Single-state munis

Kiplinger's Personal Finance Magazine, August, 1998

For a complete explanation of how to use these rankings, including a description of each column heading, see page 90. Some additional information about the single-state tax-free bond listings:

CATEGORY. Funds are listed alphabetically within each state (but note that some states have no funds). To be included, a single-state fund must have at least a one-year track record and usually at least $29 million in assets.

12-MONTH YIELD. To figure your taxable-equivalent yield, divide the yield shown in the table by 1 minus your total effective tax rate--that is, federal, state and local rates combined. But you can't just add them together. Because state and local taxes can be deducted on federal returns if you itemize, your effective tax rate is reduced. To find out what it is, multiply your state rate (say, 5%) by 1 minus your federal tax rate (0.72 if you're in the 28% bracket). Then add the result (3.6%) to your federal rate to arrive at your total effective rate (in this example, 31.6%, or 32% rounded). Your divisor for figuring the taxable equivalent of a single-state fund would then be 0.68 (1 minus 0.32).

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