Municipal Bond Forum
Home > Municipal Bond Forum > Taxes >
State-income tax equivalent yield
Q
I just checked out the site. It is very good. I will probably open an account in the coming weeks. Do you have a formula that can be used to factor state income tax to determine tax equivalent yield? Also do you have a formula to consider when it makes sense to buy munis when someone is paying the Alternative Minimum Tax?
A
James A. Klotz responds:
We can’t provide a general formula because tax rates vary from state to state. Although most states do not tax bonds from “in-state” issuers, there are exceptions.
Most investors from high income-tax states restrict their purchases to issues from their home state.
There are many municipal bonds available, which are not subject to the AMT.
Start here.
Do you have specific criteria for bonds you’re looking for? Let us know and we’ll e-mail you bonds that fit your needs. There is no charge for this service.
This report is produced solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. This report is based on information obtained from sources believed to be reliable but no independent verification has been made, nor is its accuracy or completeness guaranteed.