Compare taxable vs. tax-free investment return

Many investments are taxed differently. For example with bonds, some may be taxed federally only, some may be taxed at the state level only, and some may be taxed both at the state and federal level. Use this calculator to help make an apple-to-apple comparison of varying investment returns.

Rates and Assumptions

Before-tax return on savings ?

The annual return your investment earns before any taxes are taken out.

Table of Historic Rates of Return. Inflation 2.9%, U.S. Treasury Bills 3.3%, Long-term Government Bonds 5.0%, U.S. Large-Company Stocks 10.4%, and U.S. Small-Company Stocks 11.8%. Past performance is no guarantee of future results. Source: Ibbotson SBBI 1926-2024

Federal marginal tax bracket ?

Your marginal federal income tax rate — the rate applied to your next dollar of taxable income.

Table of Federal Income Brackets and Rates. Tax Rate For Single Filers For Married Individuals Filing Joint Returns For Heads of Households 10% $0 to $11,925 $0 to $23,850 $0 to $17,000 12% $11,925 to $48,475 $23,850 to $96,950 $17,000 to $64,850 22% $48,475 to $103,350 $96,950 to $206,700 $64,850 to $103,350 24% $103,350 to $197,300 $206,700 to $394,600 $103,350 to $197,300 32% $197,300 to $250,525 $394,600 to $501,050 $197,300 to $250,500 35% $250,525 to $626,350 $501,050 to $751,600 $250,500 to $626,350 37% $626,350 or more $751,600 or more $626,350 or more.

State marginal income tax bracket ?

Your marginal state income tax rate, if any. Leave at 0% if your state has no income tax or the investment is exempt from state tax.

Advanced options 1

Do you itemized deductions? ?

No Yes

Itemizers may deduct some state taxes paid on their federal return, which softens the federal tax drag on your return.

Enter your values and select Calculate.

The after-tax return figure above is what your investment actually earns once federal and, if applicable, state income tax are subtracted. There is no single 'good' number here — it depends entirely on the tax rates you entered and the type of investment you're comparing it against, whether that's a taxable bond, a Treasury, or a municipal bond.

Your federal and state tax brackets do the most to move this result, since a higher bracket takes a larger bite out of the same before-tax return. Whether you itemize deductions also matters at the margin: itemizers get a small offset because some state tax paid is deductible on the federal return.

This calculator doesn't account for things like capital gains treatment, the Alternative Minimum Tax, deduction limits, or the timing of when gains are realized versus taxed on paper. It also assumes your tax brackets stay constant, which real tax situations rarely do year to year.

It's worth rerunning this after a raise, a move to a new state, or a change in tax law, and worth bringing the result to a tax advisor before making a decision between taxable and tax-exempt investments. Just having a clear-eyed comparison of after-tax outcomes puts you ahead of most people who never run the numbers at all.

This information may help you analyze your financial needs. It is based on information and assumptions provided by you regarding your goals, expectations and financial situation. The calculations do not infer that the company assumes any fiduciary duties. The calculations provided should not be construed as financial, legal or tax advice. In addition, such information should not be relied upon as the only source of information. This information is supplied from sources we believe to be reliable but we cannot guarantee its accuracy. Hypothetical illustrations may provide historical or current performance information. Past performance does not guarantee nor indicate future results.