Taxable Equivalent Yield Chart (Structures)

TAXABLE EQUIVALENT YIELD (Structures)

The Value of the Structured Settlement Tax Benefit to Structured Settlement Payees

SPEAK TO SOMEONE NOW

The Taxable Equivalent Yield

on a Structured Settlement

What is the Value of the Structured Settlement

Tax Benefit?

Structured settlements provide a real value as a stable respite from market volatility at all durations for plaintiffs and attorneys.  Always check the taxable equivalent yield to easily compare the internal rate of return of a stable structured settlement payment stream or payment streams to a taxable alternative.


How to Use the Taxable Equivalent Yield Chart for Structured Settlements

Structured settlement payments representing damages for physical injury or physical sickness are income tax-free.  This includes any growth in excess of the structured settlement funding amount. While lump sum cash settlements are income tax-free for physical injury and physical cases, if the money is then placed in a traditional investment, then any growth may subject to income taxes.


The taxable equivalent yield chart below helps you quickly and easily compare the yield on a structured settlement to the yield on a taxable investment. 


Structured settlements offer significant tax benefits to plaintiffs, especially with today's interest rates!


  • Structured settlement payments are income tax free if structured settlement payments represent damages that qualify under IRC §104(a)(1), §104(a)(2), and §139F; 
  • Payments received from structured settlements representing other types of damages,  offer tax deferral.


How to Use the Net Taxable Yield Chart for

Structured Settlements

If your head is getting turned by  the return or yield on CD's ,money market funds, or an alternative investment and the alternative investment is taxable, use the net taxable yield chart as a simple way to true up the comparison. For example, 4% taxable income nets out to less than 3%, once your tax bracket gets above 25%. Also consider that CD's and money market funds are not intended to be long term investments.  See Historical CD Interest Rates 1984-2023 | Bankrate


IMPORTANT NOTE Should you be contacted by someone trying to buy structured settlement payments from your existing structured settlement for pennies on the dollar, use a rate in existence when the structured settlement was established (i.e., not the rate paid by structured settlement today) to gain a better understand the value of what you actually have.  For example, if you're 31 in March 2023 and your structured settlement was established in April 1996 (when you were 5 years old), the structure might have an Internal Rate of Return of 6.8% to more than 7% income tax-free on the original investment. Buyers can only offer you pennies on the dollar. So, you first have to make up what you lost by selling to them and then you have to take on more risk with without the level of certainty you may have with your structured settlement.


Last updated February 6, 2024

TAXABLE EQUIVALENT YIELD
Compare the higher taxable interest required to equal income tax-free structured settlement
accumulation at various structured settlement internal rates of return
Tax-Free Rate 15% taxable 18% taxable 28% taxable 31% taxable 33% taxable 35% taxable 38% taxable 40% taxable
2.0% 2.35 2.44 2.78 2.90 2.99 3.08 3.23 3.33
3.0% 3.53 3.66 4.17 4.35 4.48 4.62 4.84 5.00
4.0% 4.71 4.88 5.56 5.80 5.97 6.15 6.45 6.67
5.0% 5.88 6.10 6.94 7.25 7.46 7.69 8.06 8.47
5.5% 6.47 6.71 7.64 7.97 8.21 8.46 8.87 9.32
6.0% 7.06 7.32 8.33 8.70 8.96 9.23 9.68 10.17
6.5% 7.65 7.93 9.03 9.42 9.70 10.00 10.48 11.02
7.0% 8.24 8.54 9.72 10.14 10.45 10.77 11.29 11.86
7.5% 8.82 9.15 10.42 10.87 11.19 11.54 12.10 12.71
8.0% 9.41 9.76 11.11 11.59 11.94 12.31 12.90 13.56
8.5% 10.00 10.37 11.81 12.32 12.69 13.08 13.71 14.41
9.0% 10.59 10.98 12.50 13.04 13.43 13.85 14.52 15.25
9.5% 11.18 11.59 13.19 13.77 14.18 14.62 15.32 16.10
10% 11.76 12.20 13.89 14.49 14.93 15.38 16.13 16.95
 
NET TAXABLE YIELDS
This table shows the after-tax yields for a given taxable interest rate.
Would you be better off with a structured settlement?
Taxable Rate 15% taxable 18% taxable 28% taxable 31% taxable 33% taxable 35% taxable 38% taxable 40% taxable
1.0% 0.85 0.82 0.72 0.69 0.67 0.65 0.62 0.60
1.5% 1.28 1.23 1.08 1.04 1.00 0.98 0.93 0.90
3.0% 2.55 2.46 2.16 2.07 2.01 1.95 1.86 1.80
4.0% 3.40 3.28 2.88 2.76 2.68 2.60 2.48 2.40
5.0% 4.25 4.10 3.60 3.45 3.35 3.25 3.10 2.95
5.5% 4.68 4.51 3.96 3.80 3.69 3.58 3.41 3.25
6.0% 5.10 4.92 4.32 4.14 4.02 3.90 3.72 3.54
6.5% 5.52 5.33 4.68 4.48 4.36 4.23 4.03 3.84
7.0% 5.95 5.74 5.04 4.83 4.69 4.55 4.34 4.13
7.5% 6.38 6.15 5.40 5.18 5.02 4.88 4.65 4.43
8.0% 6.80 6.56 5.76 5.52 5.36 5.20 4.96 4.72
8.5% 7.23 6.97 6.12 5.86 5.69 5.53 5.27 5.02
9.0% 7.65 7.38 6.48 6.21 6.03 5.85 5.58 5.31
9.5% 8.07 7.79 6.84 6.56 6.36 6.18 5.89 5.61
10% 8.50 8.20 7.20 6.90 6.70 6.50 6.20 5.90
John Darer settlement planner

Structured Settlement Numbers

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