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

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.

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Year of publication:	2010-02-01
Authors:	Cebula, Richard
Institutions:	Volkswirtschaftliche Fakultät, Ludwig-Maximilians-Universität München
Subject:	tax-free interest rate yields \| taxable interest rate yields \| equivalence computations \| state income tax rates

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Extent:	application/pdf
Series:	MPRA Paper.
Type of publication:	Book / Working Paper
Notes:	Published in Journal of Economics and Finance Education 1.10(2011): pp. 83-84
Classification:	E43 - Determination of Interest Rates; Term Structure Interest Rates ; H24 - Personal Income and Other Nonbusiness Taxes and Subsidies ; H74 - State and Local Borrowing
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011112441