However, tax-equivalent yield isn't the whole story. If a municipal-bond fund and a Treasury fund of the same duration have the same after-tax yield, the Treasury fund is a better investment because it is less risky.tax equivalent yield calculator:Would I be better off in a traditional total bond market fund and just pay the taxes?
https://www.eatonvance.com/tax-equivale ... ulator.php
https://digital.fidelity.com/prgw/digital/taxyieldcalc/
This is the reason for my 25% rule of thumb. If muni and taxable funds of the same risk have equal after-tax yields at a 25% tax rate, then you should prefer munis if your marginal tax rate is higher than 25%. (For in-state munis versus Treasuries, use only the federal tax rate. For out-of-state munis versus Treasuries, use the difference between your federal and state rates.)
Statistics: Posted by grabiner — Tue Feb 04, 2025 8:45 pm