BondClass- Fixed Income Education for Every Investor

Home

Municipals

Taxation

2005 Tax-Exempt/Taxable Yield Equivalents

The table below will help you determine the amount of income you require from a taxable investment to equal the yield on a tax-exempt bond. The table is for illustrative purposes only and is not intended to be representative of any specific security. To use the table most effectively, follow these directions.

HOW TO USE THIS CHART

Find the appropriate return (single or joint).
Determine your tax bracket by locating the taxable income category that you fall into. Taxable income is income after appropriate exemptions and deductions are taken. (The table does not account for special provisions affecting federal tax rates, such as the alternative minimum tax.)
The numbers in the column under your tax bracket give you the approximate taxable yield equivalent for each of the tax-exempt yields in the left-most column.

Example: If you are single and have a taxable income of $70,000 ($115,000 if married), you would fall into the 28% tax bracket. According to the table, you would need to earn 8.33% on a taxable security to match a 6.0% yield from a tax-exempt security.

Taxable Income
Single Return	$0 - $6,000	$6,001- $28,400	$28,401- $68,800	$68,801- $143,500	$143,501- $311,950	$311,951 & over	Sample Effective Marginal Rate for Certain High-Income Taxpayers
Joint Return	$0 - $12,000	$12,001- $47,450	$47,451- $114,650	$114,651- $174,750	$174,751- $311,950	$311,951 & over
Tax Bracket	10%	15%	25%	28%	33%	35%	36%

Tax Exempt Yields (%)	Taxable Yield Equivalents (%)						Sample Effective Marginal Rate
	10%	15%	25%	28%	33%	35%	36%
1.00%	1.11	1.18	1.33	1.39	1.49	1.54	1.56
2.00	2.22	2.35	2.67	2.78	2.99	3.08	3.13
2.50	2.78	2.94	3.33	3.47	3.73	3.85	3.91
3.00	3.33	3.53	4.00	4.17	4.48	4.62	4.69
3.50	3.89	4.12	4.67	4.86	5.22	5.38	5.47
4.00	4.44	4.71	5.33	5.56	5.97	6.15	6.25
4.50	5.00	5.29	6.00	6.25	6.72	6.92	7.03
5.00	5.56	5.88	6.67	6.94	7.46	7.69	7.81
5.50	6.11	6.47	7.33	7.64	8.21	8.46	8.59
6.00	6.67	7.06	8.00	8.33	8.96	9.23	9.38
6.50	7.22	7.65	8.67	9.03	9.70	10.00	10.16
7.00	7.78	8.24	9.33	9.72	10.45	10.77	10.94
7.50	8.33	8.82	10.00	10.42	11.19	11.54	11.72

* The income brackets to which the tax rates apply are adjusted annually for inflation.Those listed above are for 2003.

**The Internal Revenue Code phases out the personal exemption deduction for taxpayers with adjusted gross income in excess of $209,250 (married, filing jointly) and $139,500 (single taxpayers). In addition, certain itemized deductions are reduced for taxpayers with adjusted gross income in excess of $139,500. In general, the limit on itemized deductions will increase the effective marginal tax rate by 1%, and the personal exemption phase out will increase the effective marginal tax rate by 0.8% for each exemption claimed.


Home \| Blogs \| Privacy Policy \| Terms & Conditions \| Affiliate \| Site Map \| Contact Us \| Bonds.com Holdings, Inc.

© 2006 Bondclass.com - All Rights Reserved

Brought to you by Bonds.com Holdings Inc.