Finance Tools
Effective Tax Rate on Investments Calculator
Estimate your effective tax rate on investment income by combining taxes from dividends and capital gains, and see after-tax investment income.
Effective Tax Rate on Investments Calculator
Estimate your effective (blended) tax rate on investment income by combining taxes on dividends and capital gains. This helps you understand your overall tax burden and after-tax investment income.
Results
Total Investment Income: $4,000
Total Tax: $750
After-Tax Investment Income: $3,250
Effective Tax Rate (blended): 18.75%
Breakdown: dividend tax $150, capital gains tax $600. This is an estimate for planning.
How to use
- Enter dividend income and a dividend tax rate.
- Enter capital gains amount and a capital gains tax rate.
- Review total tax and your blended effective tax rate.
- Adjust rates to compare scenarios (qualified vs ordinary, short vs long term).
FAQ
What is an effective tax rate on investments?
It’s the total tax you pay divided by your total investment income for a period. If you have multiple income types (dividends and gains), it becomes a blended rate.
Should I include unrealized gains?
Typically no. Taxes are usually triggered on realized gains. Use realized amounts to estimate your effective rate more accurately.
Does this include account-level tax benefits?
Not automatically. If you’re using a tax-advantaged account, your effective tax rate may differ. Use rates that reflect your account type and situation.
How to use this effective tax rate on investments calculator
- Enter your dividend income amount.
- Enter your dividend tax rate (%).
- Enter your capital gains amount.
- Enter your capital gains tax rate (%).
- Review total tax, total investment income, and effective (blended) tax rate.
Example
If dividends are $1,000 taxed at 15% and capital gains are $3,000 taxed at 20%, total tax is $750 and effective tax rate is 18.75% on $4,000 of investment income.
- Dividend tax = $1,000 × 0.15 = $150
- Capital gains tax = $3,000 × 0.20 = $600
- Total investment income = $1,000 + $3,000 = $4,000
- Total tax = $150 + $600 = $750
- Effective tax rate = $750 ÷ $4,000 = 18.75%
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