Computing After-Tax Yield

April 13, 2006

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To compute your after tax yield on an investment, you'll need to know what tax bracket you are in, and the stated (pre-tax) yield of your investments. The arithmetic formula for figuring how much pre-tax yield you'll need to equal a particular after-tax yield is: [after-tax yield / 1.00 - tax rate]

If you don't want to go through this computation, here are a few after-tax equivalents for pre-tax yields. To use the table, locate your marginal tax rate in the first column, and read across that line to find your estimated yield. Then read the number in the top of that column, to find your after-tax yield.

Sample After-Tax and Pre-Tax Yield Comparison
Tax rate (%)	After-tax yield (%):	2.0	3.0	4.0	5.0	6.0	7.0	8.0	10.0	12.0
	Pre-tax yield (%):	EQUALS
10		2.22	3.33	4.44	5.56	6.67	7.78	8.89	11.11	13.33
15		2.35	3.53	4.70	5.88	7.05	8.24	9.42	11.76	14.18
25		2.67	4.0	5.33	6.67	8.0	9.33	10.67	13.33	16.0
28		2.77	4.17	5.56	6.94	8.33	9.72	11.11	13.89	16.67
33		2.99	4.48	5.98	7.46	8.96	10.45	11.94	14.93	17.91
35		3.08	4.62	6.15	7.69	9.23	10.77	12.31	15.38	18.46