State Tax Rates and Multipliers
The following state income tax rates and multipliers should be used as a quick reference when calculating the Taxable Equivalent Yield for a municipal bond:
Here’s How It Works:
Municipal bond yield (x) the multiplier corresponding with the client's state of residence and federal income tax bracket.
Example: Alabama resident in the 35% federal income tax bracket interested in a municipal bond yielding 4.50%: 4.50% x 1.619 = 7.29%.
Summary: Your client would have to earn 7.29% or higher, on a taxable security of similar maturity and rating in order to match the 4.50% yield of the municipal bond.
 |
 |
2007 Federal Rates and Brackets
|
 |
|
 |
|
|
25% |
28% |
33% |
35% |
| Single: |
$31,851-
$77,100 |
$77,101 -
$160,850 |
$160,851 -
$349,700 |
$349,700 and
higher |
| Married: |
$63,701 -
$128,500 |
$128,501 -
$195,850 |
$195,851 -
$349,700 |
$349,701 and
higher |
|
STATE |
Max State Tax
(Per Fed Bracket) |
In-State
Bonds |
Out-of-State
Bonds |
25% |
28% |
30% |
35% |
| ALABAMA |
5.00% |
E |
T |
1.404 |
1.462 |
1.571 |
1.619 |
| ALASKA |
NO TAX |
------ |
------ |
1.333 |
1.389 |
1.493 |
1.538 |
| ARIZONA |
4.79% |
E |
T |
1.400 |
1.459 |
1.568 |
1.616 |
| ARKANSAS |
7.00% |
E |
T |
1.434 |
1.493 |
1.605 |
1.654 |
| CALIFORNIA |
9.30% |
E |
T |
1.470 |
1.531 |
1.646 |
1.696 |
| COLORADO |
4.63% |
E |
T |
1.398 |
1.456 |
1.565 |
1.613 |
| CONNECTICUT |
5.00% |
E |
T |
1.404 |
1.462 |
1.571 |
1.619 |
| DELAWARE |
5.95% |
E |
T |
1.418 |
1.477 |
1.587 |
1.636 |
| WASH DC |
8.70% |
E |
E |
1..465 |
1.526 |
1.635 |
1.685 |
| FLORIDA |
NO TAX |
E |
T |
1.333 |
1.389 |
1.493 |
1.539 |
| GEORGIA |
6.00% |
E |
T |
1.418 |
1.478 |
1.588 |
1.637 |
| HAWAII |
8.25% |
E |
T |
1.452 |
1.513 |
1.626 |
1.676 |
| IDAHO |
7.80% |
E |
T |
1.446 |
1.506 |
1.619 |
1.669 |
| ILLINOIS |
3.00% |
T(MOST) |
T |
1.375 |
1.432 |
1.539 |
1.586 |
| INDIANA |
3.40% |
E |
E |
1.380 |
1.438 |
1.545 |
1.593 |
| IOWA |
8.98% |
T(MOST) |
T |
1.465 |
1.526 |
1.640 |
1.690 |
| KANSAS |
6.45% |
E |
T |
1.425 |
1.485 |
1.595 |
1.645 |
| KENTUCKY |
6.00% |
E |
T |
1.418 |
1.478 |
1.588 |
1.637 |
| LOUISANA |
6.00% |
E |
T |
1.418 |
1.478 |
1.588 |
1.637 |
| MAINE |
8.50% |
E |
T |
1.457 |
1.518 |
1.631 |
1.681 |
| MARYLAND |
4.75% |
E |
T |
1.400 |
1.458 |
1.567 |
1.615 |
| MASSACHUSETTS |
5.30% |
E |
T |
1.408 |
1.467 |
1.576 |
1.625 |
| MICHIGAN |
3.90% |
E |
T |
1.387 |
1.445 |
1.553 |
1.601 |
| MINNESOTA |
7.85% |
E |
T |
1.447 |
1.507 |
1.620 |
1.670 |
| MISSISSIPPI |
5.00% |
E |
T |
1.404 |
1.462 |
1.571 |
1.619 |
| MISSOURI |
6.00% |
E |
T |
1.418 |
1.478 |
1.588 |
1.637 |
| MONTANA |
6.90% |
E |
T |
1.432 |
1.492 |
1.603 |
1.653 |
| NEBRASKA |
6.84% |
E |
T |
1.431 |
1.491 |
1.602 |
1.651 |
| NEVADA |
NO TAX |
----- |
----- |
1.333 |
1.389 |
1.493 |
1.538 |
| NEW HAMPSHIRE (D&I) |
5.00% |
E |
T |
1.404 |
1.462 |
1.571 |
1.619 |
| NEW JERSEY |
6.37% |
E |
T |
1.424 |
1.483 |
1.594 |
1.643 |
| NEW MEXICO |
5.80% |
E |
T |
1.415 |
1.474 |
1.584 |
1.633 |
| NEW YORK |
6.85% |
E |
T |
1.431 |
1.491 |
1.602 |
1.652 |
| NY CITY(7.70% State/3.648% City) |
10.498% |
E |
T |
1.490 |
1.552 |
1.668 |
1.719 |
| NORTH CAROLINA |
8.25% |
E |
T |
1.453 |
1.514 |
1.627 |
1.677 |
| NORTH DAKOTA |
5.54% |
E |
E(MOST) |
1.412 |
1.470 |
1.580 |
1.629 |
| OHIO |
7.185% |
E |
T |
1.437 |
1.496 |
1.608 |
1.658 |
| OKLAHOMA |
6.25% |
E |
T |
1.422 |
1.482 |
1.592 |
1.641 |
| OREGON |
9.00% |
E |
T |
1.465 |
1.526 |
1.640 |
1.691 |
| PENNSYLVANIA |
3.07% |
E |
T |
1.376 |
1.433 |
1.540 |
1.587 |
| RHODE ISLAND |
9.90% |
E |
T |
1.480 |
1.542 |
1.657 |
1.708 |
| SOUTH CAROLINA |
7.00% |
E |
T |
1.434 |
1.493 |
1.605 |
1.654 |
| SOUTH DAKOTA |
NO TAX |
----- |
----- |
1.333 |
1.389 |
1.493 |
1.538 |
| TENNESSEE(D&I) |
6.00% |
E |
T |
1.418 |
1.478 |
1.588 |
1.637 |
| TEXAS |
NO TAX |
----- |
----- |
1.333 |
1.389 |
1.493 |
1.538 |
| UTAH |
7.00% |
E |
T (MOST) |
1.434 |
1.493 |
1.605 |
1.654 |
| VERMONT |
9.50% |
E |
T |
1.429 |
1.501 |
1.634 |
1.700 |
| VIRGINIA |
5.75% |
E |
T |
1.415 |
1.474 |
1.584 |
1.632 |
| WASHINGTON |
NO TAX |
----- |
----- |
1.333 |
1.389 |
1.493 |
1.538 |
| WEST VIRGINIA |
6.50% |
E |
T |
1.426 |
1.485 |
1.596 |
1.645 |
| WISCONSIN |
6.75% |
T(MOST) |
T |
1.430 |
1.489 |
1.601 |
1.650 |
| WYOMING |
NO TAX |
----- |
----- |
1.333 |
1.389 |
1.493 |
1.538 |
E: Exempt T: Taxed
D&I: State Income Tax on dividends and interest only
The taxable equivalent yield (TEY) measures what an investor would have to earn (yield) on a taxable (or fully taxable) investment in order to match the yield provided by a tax-exempt municipal bond. The TEY is only one factor that should be considered when purchasing a security, and is meant to be used only as a general guideline when determining taxable equivalent yields for agency and treasury securities. The state tax rates shown represent the maximum state income tax in each state. Some states have lower tax rates within each federal tax bracket in relation to income level and type of filing. If state tax rates are lower than posted, taxable equivalent yields may be lower than shown. The effective combined rate assumes the taxpayer itemizes his / her deductions. The factors do not adjust for: the phase-out of itemized deductions for certain high income taxpayers; the yield to maturity factoring in market discount or market premium, or the effect, if any, of the federal Alternative Minimum Tax (AMT).
2007 tax figures are derived from sources believed to be reliable. Morgan Stanley does not take any responsibility for their accuracy. Federal and state income tax rates can change without prior notification.
