Taxable vs. Tax Advantaged Investments
- Savings & Investments
- Calculator
How taxes are applied to an investment can make an incredible difference. This calculator is designed to help compare a normal taxable investment to two common tax-advantaged situations: An investment where taxes are deferred until withdrawals are made, and an investment where taxes are paid on money that goes into the account, but all withdrawals are tax free.
Financial Calculators from
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Investment contributions and withdrawals: |
Investment taxes: |
KJE1 After-Tax Withdrawal |
Annual Balance of Accounts |
Definitions
Annual rate of return
This is the annual rate of return you expect from your investments after taxes. The actual rate of return is largely dependent on the types of investments you select. The Standard & Poor's 500® (S&P 500®) for the 10 years ending December 31st 2024, had an annual compounded rate of return of 14.9%, including reinvestment of dividends. From January 1, 1970 to December 31st 2024, the average annual compounded rate of return for the S&P 500®, including reinvestment of dividends, was approximately 11.2% (source: www.spglobal.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a financial institution pay less but carry significantly lower risk of loss of principal balances.
It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that investment funds and/or investment companies may charge.
Years to contribute
Number of years you plan on making contributions.
Years of withdraws
Number of years you plan on taking distributions. Enter '1' for a lump sum distribution. All distributions are assumed to happen at the beginning of the period.
Existing balance
Any existing balance for the accounts.
New contributions
Your periodic contribution. All contributions are assumed to happen at the beginning of the period.
Contribution frequency
The frequency of your contributions. The options are Monthly, Quarterly, or Annually. All contributions are assumed to be made at the beginning of the period.
Withdrawal frequency
The frequency of your distributions. The options are Monthly, Quarterly or Annually. All distributions are assumed to be taken at the end of the period.
Tax during contributions / withdrawals*
Your estimated marginal tax rate. Use the ‘Filing Status and Federal Income Tax Rates on Taxable Income’ table to assist you in estimating your federal tax rate.
| Tax Rate | Married Filing Jointly or Qualified Widow(er) | Single | Head of Household | Married Filing Separately |
|---|---|---|---|---|
| 10% | $0 - $23,850 | $0 - $11,925 | $0 - $17,000 | $0 - $11,925 |
| 12% | $23,850 - $96,950 | $11,925 - $48,475 | $17,000 - $64,850 | $11,925 - $48,475 |
| 22% | $96,950 - $206,700 | $48,475 - $103,350 | $64,850 - $103,350 | $48,475 - $103,350 |
| 24% | $206,700 - $394,600 | $103,350 - $197,300 | $103,350 - $197,300 | $103,350 - $197,300 |
| 32% | $394,600 - $501,050 | $197,300 - $250,525 | $197,300 - $250,500 | $197,300 - $250,525 |
| 35% | $501,050 - $751,600 | $250,525 - $626,350 | $250,500 - $626,350 | $250,525 - $375,800 |
| 37% | Over $751,600 | Over $626,350 | Over $626,350 | Over $375,800 |
| *Caution: Do not use these tax rate schedules to figure 2024 taxes. Use only to figure 2025 estimates. Source: Rev. Proc. 2024-40 | ||||
Increase tax-deferred contribution by tax deduction savings
If you check this box the calculator will assume contributions to the tax-deferred investment are tax-deductible when they are made. The calculator will then increase the contribution amount for the tax-deferred investment by the amount required to make the net contribution equal to the investments that have contributions made on an after-tax basis.
Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues. The S&P 500 is an unmanaged index of 500 widely held stocks. It is not possible to invest directly in an index. The performance mentioned does not include fees and charges which would reduce an investor returns. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, or state or local taxes. Profits and losses on federally tax-exempt bonds may be subject to capital gains tax treatment. Fixed income risks include, but are not limited to, changes in interest rates, liquidity, credit quality, volatility, and duration.
Calculators are provided by an independent third party and are being made available to you as self-help tools for your independent use and are not intended to provide investment advice or be representative of actual results. We do not guarantee their applicability or accuracy in regards to your individual circumstances. The determinations made by these calculators should not be construed as guarantees or projections. Moreover, the reasonableness of certain information may change over time because of changes in tax law, investment trends and your personal circumstances. The information contained here is based on current law and has been obtained from sources believed to be reliable, but we do not guarantee its accuracy. Investment results can vary considerably depending on the type of securities involved, general market conditions and other factors. It is important that you periodically review and update your plans. Raymond James does not provide tax or legal advice. You should contact your tax or legal advisor concerning your particular situation. All investments carry a degree of risk, and past performance is not a guarantee of future results. Asset allocation and diversification do not guarantee a profit nor protect against loss.
