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A 5% yield leaves 3% after a 40% tax rate. With 3% inflation, that just preserves your buying power. Enter your info to see where you land.
I file as in with of , and I'm comparing at an assumed inflation rate of .
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The calculator uses 2026 federal brackets and state rate estimates. Edit any rate to match your situation.
ANNUAL INFLATION
Tax cuts what you keep. Inflation sets what your money buys.
Taxable bond interest is generally ordinary income, even when reinvested. At a 40% combined rate, a 5% yield leaves 3% after tax.
The net investment income tax can apply when modified adjusted gross income exceeds $200,000 for single or head-of-household filers, or $250,000 for joint filers. Tax-exempt municipal interest is excluded.
$100 growing to $103 buys no more if prices also rise 3%. A positive result in the grid means the after-tax balance grows faster than prices.
These are the tax treatments used in the calculator.
| Bond | How it's taxed |
|---|---|
| Corporate and other taxable bonds | Federal income tax, plus state income tax and the 3.8% surtax where applicable. |
| Treasury bonds | Subject to federal income tax and the surtax where applicable. Exempt from state and local income tax. |
| In-state municipal bonds | Assumed exempt from federal income tax, the surtax, and your state's income tax. State exemptions depend on the bond. |
| Out-of-state municipal bonds | Assumed exempt from federal income tax and the surtax. The selected state rate applies, though some bonds qualify for an exemption. |
Taxable interest is taxed every year. Municipal interest may not be taxed at all. A tax-deferred fund pays tax on what it distributes and waits on the rest until you sell. Enter one yield and see what the other two must pay to finish in the same place.
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I'm starting with yielding , and the municipal bond is .
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How the match works. Each equivalent yield is the one that leaves the same after-tax dollars on $10,000 at the end of the holding period. Taxable and municipal interest are taxed as they are earned and reinvested, so the yield that matches does not depend on how long you hold. The tax-deferred fund's does: the longer the holding period, the more of its return compounds before any tax is paid.
Tax rates come from Bond income, where you set your income, filing status, and state. You can adjust the rate on interest and distributions here without changing it there — though editing a rate in Bond income will replace it, unless you tick "Override with my own rate" to lock yours in.
Same money, three tax schedules.
At a 40% rate, a 5% yield compounds at 3% after tax. That after-tax rate is what the other two must match.
A lower yield can do the same work. The higher your tax rate, the wider the gap between the two yields.
Only the distributed share is taxed each year. The rest compounds untaxed until you sell, when it is taxed at the gains rate. The less that is distributed and the longer you hold, the lower the yield needed to match.
Compare two investments with the same pre-tax return. One pays annual distributions that are taxed and reinvested. The other defers tax until sale. See the gap after both are sold.
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Set the share of the comparison portfolio's return paid out each year. The fully deferred portfolio makes no distributions.
Future dollars, before adjusting for inflation.
How this comparison works. Both investments start with $100,000 and earn a constant annual return. Distributions are taxed, then reinvested; those reinvestments increase cost basis. Remaining unrealized gains are taxed at the capital gains rate when sold. The difference reflects tax timing and any difference between the two tax rates.
Turn on real terms to show today's purchasing power using a constant annual inflation rate. Each year's after-tax balance and tax payments are adjusted for inflation from that year back to today. The pre-tax return input stays nominal. This illustration excludes fees and market fluctuations. Include state taxes and any applicable 3.8% surtax in the rates you enter. Actual tax treatment depends on the investment and may change. This comparison applies to taxable accounts.
A box spread is an options trade that acts like a loan: you collect cash today and repay a fixed, larger amount at expiration. The implied rate usually sits near Treasury yields — well below most mortgages. Compare the after-tax cost here, then read the catch.
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Pick a term to load its indicative market yield, then adjust either. Yields are annualized rates; the dollar cost covers the term you choose.
How this comparison works. The box spread yield is an annualized financing rate: borrowing the amount shown for the term shown costs amount × yield × (term in years). A short SPX box spread is a Section 1256 contract, so its financing cost is a capital loss — 60% long-term, 40% short-term. The long-term share is valued at the tax rate on gains at sale (shared with the other pages); the short-term share at the combined ordinary rate from Bond income. Mortgage interest, if you itemize, is deducted at the ordinary rate. This illustration ignores bid/ask spreads on the options, margin requirements, and fees.
Indicative yields are snapshots of recent market quotes and move constantly; check live quotes before trading. For illustration, not tax, legal or investment advice. Confirm the tax treatment of your trades with your tax adviser.
A box spread is a fixed-rate loan with an expiration date — not a 30-year commitment.
When the options expire you repay the full amount. To keep the loan going you open a new box spread — a roll. There is no autopilot; miss the expiration and the position settles in cash.
Today's 4% box can become next year's 6% box. Unlike a fixed mortgage, you lock the rate only for the term you bought. If rates rise, your borrowing cost rises with each roll.
A box is four option legs. Each roll crosses the bid/ask spread four times, which quietly raises your true financing rate above the quoted mid-price yield — more so on short terms you roll often.
Your broker must approve the strategy and extend margin; requirements can change. Use European-style index options (like SPX), which can't be assigned early, and close or roll before expiration to avoid settlement surprises.
A 5% coupon and a 5% gain you sell yourself are the same return — but the tax bill is not. Coupons are taxed in full at ordinary rates every year. When you sell shares instead, only the gain slice of each sale is taxed, at the lower capital-gains rate. See what that difference is worth and what it compounds to.
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The return, horizon, and gains tax rate are shared with the Equivalent yield and Tax deferral pages — change them here and they follow you there.
How the math works. The year-one examples compare a coupon taxed as ordinary income with a sale taxed only on its gain, using the gains rate. The multi-year chart gives both paths the same annual after-tax cash target: the initial coupon's after-tax payout, or the custom amount you enter. The distributing path reinvests any after-tax coupon above that target and sells principal to cover a shortfall. The deferred path sells only enough to meet the target, tracking cost basis pro-rata. If either path runs out of money, it cannot provide the full cash target in later years.
One year, same pre-tax return. The only difference is how the cash reaches you.
Both paths target the same annual after-tax cash. Balances and any shortfalls are shown below.
The return is identical. The tax code treats the two doors very differently.
Interest and non-qualified dividends are taxed in full at ordinary rates the year they're paid — there's no basis to recover, because nothing was sold. At a 37% combined rate, $5 of coupon leaves $3.15.
Cost basis spreads across your whole holding. Sell $5 of a $105 position and only 1/21 of the sale — the gain slice — is taxable. The other 20/21 is return of principal, tax-free.
That small gain slice is a long-term capital gain (held over a year), taxed well below ordinary rates. $5 × 1/21 × 20% is about five cents — versus $1.85 on the coupon.
To net the same $3.15 after tax you only need to sell about $3.18. The other $1.82 stays invested and compounds for decades — which is where the real money is.
A Roth is taxed today and never again. A Traditional is deducted today and taxed when you withdraw. The question is your tax rate now versus in retirement — so enter your expected retirement income and this tool estimates that rate from current law. Adjust it freely.
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Your current contribution deduction rate uses federal and state income tax, excluding NIIT and payroll taxes. You can set a custom rate here. The retirement rate is estimated from your expected income below and stays adjustable.
How the math works. Both sides start with the same pre-tax dollars each year. Roth: you pay tax now at today's marginal rate, contribute the rest, and it grows tax-free. Traditional: you contribute the full pre-tax amount and deduct it; at retirement the balance is taxed once at your retirement rate. Below the contribution limit both choices cost the same out of pocket, so at equal tax rates they tie exactly. When you max out, Traditional costs less out of pocket, so each year's tax savings are invested in a taxable account (gains taxed at the shared gains rate at the end). End-of-year contributions, same return both sides. When maxing out, both contribute the $24,500 limit — Roth's limit is after-tax dollars, so it shelters more.
Same dollars in. The only question is when the tax is taken.
A $10,000 pre-tax contribution at a 32% marginal rate becomes a $6,800 Roth contribution. From there it grows and is withdrawn tax-free — the rate in retirement never matters.
The full $10,000 goes in and grows. At withdrawal you pay your retirement marginal rate on the whole balance. Below the contribution limit both choices cost you the same out of pocket — the deduction is what makes the $10,000 pre-tax contribution affordable — so at equal tax rates the two tie exactly.
Enter what you expect to live on in retirement and the calculator applies 2026 federal brackets (minus the standard deduction) plus your state's schedule to estimate your marginal rate. It's a starting point — drag the rate slider where you think reality lands.
Contribution limits are nominal dollars. $24,500 of Roth is $24,500 after tax; $24,500 of Traditional cost you only about $16,700 after the deduction. When you max out, Roth simply shelters more wealth per year of limit.
Latest available U.S. Treasury par yields, retrieved automatically — shown as nominal yield, real yield, and after-tax real yield at your tax rates.
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Tax rates come from the Bond income page. Treasury interest is exempt from state tax, so only your federal rate applies.
Long-term gains get a 0% federal rate up to a taxable-income threshold. Find your remaining 0% room before you sell.
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Copied links include these inputs and tax assumptions. Anyone with the link can read them.
Starts from your tax profile — gross income minus the standard deduction. Adjust it freely; the harvest stacks on top.
Treasury interest skips state tax. Eligible portions of fund distributions may also qualify when state requirements are met. See which parking spot keeps the most after tax.
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Copied links include these inputs and tax assumptions. Anyone with the link can read them.
Enter the yields you're actually offered. Tax rates come from your shared tax profile.
State income tax is the one tax bill you can vote on with your feet. Compare what you'd pay at home against any other state — at your income and filing status — and see what the move is really worth.
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Income and filing status are shared across all calculators — change them in your tax profile above. Your current state follows your tax profile until you pick one yourself.
Every mainstream, legal way to keep more of what you earn — each explained in plain English, with links to the best guides. Start with the ones that fit your life.
Educational only — not tax advice. Tax law is personal and it changes; check with your tax pro before acting on anything here.
These are educational summaries, not tax, legal, or investment advice. Tax law changes — confirm current limits and eligibility with your tax adviser before acting. External links open in a new tab.
Enter your salary and see your tax rate — the marginal rate on your next dollar and the effective rate on every dollar, federal plus state plus payroll. Then open the full 2026 tax tables to see every bracket at every income.
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Filing status, state, and income are shared across all calculators — the salary slider below edits the same income shown in your tax profile above.
| Taxable income | Marginal rate |
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| Taxable income | Marginal rate |
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