Estimate the effect of paying tax on interest as it accrues, so only the after-tax interest compounds.
27% is an example (22% federal + 5% state), not a statutory rate. Interest is ordinary income; banks generally do not withhold it. Use your own marginal rate. IRA/401(k) accounts can defer tax.
This version estimates what happens when tax is paid on interest as it accrues. Only the after-tax interest remains in the account, so the compounding base is smaller.
US banks generally do not withhold interest tax, so this is a planning scenario rather than a description of a standard account. It is useful for comparing tax-deferred and taxable savings.
Use your combined federal and state marginal rate. The default 27% is an example, not a legal rate.
After-tax interest each period = interest × (1 − rate)Not usually. Interest is generally taxed annually, and banks do not withhold it. This calculator shows the economic effect of paying tax as interest accrues.
This page removes tax from each interest payment, so less money compounds. The at-maturity page taxes the accumulated interest once.
Your combined federal and state marginal rate. Add your state rate to your federal bracket. The 27% default is only an example.
No. Those accounts are tax-deferred or tax-free at withdrawal depending on the type, so the timing and rate differ.
2026-10-19