Keyword: Tax Efficiency
Tax Equivalent Calculator / The IRS Defense
A 5.5% CD is not 5.5% if you lose 37% of it to taxes. Compare Taxable vs. Tax-Free investments to find your true "Alpha."
37%
%
VS
%
$
The Magic Number
5.56%
A taxable investment must earn 5.56% just to match the 3.5% tax-free yield.
Taxable (CD/HYSA)
5.5%3.46%
Real Yield (After 37% Tax)
Tax-Free (Muni)
3.50%
100% KEEPER
Winner: Tax-Free Municipal Bond
You save $35 per year in taxes by choosing the Muni.