Taxable and Tax-Free Equivalence of Interest Rate Yields: A Brief Note

Richard Cebula ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper demonstrates the appropriate way in which to translate a tax-free interest rate yield into an equivalent taxable interest yield when there is not only a federal income tax to account for but also a state income tax as well. The results shown indicate the importance of allowing for state income tax rates when computing interest rate yield equivalence.

Keywords: tax-free interest rate yields; taxable interest rate yields; equivalence computations; state income tax rates (search for similar items in EconPapers)
JEL-codes: E43 H24 H74 (search for similar items in EconPapers)
Date: 2010-02-01
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Published in Journal of Economics and Finance Education 1.10(2011): pp. 83-84

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:55263

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