After-tax basis,

Definition of After-tax basis:

1. A measure of return on investment for taxable bonds that calculates the cost basis by subtracting the taxes paid from the bonds yield.

2. After-tax basis refers to how one compares net yields on taxable and tax-exempt bonds. Taxable bonds, such as corporate bonds, may offer higher returns than tax-exempt bonds. Municipal bonds are a typical example of tax-exempt bonds. .

3. The after-tax basis is a method of comparison useful in comparing bonds before investing. .