Equivalent Rates for Taxable Vs. Tax-Exempt Income (LO. 7) A tax-exempt security's rate is determined by mathematically setting its after-tax rate equal with that of a taxable security (TS). The tax paid on a taxable security is the marginal tax rate (MTR). Elki would like to invest $66,000 in tax-exempt securities. He now has the money invested in a certificate of deposit that pays 6.15% annually. What rate of interest would the tax-exempt security have to pay to resuit in a greater return on Elki's investment than the certificate of deposit? Work the problem assuming the following marginal tax rates