How To Figure Our Your After Tax Interest Rate On Tax Deductible Debt

How can I figure out my "after tax" interest rate on tax deductible debt?

There's actually a handy-dandy little formula that lets you do that. The formula is this: it's 1 minus your tax bracket, times the interest rate. So a little illustration here. Let's say you have a 6% mortgage, and let's say you're in the 25% tax bracket. You would take 1 minus .25, which is your tax bracket, that gives you .75. You multiply that times 6%, the interest rate, and your after-tax interest rate is actually 4.5%.