I want to add that you should use tax software to simulate your current situation, and input the expected yield/distributions in either tax-exempt or taxable sections of your software, to see which provides you the best after-tax income.
This ignores any desires for type of income, i.e. treasuries vs municipals, as treasuries are 'safer' than municipals from a credit lens.
Our AGI is more than a million and if I add an additional $100,000 to my tax return in taxable interest, it causes our taxes due to increase 34% or $34,000. If I instead add $200,000, our taxes increase 32.5% or $65,000. These percentages are all-inclusive of federal bracket+NIIT, etc.. No state income tax for us.
as of Sept 16 2025:
VGSH ETF (1.9 year treasuries) 3.68% SEC yield, after 32.5% taxes = 2.484% or after 34% taxes = 2.428%
SUB ETF (1.9 year municipals) 2.30% SEC yield tax-free
Both scenarios, at our desired bond duration of less than 2 years, we are better off in 2 treasuries than 2 year municipals, and we have a lot of ordinary interest and qualified dividends and long term capital gains.
If on your tax return adding additional taxable interest costs you 37% all-inclusive in taxes, VGSH ETF @ 3.68% still provides 2 basis points more interest after taxes than the municipal bonds provided in SUB ETF, and is safer from credit perspective.
There are a couple of books worth reading that may help guide you further.
Larry Swedroe's The Only Guide to a Winning Bond Strategy You'll Ever Need
William Bernstein's The Four Pillars of Investing, Second Edition
This ignores any desires for type of income, i.e. treasuries vs municipals, as treasuries are 'safer' than municipals from a credit lens.
Our AGI is more than a million and if I add an additional $100,000 to my tax return in taxable interest, it causes our taxes due to increase 34% or $34,000. If I instead add $200,000, our taxes increase 32.5% or $65,000. These percentages are all-inclusive of federal bracket+NIIT, etc.. No state income tax for us.
as of Sept 16 2025:
VGSH ETF (1.9 year treasuries) 3.68% SEC yield, after 32.5% taxes = 2.484% or after 34% taxes = 2.428%
SUB ETF (1.9 year municipals) 2.30% SEC yield tax-free
Both scenarios, at our desired bond duration of less than 2 years, we are better off in 2 treasuries than 2 year municipals, and we have a lot of ordinary interest and qualified dividends and long term capital gains.
If on your tax return adding additional taxable interest costs you 37% all-inclusive in taxes, VGSH ETF @ 3.68% still provides 2 basis points more interest after taxes than the municipal bonds provided in SUB ETF, and is safer from credit perspective.
There are a couple of books worth reading that may help guide you further.
Larry Swedroe's The Only Guide to a Winning Bond Strategy You'll Ever Need
William Bernstein's The Four Pillars of Investing, Second Edition
Statistics: Posted by Starfox — Thu Sep 18, 2025 1:14 pm — Replies 20 — Views 1085