Target Date Bond ETFs & After-Tax Calculator
Target Date Bond ETFs (such as iShares iBonds) hold a defined portfolio of bonds that mature in a specific calendar year. Unlike traditional perpetual bond funds, they liquidate like individual bonds, providing defined maturity payouts and eliminating long-term interest rate risk. Enter your tax information below to dynamically compute the after-tax effective compound yield to maturity in real time.
Yields are automatically refreshed from my rate scraper backend published on GitHub.
When comparing these yields to bank deposit products (high-yield savings accounts, CDs, etc.), remember to discount those bank rates by your marginal Federal and State income tax rates for an apples-to-apples comparison.
| Year | Liquidates In | Category | Symbol | State Taxable | Compounded YTM | Tax-Effective YTM | Rate Updated |
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Compounded Weighted Average Yield to Maturity & Expense Ratio Drag
The Yield to Maturity (YTM) calculations presented in this table account for reinvesting monthly dividends across the calendar year, and account for each fund's expense ratio drag.
Bond ETFs publish an annualized Weighted Average Yield to Maturity representing the internal rate of return of the underlying bond portfolio if held to maturity. Management fees (expense ratios) reduce net investor returns, while monthly dividend distributions compound upon reinvestment.
The annual compounded effective yield to maturity is calculated net of fund expenses according to the reference formula:
Compounded YTM = (1 + (Weighted_Average_YTM - Expense_Ratio) / (365 / 30))^12 - 1
Expense ratios factored into this calculator: US Treasuries (0.07%), TIPS (0.10%), Municipals (0.10%), Investment Grade Corporate (0.10%), and High Yield Corporate (0.35%).
Maturity Timelines & Liquidation Dates
Treasuries, Municipals, & Corporate: Mature in December of their stated target year. On approximately December 15, the fund stops trading, and all remaining assets are returned to shareholders as a final cash liquidation payout on or about December 31.
TIPS (Treasury Inflation-Protected Securities): Mature in October of their target year. TIPS stop trading in mid-October and distribute final principal plus inflation adjustments on or about October 31.
The "Liquidates In" column dynamically calculates the remaining time from today to the fund's liquidation date in real time.
Federal and State Tax Treatment
US Treasuries & TIPS: Federally taxable and subject to NIIT (Net Investment Income Tax). However, interest on direct US government obligations is exempt from state and local income taxes under 31 U.S.C. § 3124. A tiny fraction of income (typically under 1%) may derive from repurchase agreements and cash collateral, which is subject to state tax as indicated in the "State Taxable" column.
Municipals: Exempt from federal income tax (0% Fed) and exempt from NIIT (0% NIIT). State tax exemption depends on your state of residence: in-state municipal interest is state tax-exempt, while out-of-state interest is generally taxable. This calculator applies state-by-state exemption percentages for your selected state.
Corporate & High Yield: Fully taxable across Federal, NIIT, and State income taxes.