Small business calculator
After-tax Cost of Debt Calculator
Estimate the after-tax cost of debt: start with a pre-tax cost of debt and a marginal corporate tax rate. If you don’t know the tax rate, you can derive it from net income and pre-tax income.
Inputs
After-tax cost of debt = cost of debt × (1 − tax rate). If tax rate is blank, we compute it as \(1 - \text{net income}/\text{pre-tax income}\) when possible.
Results
If you fill both incomes, we’ll compute the implied tax rate and use it in the after-tax calculation.
Example
If cost of debt is 7% and tax rate is 21%, after-tax cost of debt is \(7% × (1 − 0.21) = 5.53%\).
How it works
After-tax cost of debt = cost of debt × (1 − tax rate). When tax rate is not provided, implied tax rate = 1 − net income ÷ pre-tax income (when pre-tax income is greater than zero).
Related tools
See Finance calculators for related ratios (dedicated cost-of-capital and WACC tools may be added later), or back to the Small Business calculator list.