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Calculate the Inflation-Adjusted, After-Tax Future Value of a Single Deposit

Future Value of Investment

This calculator will help you to determine the after-tax future value of a lump-sum investment in today's dollars. Enter the amount invested, your anticipated investment APR, the anticipated rate of inflation along with the rate the investment will be taxed at to see how much money you'll have saved in the future along with what that money would be worth in today's dollars. If you do not want to account for taxes or inflation you can set those inputs to zero.

The results will show how various compounding frequencies on the investment impact the overall returns, along with the returns after taxes are paid & inflation is taken into account.

The above tabs allow you to switch between the calculator and current market rates available on high yield savings accounts & CDs of various durations including 1, 3, 6 & 9 months along with 1, 2, 3 and 5 year terms.

Description Amount
Deposit amount:
Annual interest rate (APR %):
Years:
Inflation Rate:
Tax Rate:

Continuous Compounding

Future savings:
Interest earned:
APY:
Taxes Paid:
Interest Earned After Tax:
Savings After Tax:
Real Savings After Inflation:

Daily Compounding

Future savings:
Interest earned:
APY:
Taxes Paid:
Interest Earned After Tax:
Savings After Tax:
Real Savings After Inflation:

Weekly Compounding

Future savings:
Interest earned:
APY:
Taxes Paid:
Interest Earned After Tax:
Savings After Tax:
Real Savings After Inflation:

Biweekly Compounding

Future savings:
Interest earned:
APY:
Taxes Paid:
Interest Earned After Tax:
Savings After Tax:
Real Savings After Inflation:

Semimonthly Compounding

Future savings:
Interest earned:
APY:
Taxes Paid:
Interest Earned After Tax:
Savings After Tax:
Real Savings After Inflation:

Monthly Compounding

Future savings:
Interest earned:
APY:
Taxes Paid:
Interest Earned After Tax:
Savings After Tax:
Real Savings After Inflation:

Bimonthly Compounding

Future savings:
Interest earned:
APY:
Taxes Paid:
Interest Earned After Tax:
Savings After Tax:
Real Savings After Inflation:

Quarterly Compounding

Future savings:
Interest earned:
APY:
Taxes Paid:
Interest Earned After Tax:
Savings After Tax:
Real Savings After Inflation:

Semiannual Compounding

Future savings:
Interest earned:
APY:
Taxes Paid:
Interest Earned After Tax:
Savings After Tax:
Real Savings After Inflation:

Annual Compounding

Future savings:
Interest earned:
APY:
Taxes Paid:
Interest Earned After Tax:
Savings After Tax:
Real Savings After Inflation:

 

Future Value Formula

The basic formula for future value is as follows:

FV = PV * (1 + r)n

Formula Terms / Definitions

  • FV: future value
  • PV: present value
  • r: rate of return, expressed as a decimal rather than percent (percent divided by 100)
  • n: number of compounding periods

That formula will give you the future value of an investment in nominal terms, however it does not adjust the results for inflation or the impact of taxes.

Future Value of Investment Returns.

Future Value After Taxes

To account for taxes would start with the same formula

FV = PV * (1 + r)n

but then subtract the taxes from the gains.

FVaftertaxes = ((PV * (1 + r)n) - PV) * (1 - tr) + PV

Formula Terms / Definitions

  • FVaftertaxes: future value, after accounting for the impact of taxes
  • PV: present value
  • r: rate of return, expressed as a decimal rather than percent (percent divided by 100)
  • n: number of compounding periods
  • tr: tax rate on investment, as expressed as a deciminal rather than a percent (percent divided by 100)

It is worth noting the above presumes the investment is taxed at the end of the investment period rather than taxed throughout the period. This in turn allows some of the gains to compound before taxing. If returns were taxed each year then the formula would need to be changed to subtract tax after each compounding cycle rather than doing it at the end.

Long term capital gains are typically taxed at a signficantly lower rate than short term capital gains. Short term gains are typically taxed similarly to ordinary income.

2018 United States Income Tax Rates

Rate For Unmarried Individuals, Taxable Income Over For Married Individuals Filing Joint Returns, Taxable Income Over For Heads of Households, Taxable Income Over
10% $0 $0 $0
12% $9,525 $19,050 $13,600
22% $38,700 $77,400 $51,800
24% $82,500 $165,000 $82,500
32% $157,500 $315,000 $157,500
35% $200,000 $400,000 $200,000
37% $500,000 $600,000 $500,000

Standard Deduction

Filing Status Deduction Amount
Single $12,000
Married Filing Jointly $24,000
Head of Household $18,000

Interest on a normal savings account is taxed annually. Banks typically issue a 1099-INT in the first month of the following calendar year.

Ordinary annuity returns are taxed when the money is withdrawn. If an annuity is purchased using pre-tax money then the entire balance is taxable, with taxes applying to each traunch that is withdrawn. If the purchase was made using after-tax funds then only the earnings are taxable, and the principal portion of each payment is not taxed. If a deferred annuity is cashed out via a lump sum then income tax will be due on all earnings above the original investment amount.

2018 Capital Gains Taxes

Short-term capital gains - which are typically assessed on investments held under 1 year - are taxed as ordinary income.

Long-Term Capital Gains Rate Single Taxpayers Married Filing Jointly Head of Household Married Filing Separately
0% Up to $38,600 Up to $77,200 Up to $51,700 Up to $38,600
15% $38,600-$425,800 $77,200-$479,000 $51,700-$452,400 $38,600-$239,500
20% Over $425,800 Over $479,000 Over $452,400 Over $239,500

Both short-term and long-term capital gains are also assessed an additional 3.8% net investment income tax for high earners. The 3.8% assessment was part of the Affordable Care Act, which has yet to be repealed.

Future Value After Taxes & Inflation

Nominal dollars are not the same thing as actual spending power. Our debt-based fractional reserve monetary system is inherently inflationary, which means the value of currency generally declines over time.

To account for the decline in purchasing power we must subtract the compounded impacts of inflation from the final total.

FVafterttaxandinflation = (((PV * (1 + r)n) - PV) * (1 - tr) + PV) * (1 - ir)n

Formula Terms / Definitions

  • FVafterttaxandinflation: future value, after subtracting tax payments & then accounting for the impacts of inflation
  • PV: present value
  • r: rate of return, expressed as a decimal rather than percent (percent divided by 100)
  • n: number of compounding periods
  • tr: tax rate on investment, as expressed as a deciminal rather than a percent (percent divided by 100)
  • ir: rate of inflation, as expressed as a deciminal rather than a percent (percent divided by 100)

Continuous Compounding Interest Formula

The above calculations are quite easy to do for interest or returns which compound annually. For investments which compound many times per year you have to divide the rate of return by the number of times the investment compounds each year & then multiply the annual periods by the number of times the investment compounds per year.

For continuously compounding interest the mathematical constant e is used.

FV = PV * er n

Formula Terms / Definitions

  • FV: future value
  • PV: present value
  • e: mathematical constant e, also known as Euler's number, which is approximately equal to 2.71828
  • r: rate of return, expressed as a decimal rather than percent (percent divided by 100)
  • n: number of compounding periods