Tax-Equivalent Yield Calculator Excel Template
Tax-Equivalent Yield Calculator Excel Template
Interactive Excel Financial Model
Download, customize, and integrate into your own analysis
What's Included
- Interactive financial model with live Excel formulas
- All formulas visible and fully editable
- Professional formatting with color-coded inputs & outputs
- Formula reference sheet with variable definitions
- Step-by-step instructions sheet
- Compatible with Microsoft Excel 2016 and later
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Price range: $0.00 through $20.00
Compare muni vs taxable bonds with this Tax Equivalent Yield Excel template. Calculates TEY, combined tax rate, after-tax yield, and muni advantage.
Online Calculator vs Excel Template
| Feature | Online | Excel |
|---|---|---|
| Instant use — no download | ✓ | — |
| Works offline | — | ✓ |
| Customize formulas & layout | — | ✓ |
| Save & share with colleagues | — | ✓ |
| Integrate into your own models | — | ✓ |
| Print-ready formatting | — | ✓ |
About This Template
Download the Tax Equivalent Yield Calculator Excel template to compare municipal bonds against taxable alternatives on an after-tax basis. This spreadsheet helps fixed-income investors, financial advisors, and tax-aware portfolio managers determine whether a tax-exempt muni bond or a taxable corporate/Treasury bond delivers a better after-tax return given their specific tax situation.
What You Can Calculate
The template produces seven outputs from your inputs:
- Tax-Equivalent Yield — the pre-tax yield a taxable bond must offer to match your muni's after-tax return
- Recommendation — a clear Buy Municipal Bond, Buy Taxable Bond, or Approximately Equal verdict
- Combined Tax Rate — your total marginal rate on taxable interest (federal + NIIT + state)
- Tax Rate on Taxable Bond — the effective rate applied to the taxable bond (accounts for Treasury state-exemption)
- After-Tax Taxable Yield — what you actually keep from the taxable bond after income taxes
- Muni Advantage — the yield difference favoring the muni (positive) or taxable bond (negative)
- Breakeven Tax Rate — the combined rate at which both bonds provide equal after-tax returns
Required Inputs
Enter your municipal bond yield, federal and state marginal tax rates, and a comparable taxable yield. Toggle whether NIIT applies (3.8% surtax for high earners) and whether SALT is capped (most filers under TCJA). Select Corporate or Treasury as the taxable bond type — Treasuries are state-tax exempt, which changes the comparison.
Methodology
The core formula is TEY = Muni Yield / (1 − Combined Tax Rate). When SALT is capped, the combined rate is simply federal + NIIT + state. When SALT is deductible, the state portion is reduced by the federal deductibility adjustment: state × (1 − federal rate). Treasury comparisons exclude state tax from the taxable bond's effective rate.
Assumptions & Limitations
- Assumes in-state municipal bond (exempt from both federal and state income tax)
- Does not account for AMT (Alternative Minimum Tax)
- Uses marginal tax rates on interest income, not effective rates
- NIIT rate fixed at 3.8%
Frequently Asked Questions
Yes. Duplicate the Calculator sheet (right-click the tab, select 'Move or Copy', check 'Create a copy') to run scenarios for different municipal bonds with varying yields, then compare the tax-equivalent yields across sheets.
Simply update the Federal Marginal Tax Rate and State Marginal Tax Rate inputs. The template instantly recalculates all outputs, so you can see how a tax bracket change affects the muni vs taxable decision.
Change the Taxable Bond Type dropdown from Corporate to Treasury. The template will automatically exclude state tax from the taxable bond calculation, since Treasury interest is state-exempt.
A fully interactive financial model with live Excel formulas, an Instructions sheet with usage guide, and a Formula Reference sheet with variable definitions and model assumptions. All formulas are visible and editable.
Microsoft Excel 2016 or later. The template uses standard Excel formulas only — no macros, VBA, or add-ins required.
Yes. All cells are fully editable. You can modify any formula, add your own calculations, change formatting, or integrate the model into your existing spreadsheets.
The online calculator runs in your browser for quick calculations. This Excel template gives you a portable, offline financial model you can customize, save, share with colleagues, and integrate into your own analysis.
This template is provided for educational and personal use. You may use it in your own professional analysis and presentations. Redistribution or resale of the template itself is not permitted.
You can re-download the latest version from your account or by requesting a new download link. Free downloads are limited to 5 per email address per month.
