Tax-Efficient Investment Planner
Illustrate potential long-term growth in different US-based account types considering simplified tax scenarios.
1. Your Investment & Tax Assumptions (USA Focus)
Assumed to be made at the start of each year.
Before any taxes.
E.g., if total return is 7% and this is 20%, then 1.4% is dividends/interest, 5.6% is capital appreciation. Assumed taxed as ordinary income in taxable accounts.
Used for Traditional Account withdrawals. If unsure, can use current rate.
Important Assumptions for this Illustration
- This tool provides hypothetical illustrations for educational purposes only and is NOT financial or tax advice.
- Tax laws are complex and can change. These calculations use simplified US federal tax assumptions. State taxes are not included.
- Investment returns and tax rates are assumed to be constant over the investment horizon.
- **Taxable Account:** Dividends/interest portion of returns are taxed annually at the ordinary income rate. All accumulated capital gains are taxed at the long-term capital gains rate upon full liquidation at the end of the horizon. No mid-term selling or tax-loss harvesting is assumed.
- **Traditional Account (e.g., 401k/IRA):** Contributions are assumed to be pre-tax (the tool doesn't model the upfront tax deduction but grows the full contributed amount tax-deferred). All withdrawals at the end are taxed at the specified retirement ordinary income rate.
- **Roth Account (e.g., Roth IRA/401k):** Contributions are made with post-tax money. Growth and qualified withdrawals are tax-free.
- Contribution limits, eligibility, and specific rules for US tax-advantaged accounts are NOT considered.