Tax Equivalent Yield (TEY) Calculator

Calculates Tax Equivalent Yield (TEY) based on bond yield and tax rate.

Result Tax Equivalent Yield 0%

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Formula

Tax equivalent yield = ( ( Bond yield / 100 ) / ( 1 - ( Tax rate / 100 ) ) ) * 100

( ( 11% / 100.0 ) / ( 1 - ( 12% / 100.0 ) ) ) * 100.0 = 12.5%.If Johnson invests 11% of his portfolio in bonds and the tax rate is 12%, he earns 12.5% as his effective return on investment. The result number, 12.5%, represents the yield after taxes that Johnson can expect to earn from investing in these bonds.

Meaning

The Tax Equivalent Yield (TEY) is a measure that helps investors compare the after-tax return of different investments, such as bonds or savings accounts. It represents the yield an investment would have earned before taxes if it were invested tax-free. In simpler terms, TEY allows you to understand how much after-tax return you can expect from an investment compared to what you would get if you didn't have to pay taxes on it.