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Muni or Taxable Bond? Our Calculator Crunches the Numbers

Morningstar's Christine Benz demonstrates how our Tax-Equivalent Yield Calculator can help you determine whether you're better off investing in taxable or municipal bonds after adjusting for munis' tax-exempt status.

Christine Benz: Hi,I am Christine Benz from One of the key steps to take when evaluating whether you are better off in taxable or municipal bonds is to look at the two yields and see whether you are better off in the taxable bond or the muni once you consider the fact that you're earning a tax break on the municipal bond or bond fund. I'll show you how to do that using the tax-equivalent yield function on's Bond Calculator.

The starting point for doing this comparison is finding the yields for the taxable-bond fund you'd like to look at, as well as the municipal-bond fund. So let's start by entering a ticker for a widely held taxable-bond fund and finding its yield on the site. We can see that its yield is 4.12%. If you would like an even more current snapshot of the fund's yield, you can go to the fund company's website and look for a statistic called SEC Yield. But this statistic on will work as well.