💌 Coupon Payment Calculator
Calculate the coupon payment you receive from a bond each period based on face value and coupon rate.
Bond Coupon Income
Bonds pay fixed coupon income regardless of price changes. The coupon rate is locked in at issuance — it never changes. This predictability makes bonds useful for income investors and retirees.
How Bond Coupon Payments Work
A bond's coupon payment = Face Value × (Coupon Rate ÷ Payments per Year). A $1,000 face value bond with a 6% coupon paying semi-annually pays $30 every 6 months ($60 per year). The coupon rate is fixed at issuance and never changes, regardless of what happens to interest rates or the bond's market price. This is why bonds are called "fixed income" securities.
Coupon Rate vs Current Yield vs Yield to Maturity
Three different "yields" that often confuse investors: Coupon Rate = Annual coupon ÷ Face value (fixed, set at issuance). Current Yield = Annual coupon ÷ Current market price (changes as price changes). Yield to Maturity (YTM) = Total return including coupon payments AND price appreciation/depreciation to face value at maturity (the most important measure). When interest rates rise, bond prices fall, so current yield and YTM rise above the coupon rate.
People Also Ask
Coupon payments never change — they are contractually fixed. What changes is the bond's market price. If rates rise after you buy a bond, your fixed coupon payments look less attractive, so the bond's price falls to compensate new buyers. If rates fall, your above-market coupon becomes more valuable, and the price rises.
For most corporate bonds: yes, coupon income is taxed as ordinary income at your marginal rate. For US Treasury bonds: federally taxable but exempt from state and local taxes. For municipal bonds: generally exempt from federal tax and often state/local tax for residents. This tax treatment makes munis especially valuable for high-income investors.
A zero-coupon bond pays no periodic coupon payments. Instead, it's issued at a deep discount to face value and matures at full face value. The return comes entirely from the price appreciation. For example, a 10-year zero-coupon Treasury (STRIPS) might be purchased for $613 and mature at $1,000 — providing a ~5% annual return with no periodic income.