Agree with the overall theme - discount bond is better after tax, however the math is a little more complicated than your breakdown. The yield to maturity (1.82%) assumes reinvestment of the coupon interest (1.1%) on each payment date at 1.82% until 2031 which you are unlikely to earn. Most significantly there is the tax leakage leaving only 5.11 to reinvest, rather than $11 assumed. So, part of the expected 1.82% total return is not likely to be realized.James, please correct me if my understanding is wrong.
In your scenario, my marginal tax rate would be applicable on 1.10% and the balance of 0.72% would be treated as a taxable gain.
$11 interest: after tax $5.11 (53.53% tax rate)
$7.20 capital gain: after tax 5.27 (26.76% tax rate)
$10.38 total after tax (1.038%)
In addition, as noted, a small part of the total return (1.82%) is this interest earned from reinvestment of the coupon interest. Therefore the capital gain is not just the difference between the two percentages.
Easier to calculate the expected capital gain by use of the clean price you will pay for the bond. If you hold to maturity your gain is the difference between this price and par.
Also, worth noting if you buy the bond between payments you will pay accrued interest. This is “interest paid” and should be used to reduce interest earned on your taxes in the first year.