See how much more wealth you build by using tax-advantaged accounts like 401(k), Traditional IRA, and Roth IRA versus a regular taxable brokerage account.
Enter your initial investment, annual contribution, expected return rate, and tax rates in the fields above. The calculator models growth in three account types simultaneously: a standard taxable brokerage account, a Traditional IRA or 401(k), and a Roth IRA. Click "Calculate" to see the after-tax value of each account at the end of your chosen investment period.
The year-by-year breakdown tables show exactly how each account grows annually. Switch between tabs to compare the details of each account type.
The difference between investing in a taxable account versus a tax-advantaged account can be enormous over a long horizon. Consider two investors who each contribute $6,000 per year with a 7% annual return over 30 years. The investor using a taxable brokerage account might pay taxes on dividends every year and capital gains when selling — easily losing 15–30% of their potential wealth to taxes. The investor maxing out a Roth IRA pays no taxes on growth or withdrawals at all.
For someone in the 24% tax bracket earning 2% dividends on $500,000, that's $2,400 in annual taxes that never compounds. Over 30 years, that drag compounds into a six-figure difference. This calculator makes that invisible cost visible.
Financial advisors, young professionals building their first portfolios, and anyone considering whether to invest extra money in a taxable account versus a backdoor Roth all benefit from this analysis. Even a 5–10 year comparison reveals tens of thousands of dollars in differences — enough to change your strategy entirely.
Taxable Account: Each year, dividends are taxed at the ordinary income rate, reducing the amount that compounds. At the end of the period, capital gains tax is applied to the profit above cost basis.
After-tax final value = Final Balance − (Capital Gains Tax Rate × (Final Balance − Cost Basis))
Traditional IRA / 401(k): Contributions are pre-tax (reducing taxable income today). All growth is tax-deferred. At withdrawal, the entire balance is taxed as ordinary income at your expected retirement tax rate.
After-tax value = Total Balance × (1 − Withdrawal Tax Rate)
Roth IRA: Contributions are post-tax (no upfront deduction). All growth and qualified withdrawals are completely tax-free.
After-tax value = Total Balance (no tax applied)
The taxable account's effective annual return is reduced by the drag of dividend taxes each year, creating a compounding disadvantage versus the tax-deferred and tax-free accounts.
In a taxable brokerage account, you pay taxes on dividends each year and capital gains when you sell investments. In a tax-advantaged account (401k, IRA, Roth IRA), growth is either tax-deferred or tax-free, dramatically improving long-term compounding.
Not always. If your current tax rate is significantly higher than your expected retirement tax rate, the Traditional IRA wins because the upfront deduction saves more taxes than you'll pay later. If you expect to be in a similar or higher bracket in retirement, the Roth IRA usually wins. This calculator helps you see the exact difference for your specific situation.
This calculator does not enforce IRS contribution limits (e.g., $7,000/year for IRA in 2024). It models the mathematical growth of whatever contribution amount you enter. Always check current IRS limits when planning actual contributions.
Most investors should use this tool to compare the marginal dollar — i.e., where should your next $1,000 go? The answer is almost always to fill tax-advantaged accounts first (especially any 401k with an employer match), then taxable accounts with whatever remains.