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Tax bracket to choose corporate vs municipal bond for taxable act.

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  • Tax bracket to choose corporate vs municipal bond for taxable act.

    Filing status: Married jointly

    Income: 220K

    Pre tax 403/457 contribution: 36K

    Itemized deduction: 25K

    Exemption: 16 K

    Taxable income: 220-36-25-16= 143 K

    I am trying to calculate tax yield to decide between corporate vs muni.

    Which tax bracket I need to choose from- gross income or taxable income?

     

     

  • #2

    Your marginal rate. Where the last dollar is taxed. Hint: you already calculated it.

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    • #3
      That puts you in the 25% marginal federal income tax bracket + state if applicable. If the muni yields more than (25% + state tax) less than the normal fund, I guess you could use that math to guide you.

      But I would take the guesswork out by keeping bonds in tax deferred account(s). [And yes, I know WCI says bonds go in taxable]

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      • #4
        Thank you so much!

         

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        • #5
          Nice little calculator here

           

          https://funds.eatonvance.com/tax-equivalent-yield-calculator.php

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          • #6
            @Zaphod: Super helpful!

             

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