The taxable equivalent yield chart compares the tax exempt yields of municipal bonds to the taxable yields of other investments. To use this chart, first find the column that represents your individual or joint taxable income. The percentages in the column corresponding with your income level show the taxable yield that is equivalent to the tax-exempt yield shown on the left side of each row. This chart does not take state tax into consideration.

For example, if an individual has an income of $100,000 per year he would fall into the 28% tax bracket. The column for this tax bracket shows that a 1.39% taxable yield is equivalent to a 1.0% tax-exempt yield, a 2.08% taxable yield is equivalent to a 1.5% tax-exempt yield, and so on.

2012 Tax Rates & 2012 Tax Brackets

Here are the federal income tax rates for 2012 from the IRS:

In addition to the tax brackets above, you may owe tax under the alternative minimum tax. The 2012 AMT exemption on www.irs.gov is available to see if it applies to you.

Individual Taxable Income Under $8,350 $8,350- $33,950 $33,950- $82,250 $82,250- $171,550 $171,550- $372,950 Over$372,950
Joint Taxable Income Under $16,700 $16,700- $67,900 $67,900- $137,050 $137,050- $208,850 $208,850- $372,950 Over$372,950
Tax Bracket 10% 15% 25% 28% 33% 35%
Tax-Exempt Yields
1.00% 1.11% 1.18% 1.33% 1.39% 1.49% 1.54%
1.50% 1.67% 1.76% 2.00% 2.08% 2.24% 2.31%
2.00% 2.22% 2.35% 2.67% 2.78% 2.99% 3.08%
2.50% 2.78% 2.94% 3.33% 3.47% 3.73% 3.85%
3.00% 3.33% 3.53% 4.00% 4.17% 4.48% 4.62%
3.50% 3.89% 4.12% 4.67% 4.86% 5.22% 5.38%
4.00% 4.44% 4.71% 5.33% 5.56% 5.97% 6.15%
4.50% 5.00% 5.29% 6.00% 6.25% 6.72% 6.92%
5.00% 5.56% 5.88% 6.67% 6.94% 7.46% 7.69%
5.50% 6.11% 6.47% 7.33% 7.64% 8.21% 8.46%
6.00% 6.67% 7.06% 8.00% 8.33% 8.96% 9.23%

Note: Milestone Consulting, LLC does not provide legal or tax advice. Please consult an attorney or tax advisor if you have questions concerning the legal or taxable/tax-free elements of a proposed settlement. For more information regarding tax rates, please visit www.irs.gov