Finance Tools

Taxable vs Tax-Advantaged Investment Calculator

Compare taxable vs tax-advantaged investing by estimating taxes, after-tax returns, and how much more you may keep in a tax-advantaged account.

Taxable vs Tax-Advantaged Investment Calculator

Compare investing in a taxable account vs a tax-advantaged account by estimating after-tax returns and annual after-tax profit. Use this to understand how taxes may reduce your take-home growth in a taxable brokerage account.

Enter the amount you plan to invest (or your current portfolio value).
This is your estimated annual return before taxes (simplified).
Use a blended effective rate (dividends + realized gains + local rules).
Often lower due to deferral or exemptions (depends on account type and rules).

Results

Taxable account (after-tax):

After-Tax Return: 6.00%

Annual After-Tax Profit: $3,000

Estimated Tax Paid (annual): $1,000

Tax-advantaged account (after-tax):

After-Tax Return: 8.00%

Annual After-Tax Profit: $4,000

Estimated Tax Paid (annual): $0

Difference (tax-advantaged − taxable): $1,000

This calculator uses simplified effective annual tax rates. Real outcomes depend on contributions, withdrawals, rules, and timing of taxes.

How to use

  1. Enter your investment amount and expected pre-tax return.
  2. Enter an effective tax rate for a taxable account.
  3. Enter an effective tax rate for a tax-advantaged account.
  4. Compare after-tax returns and annual after-tax profit.

FAQ

What counts as “tax-advantaged”?

It refers to accounts where taxes are reduced, deferred, or exempt under certain rules (for example, retirement or savings accounts in many jurisdictions).

Is “effective annual tax rate” realistic?

It’s a simplified planning input. In reality, taxes can occur differently across dividends, realized gains, and withdrawals. Use this to compare scenarios, not to file taxes.

Does this model compounding over years?

Not here—this version shows a one-year estimate. If you want, we can add a multi-year compounding mode later as a separate long-tail tool.

How to use this taxable vs tax-advantaged investment calculator

  1. Enter an investment amount.
  2. Enter an expected pre-tax annual return (%).
  3. Enter an effective annual tax rate for a taxable account (%).
  4. Enter an effective annual tax rate for a tax-advantaged account (%).
  5. Review after-tax returns and the difference between the two account types.

Example

If you invest $50,000 with an 8% pre-tax return, taxable effective tax is 25% and tax-advantaged effective tax is 0%, taxable after-tax return is 6% while tax-advantaged stays near 8%.

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