🏦Fixed Deposit vs Bond Return Calculator

Compare after-tax return of fixed deposit vs bond

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Federal tax 22% applied

Fixed Deposit vs Bond: After-Tax Return Comparison

Both fixed deposits (CDs) and bonds generate interest income subject to federal income tax. CDs compound interest, while bonds pay periodic coupon interest (simple interest per period). Over longer holding periods, compounding gives CDs an edge at the same rate.

Bonds may offer additional upside through price appreciation if interest rates fall, and Treasury bonds are exempt from state/local taxes. CDs are FDIC-insured up to $250,000, making them lower risk than corporate bonds.

Frequently Asked Questions

Are bank savings interest taxed in the US?

Yes. Interest income from savings accounts and CDs is taxed as ordinary income at your marginal federal rate. This calculator uses 22% as a common median rate.

How is US bond coupon income taxed?

Corporate and most bond coupon income is taxed as ordinary income. US Treasury interest is exempt from state/local tax but subject to federal tax.

Which is better — CDs or bonds?

CDs offer predictable returns with FDIC insurance. Bonds can offer higher yields but carry credit risk and price volatility. Tax treatment and holding period matter significantly.