For those that do itemize, the change here is that your state taxes are tax deductible (as Vicki made clear), which created a concept that I'll call "marginal net state tax rate".With our 5.3% state tax and me in the 25% federal bracket, that's 5.3%(1-25%), which is right about 4% (3.975% to be precise). If I was to itemize, then that is the marginal state tax rate I'd really pay, and *that* is the number that should be used as the state tax rate in the tax-equivalent yield formula.5% / (1-.03975), which, as Vicki said, is right around 5.2%.Wow, learn something new everyday :)I'm still working on this concept, myself. We're switching our family economy from salary income to investment income, and I want to maximize our spendable amount so it will last long enough. (VickiSpouse's job is being eliminated and he gets to Retire Early.)I'm currently trying to understand taxes enough to project them. I have a handle on what we want to spend, I now need to figure out how much more income it will take to cover the associated taxes. Vickifool
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