Find a bond's true yield to maturity, current yield, or fair price โ and compare tax-exempt munis against taxable bonds so you know which one actually pays more after taxes.
This free bond calculator covers the core fixed-income math US investors use: yield to maturity (YTM), current yield, bond price from a target yield, and tax-equivalent yield (TEY) for comparing tax-exempt municipal bonds to taxable alternatives. It also handles zero-coupon bonds and I bonds (inflation-adjusted US savings bonds). The 2026 reference rate environment includes the 10-year Treasury at approximately 4.0โ4.5% and investment-grade corporate bonds at roughly 5โ6% โ context that helps you evaluate whether a specific bond offer is competitive. Whether you're comparing individual bonds, modeling a bond ladder, or evaluating a bond fund's yield, this tool provides the math.
1. Select the calculation mode: solve for Price, YTM, or Tax-Equivalent Yield.
2. Enter the bond's face value (par value, typically $1,000).
3. Enter the annual coupon rate as a percentage and coupon frequency (semi-annual is standard for US bonds).
4. Enter the years to maturity (or the maturity date).
5. For Price mode: enter your target yield to maturity โ the calculator returns the bond's fair price.
6. For YTM mode: enter the current market price โ the calculator returns yield to maturity, current yield, and total return at maturity.
Current Yield = Annual Coupon Payment รท Current Market Price
Yield to Maturity (YTM): Solved iteratively (Newton's method approximation):
YTM โ [Annual Coupon + (Face Value โ Price) รท Years] รท [(Face Value + Price) รท 2]
Bond Price from YTM: Price = ฮฃ [Coupon รท (1+YTM)^t] + Face Value รท (1+YTM)^n, summed over all coupon periods.
Tax-Equivalent Yield = Municipal Bond Yield รท (1 โ Marginal Tax Rate)
Example: A 3.50% muni bond for an investor in the 32% federal bracket has a TEY of 3.50% รท (1 โ 0.32) = 5.15% โ meaning you'd need a taxable bond yielding more than 5.15% to beat it after taxes.
YTM captures everything: coupon payments, price paid, and the gain or loss from the discount or premium relative to face value. Current yield only captures the coupon-to-price ratio and ignores capital gain or loss at maturity. For premium bonds, YTM is lower than current yield; for discount bonds, YTM is higher. Always compare bonds by YTM, not coupon rate.
The 2026 fixed-income landscape rewards selectivity. The 10-year US Treasury yield sits at approximately 4.0โ4.5%, providing a risk-free baseline for all other fixed-income comparisons. Investment-grade corporate bonds (rated BBB and above) yield approximately 5โ6%, with the spread over Treasuries reflecting credit risk. High-yield (below investment-grade) bonds carry yields above 7โ8%, reflecting materially higher default risk.
Municipal bonds typically yield 3.0โ4.0% nominally, but for investors in higher federal brackets, the tax-equivalent yield often exceeds comparable taxable bonds. A 3.50% muni in the 24% bracket TEY = 3.50 รท 0.76 = 4.61% taxable equivalent; in the 32% bracket it rises to 5.15%. State income tax exemption (most states exempt their own bonds) adds further value for residents of high-tax states like California and New York.
New bond investors frequently confuse these three metrics:
Coupon rate is fixed at issuance โ it's the annual interest expressed as a percentage of face value. A bond with $1,000 face value and a 4% coupon pays $40/year regardless of what happens in the market.
Current yield = annual coupon รท current price. If that bond now trades at $950, current yield = $40 รท $950 = 4.21%.
Yield to maturity accounts for the full picture: coupon payments plus the $50 gain from buying at $950 and receiving $1,000 at maturity. YTM will be higher than current yield when a bond trades at a discount, and lower when it trades at a premium.
Comparing two bonds using only coupon rate is meaningless if they trade at different prices. YTM is the only metric that puts all bonds on equal footing.
Municipal bonds pay interest that is exempt from federal income tax (and often exempt from state tax for in-state residents). This makes direct yield comparison to Treasuries or corporate bonds misleading. Tax-equivalent yield normalizes the comparison:
TEY = Muni Yield รท (1 โ Federal Tax Rate)
For investors in the top 37% bracket, a 3.80% muni bond has a TEY of 3.80% รท 0.63 = 6.03%. At that yield, a taxable bond would have to pay 6.03% to deliver equivalent after-tax income. In a market where investment-grade corporates yield 5โ6%, many high-bracket investors find munis genuinely competitive.
The calculation gets more precise when state taxes are included. California's top marginal rate of 13.3% means a California muni exempt from both federal and state tax would have a combined TEY calculation using (1 โ 0.37 โ 0.133) = 0.497 as the denominator, pushing TEY even higher.
Beyond marketable bonds, the US Treasury offers two retail savings bond products with distinct mechanics:
I Bonds: Interest rate adjusts every 6 months based on inflation (CPI-U). The composite rate equals the fixed rate plus twice the semiannual inflation rate. I bonds can't be redeemed in the first 12 months, and if cashed before 5 years, you forfeit the last 3 months of interest. Maximum purchase is $10,000 per person per year (plus $5,000 from a tax refund) through TreasuryDirect.gov. Interest is deferred for federal tax until redemption โ no state or local tax.
Series EE Bonds: Earn a fixed rate. The Treasury guarantees that EE bonds double in value if held 20 years, which works out to an effective guaranteed 3.5% annualized return for the 20-year holding period regardless of the stated rate.
Both products lack the liquidity of marketable Treasuries and are best suited for specific goals โ education savings, inflation hedging, or long-term conservative accumulation.
YTM calculation requires the current market price, not just the face value.
US corporate and Treasury bonds typically pay semi-annually; some bonds pay annually or quarterly. Frequency affects YTM math.
Investment-grade bonds (BBB/Baa and above) carry lower yield but lower default risk than high-yield bonds.
Longer-duration bonds lose more value when interest rates rise. A 10-year bond has roughly 8โ9 years of duration โ meaning an 1% rate increase drops price by ~8โ9%.
Treasury interest is federally taxable but exempt from state tax. Municipal bond interest is federally exempt but may be subject to AMT. Corporate bond interest is fully taxable.
Callable bonds give the issuer the right to redeem early. Yield to call (YTC) matters more than YTM for bonds trading above par.
Wei buys a corporate bond with $1,000 face value, 3.5% coupon (semi-annual), 8 years to maturity, currently trading at $920. Current yield = $35 รท $920 = 3.80%. YTM โ [35 + (1000โ920)รท8] รท [(1000+920)รท2] = [35 + 10] รท 960 = 45 รท 960 = 4.69%. The YTM exceeds the coupon rate because he's buying at a discount and will receive full face value at maturity.
Claudia is in the 35% federal bracket and 9.3% California state bracket. She's evaluating a California general obligation muni bond yielding 3.60%, exempt from both federal and California tax. Combined TEY = 3.60% รท (1 โ 0.35 โ 0.093) = 3.60% รท 0.557 = 6.46% tax-equivalent. A corporate bond would need to yield more than 6.46% to match the muni after taxes โ a high bar in 2026's 5โ6% investment-grade environment.
1. Always compare bonds by YTM, not coupon rate โ two bonds with identical coupons can have very different yields if purchased at different market prices.
2. Calculate tax-equivalent yield before dismissing municipal bonds as "low-yielding" โ for investors in the 24%+ bracket, munis often outperform taxable alternatives on an after-tax basis.
3. Understand duration before buying long-term bonds in a rising-rate environment โ a 20-year bond can lose 15โ20% of market value from a 2% rate increase.
4. Check call provisions on corporate and muni bonds before buying at a premium โ if the bond gets called early, your YTM calculation was based on incorrect assumptions.
5. Ladder maturities for a bond portfolio the same way you would for CDs โ staggered maturities manage reinvestment risk and provide regular liquidity.
6. Don't overlook Treasuries on TreasuryDirect.gov โ buying at auction avoids broker markups and provides competitive risk-free yields.
A: YTM is the total annualized return on a bond if held to maturity, accounting for all coupon payments plus any gain or loss from purchasing at a discount or premium to face value. It's the standard metric for comparing bonds.
A: The 10-year US Treasury yields approximately 4.0โ4.5% in 2026. Investment-grade corporate bonds yield roughly 5โ6%. Municipal bonds typically yield 3.0โ4.0% nominally, but often more than 4.5โ5% on a tax-equivalent basis for high-bracket investors.
A: Price and yield move in opposite directions. When interest rates rise, existing bonds become less valuable (prices drop and yields rise to match new market rates). When rates fall, existing bond prices rise.
A: TEY converts a tax-exempt municipal bond yield to its taxable equivalent: Muni Yield รท (1 โ Marginal Tax Rate). It allows fair comparison between muni bonds and taxable fixed-income alternatives.
A: Treasury bonds are issued by the US federal government and carry no credit risk. Corporate bonds are issued by companies and carry credit risk โ the higher the yield over Treasuries, the more risk the market assigns. Treasury interest is exempt from state tax; corporate bond interest is not.
A: I bonds are US savings bonds with interest rates tied to inflation (CPI). Rates adjust every 6 months. They can't be redeemed in the first 12 months, and early redemption before 5 years forfeits 3 months of interest. Maximum annual purchase is $10,000 per person.
A: Duration measures a bond's price sensitivity to interest rate changes. A bond with 8 years of duration loses approximately 8% of market value for every 1% rise in interest rates. Longer bonds are more sensitive to rate changes.
A: Individual bonds give you a guaranteed return if held to maturity and protection from interest rate risk at the portfolio level. Bond funds fluctuate in price daily and have no fixed maturity date. Individual bonds work best when you have a specific future cash need; bond funds are more convenient for broad diversification.
Brief disclaimer: This calculator provides estimates for educational and planning purposes only. Actual bond yields, prices, and tax-equivalent returns depend on market conditions, credit ratings, call provisions, and your specific tax situation. Rates referenced reflect mid-2026 data and change frequently. Results should be treated as planning guidance rather than financial, tax, or investment advice.