How this number is made
A taxable bond’s yield is not what you keep. Multiply by one minus the tax rate that applies to that interest. Qualified dividends and municipal bonds are taxed differently. Do not use this page for them.
- The tax rate is your marginal rate on ordinary interest, federal plus state if the state taxes it.
- The yield is the pre-tax yield.
Formula
After-tax yield = taxable yield × (1 − tax rate).
Worked example
With the figures already in the form, yield after that tax is 3.80%.
Questions
Do I include state tax?
If your state taxes the interest, yes. Treasury interest is often exempt from state tax. Municipal interest is often exempt from federal tax and should use the tax-equivalent page instead.
Is this the effective tax on my whole income?
No. Use the marginal rate on the next dollar of this interest.