marginal tax rate