After-Tax Yield Calculator

A 5% pre-tax savings yield at a 40% marginal rate is a 3% after-tax yield. On 10,000 that means 300 kept versus 500 of headline income. Comparing taxable bonds, tax-free wrappers and dividend-paying assets requires comparing them on after-tax yield, not the headline number.

What the result means

After-tax yield is what you actually grow assets by. Use it to compare a taxable account against a sheltered wrapper at the same headline yield, or to compare two products at different headline yields and tax treatments.

The same math gives the equivalent taxable yield needed to match a tax-free product: divide the tax-free yield by (1 − tax rate).

Quick example

With pre-tax yield of 5% and marginal tax rate of 40% (plus investment amount of 10,000), the result is 3.00%.

Which inputs matter most

You enter Pre-Tax Yield, Marginal Tax Rate, and Investment Amount.

What's happening under the hood

After-tax yield is the pre-tax yield multiplied by one minus the marginal rate. Cash income is principal times pre-tax yield; cash kept is principal times after-tax yield; tax paid is the difference.

What the headline number hides

Gross pay, net pay, and what actually lands in your account can differ by thousands depending on tax code, benefits, pension contributions, and student loan deductions. This tool isolates one piece of that picture — a dedicated take-home calculator shows the full view.

Putting yields on the same footing

Comparing yields across differently taxed instruments requires putting them on the same footing. The calculator applies the marginal rate to the whole yield, so at the defaults 5% at a 40% marginal rate becomes 3%. On 10,000 that is the difference between 500 and 300 a year.

Two simplifications worth knowing

Two simplifications are worth knowing. Applying a single marginal rate assumes the income sits entirely in one band, whereas a large enough amount can push part of it into the next, making the effective rate higher than the one entered. The tool also treats all yield as taxed identically, while many jurisdictions tax interest, dividends, and capital gains at different rates, and holdings inside a tax-advantaged wrapper may not be taxed at all. Entering the rate that applies to that specific income gives a comparable figure.