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What tax rate applies to your ordinary investment income?

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Effective 1/1/23, Massachusetts will establish a 4% surcharge on income over $1,000,000.00. The effect of this potential tax is not shown.


Federal Income
Tax Rate*
%
+
State Income
Tax Rate**
%
+
Local Income
Tax Rate***
%
+
Federal NII
Tax Rate****
%
+
Itemized Deduction
Limitations
%
Total Tax Rate
%

The above Total Tax Rate is the combined income tax rate that applies to an incremental dollar of ordinary investment income you earn. Other types of investment return are taxed to you at different rates.

See the footnotes below for important disclosures and additional information.

Interest Income

  • In-State Municipals1

    %
    1 Federally tax-exempt obligations of the taxpayer’s state of residence and its political subdivisions. In most states, interest on in-state municipals is not subject to state or local income tax. For OK residents, interest on certain in-state municipals issued before July 2, 2001 is subject to state income tax, the effect of which is not shown. For IL, IA and WI residents, interest on in-state municipals is generally subject to state (and, in IA, applicable local) income tax, the effect of which is shown. Interest on certain in-state municipals of IL, IA and WI is not subject to state (or, in IA, applicable local) tax, the benefit of which is not shown. Interest on private activity bonds may be subject to tax under the federal AMT and the AMT of certain states, the effect of which is not shown.

  • Out-of-State Municipals2

    %
    2 Federally tax-exempt obligations of states (and their political subdivisions) other than the taxpayer’s state of residence. In most states, interest on out-of-state municipals is subject to state income tax and applicable local income tax. For DC and ND residents, interest on out-of-state municipals is not subject to state or local income tax, the benefit of which is shown. For MI residents, interest on out-of-state municipals is not subject to local income tax where applicable, the benefit of which is shown. For IN residents, interest on out-of-state municipals acquired before January 1, 2012 is not subject to state income tax, the benefit of which is not shown. For UT residents, interest on municipals of issuers in AK, DC, FL, IN (if acquired before January 1, 2012), NV, ND, SD, TN, TX, WA and WY is not subject to state income tax, the benefit of which is not shown. Interest on private activity bonds may be subject to tax under the federal AMT and the AMT of certain states, the effect of which is not shown. Interest on municipal obligations of issuers in Puerto Rico and U.S. territorial possessions is not subject to state or local income taxes.

  • U.S. Treasuries3

    %
    3 Interest received on U.S. Treasuries and other obligations of the U.S. government is exempt from state and local income taxes. Interest on debt issued or guaranteed by Ginnie Mae, Fannie Mae, Freddie Mac and other federal agencies not backed by the full faith and credit of the U.S. government is not exempt from state and local income taxes.

  • Other Debt Instruments4

    %
    4 Other debt instruments include corporate bonds and loans, debt issued or guaranteed by Ginnie Mae, Fannie Mae, Freddie Mac and other federal agencies not backed by the full faith and credit of the U.S. government, and the sovereign debt of other countries, among others. Interest received on other debt instruments is taxable as ordinary investment income.

Dividend Income

  • Qualified Dividends5

    %
    5 Qualified dividends are ordinary dividends that meet the federal issuer, holding period and other requirements to be taxed at the long-term capital gains tax rate. Qualified dividend income (QDI) is generally not subject to special state or local income tax treatment. ND excludes from taxable income 40% of QDI, the benefit of which is shown.

  • Non-Qualified Dividends6

    %
    6 Non-qualified dividends are dividends on stock that do not meet the requirements for treatment as qualified dividends. Non-qualified dividends are taxable as ordinary investment income.

Realized Capital Gains

  • Long-Term7

    %
    7 Long-term capital gains (LTCGs) are gains recognized on the taxable disposition of a capital asset held for more than one year. LTCGs are generally subject to federal tax at rates up to 20% (plus the NII tax that applies); higher LTCG rates apply to collectibles, section 1202 qualified small business stock and section 1250 real property, the effect of which is not shown here. In most states, LTCGs are subject to state and applicable local income tax at the same rates as apply to ordinary investment income. Certain states exclude a portion of LTCGs from taxable income: AR (50%); AZ (25%, only for assets acquired after 12/31/11); ND (40%); NM (40%); SC (44%); and WI (30%), the benefits of which are shown. HI applies a maximum rate of 7.25% on LTCGs, the effect of which is shown. For KS residents, LTCGs are not subject to local income tax where applicable, the benefit of which is shown. Net LTCGs in excess of $10 million are excluded from AR taxable income, net LTCGs of up to $5,000 annually are excluded from VT taxable income and net capital gains of up to $1,000 annually are excluded from NM taxable income, the benefits of which are not shown. LA and OK exclude from taxable income all or a portion of LTCGs realized on sales of stock of in-state companies held for multiple years and certain other states provide favorable treatment of limited categories of LTCGs, the benefits of which are not shown. For WA residents, a 7% tax applies on the sale or exchange of long-term capital assets such as stocks, bonds, business interests, or other investments and tangible assets in excess of $250,000 annually.

  • Short-Term8

    %
    8 Short-term capital gains (STCGs) are gains recognized on the taxable disposition of capital assets held for one year or less. STCGs are generally subject to federal, state and applicable local income tax at the same rates as apply to ordinary investment income. MA applies an 8.5% rate to STCGs and MT provides a non-refundable tax credit of 2% for net capital gains, the effect of which is shown. For KS residents, STCGs are not subject to local income tax where applicable, the benefit of which is shown.

Withdrawals from
Retirement Accounts

  • Roth IRA9

    %
    9 Qualified withdrawals from a Roth 401(k) or Roth IRA are not subject to federal, state or local income tax. Withdrawals of Roth account earnings within five years of account funding or before reaching age 59½ (except for qualifying purposes) are subject to federal income tax and/or a 10% federal early-withdrawal penalty (and may be subject to state and local tax), the impact of which is not shown.

  • Roth 401(k)9

    %
    9 Qualified withdrawals from a Roth 401(k) or Roth IRA are not subject to tax. Withdrawals of Roth account earnings within five years of account funding or before reaching age 59½ (except for qualifying purposes) are subject to federal income tax and/or a 10% federal early-withdrawal penalty (and may be subject to state and local tax), the impact of which is not shown.

  • Traditional IRA10

    %
    10 Qualified withdrawals from a traditional IRA plan are treated as ordinary income for federal tax purposes, and are not subject to NII tax. IL, MS, NH and PA exempt qualified IRA withdrawals from state income tax, the benefit of which is shown; other states provide limited exclusions, the benefit of which is not shown. For MI residents, qualified IRA withdrawals are not subject to local income tax where applicable, the benefit of which is shown. For this analysis, it is assumed that only pretax dollars were contributed, and the entire withdrawal is taxed. Withdrawals before age 59½ are generally subject to an additional 10% federal tax (and may be subject to additional state and local tax), the impact of which is not shown.

  • Traditional 401(k)11

    %
    11 Qualified withdrawals from a traditional 401(k) plan are treated as ordinary income for federal tax purposes, and are not subject to NII tax. IL, MS, NH and PA exempt qualified 401(k) withdrawals from state income tax, the benefit of which is shown; other states provide limited exclusions, the benefit of which is not shown. For MI residents, qualified 401(k) withdrawals are not subject to local income tax where applicable, the benefit of which is shown. For this analysis, it is assumed that only pretax dollars were contributed, and the entire withdrawal is taxed. Withdrawals before age 59½ are generally subject to an additional 10% federal tax (and may be subject to additional state and local tax), the impact of which is not shown.

Your tax rate on realized investment return and retirement account withdrawals varies
from as high as 47.8%
to as low as 0.0%.

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The output of this calculator is for educational purposes only and should not be considered investment, legal or tax advice. It is intended for use by U.S. individual taxpayers resident in the 50 states or the District of Columbia, and is not applicable to trusts, estates, corporations or persons subject to special rules under federal, state or local income tax laws. The indicated tax treatment of investment income and gains applies to positions in securities held outside qualified retirement plans and other tax-deferred or tax-exempt investment vehicles. The output is general in nature and is not intended to serve as the primary or sole basis for investment or tax-planning decisions.

For more individualized information, you should consult your tax advisor or investment professional. You bear sole responsibility for any decisions you make based on the output of this calculator. The calculator makes certain assumptions that may not apply to you. The calculator has many inherent limitations, and individual results may vary.

Indicated tax rates are those in effect as updated . Indicated rates are those that apply to an incremental dollar of additional income or gain, which may vary from your average tax rates. The displayed rates have been rounded to the nearest hundredth of a percent. The indicated Total Tax Rate may not add up to the displayed component rates due to rounding.

A Taxable income is your annual gross income for federal tax purposes, less adjustments and the federal deductions you claim (standard or itemized).

B The "Married Filing Separately" and "Qualifying Widow(er)" filing status are not given as options on this calculator, but may apply to you. Tax rates for qualifying widow(er)s are the same as indicated for “Married Filing Jointly.”

* This analysis does not consider the federal alternative minimum tax (AMT) or take into account the federal deduction for state and local taxes paid (limited to $10,000 annually) that is available if you itemize deductions.

** The calculation of state taxes assumes that your taxable income for state tax purposes equals your federal taxable income. Material variations could cause your state tax rate to be overstated or understated. This analysis ignores the AMT imposed by certain states (CA, CO, CT, IA and MN), the limited deduction for federal income taxes paid that is available in certain states (MO, MT and OR) and the limited itemized deduction for state and local income taxes paid that is available in certain states (AZ, GA, HI, MO and ND). State income tax rates indicated for AL and IA are net of the deduction for federal taxes paid that is available in those states.

*** The indicated local income tax rates are those imposed on investment income and gains by certain cities, counties and other local jurisdictions in IN, IA, KS, MD, MI, NY, OH and OR. Local income tax rates indicated for IA jurisdictions are net of the IA deduction for federal taxes paid. For OR residents living in Clackamas, Multnomah or Washington County, indicated local income tax rates include the 1.0% Metro Supportive Housing (SHS) personal income tax on taxable income of more than $125,000 for single filers and more than $200,000 for married filing jointly and head of household filers that applies to residents living in the Portland Metro District. County residents who live outside the Portland Metro District are not subject to the SHS personal income tax. Local income tax rates that do not apply to investment income or gains are not included.

**** The 3.8% Net Investment Income (NII) federal tax applies to individuals, estates and trusts with modified adjusted gross income (MAGI) above applicable threshold amounts ($200,000 for single and head of household; $250,000 for married filing jointly). NII generally includes gross income from taxable interest, dividends, annuities, royalties and rents (unless derived from a trade or business that isn’t a passive activity or trading business) and net gains on assets generating NII, net of allowable expenses. For the purposes of this calculator, your MAGI is assumed to equal your taxable income.

1 Federally tax-exempt obligations of the taxpayer’s state of residence and its political subdivisions. In most states, interest on in-state municipals is not subject to state or local income tax. For OK residents, interest on certain in-state municipals issued before July 2, 2001 is subject to state income tax, the effect of which is not shown. For IL, IA and WI residents, interest on in-state municipals is generally subject to state (and, in IA, applicable local) income tax, the effect of which is shown. Interest on certain in-state municipals of IL, IA and WI is not subject to state (or, in IA, applicable local) tax, the benefit of which is not shown. Interest on private activity bonds may be subject to tax under the federal AMT and the AMT of certain states, the effect of which is not shown.

2 Federally tax-exempt obligations of states (and their political subdivisions) other than the taxpayer’s state of residence. In most states, interest on out-of-state municipals is subject to state income tax and applicable local income tax. For DC and ND residents, interest on out-of-state municipals is not subject to state or local income tax, the benefit of which is shown. For MI residents, interest on out-of-state municipals is not subject to local income tax where applicable, the benefit of which is shown. For IN residents, interest on out-of-state municipals acquired before January 1, 2012 is not subject to state income tax, the benefit of which is not shown. For UT residents, interest on municipals of issuers in AK, DC, FL, IN (if acquired before January 1, 2012), NV, ND, SD, TN, TX, WA and WY is not subject to state income tax, the benefit of which is not shown. Interest on private activity bonds may be subject to tax under the federal AMT and the AMT of certain states, the effect of which is not shown. Interest on municipal obligations of issuers in Puerto Rico and U.S. territorial possessions is not subject to state or local income taxes.

3 Interest received on U.S. Treasuries and other obligations of the U.S. government is exempt from state and local income taxes. Interest on debt issued or guaranteed by Ginnie Mae, Fannie Mae, Freddie Mac and other federal agencies not backed by the full faith and credit of the U.S. government is not exempt from state and local income taxes.

4 Other debt instruments include corporate bonds and loans, debt issued or guaranteed by Ginnie Mae, Fannie Mae, Freddie Mac and other federal agencies not backed by the full faith and credit of the U.S. government, and the sovereign debt of other countries, among others. Interest received on other debt instruments is taxable as ordinary investment income.

5 Qualified dividends are ordinary dividends that meet the federal issuer, holding period and other requirements to be taxed at the long-term capital gains tax rate. Qualified dividend income (QDI) is generally not subject to special state or local income tax treatment. ND excludes from taxable income 40% of QDI, the benefit of which is shown.

6 Non-qualified dividends are dividends on stock that do not meet the requirements for treatment as qualified dividends. Non-qualified dividends are taxable as ordinary investment income.

7 Long-term capital gains (LTCGs) are gains recognized on the taxable disposition of a capital asset held for more than one year. LTCGs are generally subject to federal tax at rates up to 20% (plus the NII tax that applies); higher LTCG rates apply to collectibles, section 1202 qualified small business stock and section 1250 real property, the effect of which is not shown here. In most states, LTCGs are subject to state and applicable local income tax at the same rates as apply to ordinary investment income. Certain states exclude a portion of LTCGs from taxable income: AR (50%); AZ (25%, only for assets acquired after 12/31/11); ND (40%); NM (40%); SC (44%); and WI (30%), the benefits of which are shown. HI applies a maximum rate of 7.25% on LTCGs, the effect of which is shown. For KS residents, LTCGs are not subject to local income tax where applicable, the benefit of which is shown. Net LTCGs in excess of $10 million are excluded from AR taxable income, net LTCGs of up to $5,000 annually are excluded from VT taxable income and net capital gains of up to $1,000 annually are excluded from NM taxable income, the benefits of which are not shown. LA and OK exclude from taxable income all or a portion of LTCGs realized on sales of stock of in-state companies held for multiple years and certain other states provide favorable treatment of limited categories of LTCGs, the benefits of which are not shown. For WA residents, a 7% tax applies on the sale or exchange of long-term capital assets such as stocks, bonds, business interests, or other investments and tangible assets in excess of $250,000 annually.

8 Short-term capital gains (STCGs) are gains recognized on the taxable disposition of capital assets held for one year or less. STCGs are generally subject to federal, state and applicable local income tax at the same rates as apply to ordinary investment income. MA applies an 8.5% rate to STCGs and MT provides a non-refundable tax credit of 2% for net capital gains, the effect of which is shown. For KS residents, STCGs are not subject to local income tax where applicable, the benefit of which is shown.

9 Qualified withdrawals from a Roth 401(k) or Roth IRA are not subject to federal, state or local income tax. Withdrawals of Roth account earnings within five years of account funding or before reaching age 59½ (except for qualifying purposes) are subject to federal income tax and/or a 10% federal early-withdrawal penalty (and may be subject to state and local tax), the impact of which is not shown.

10 Qualified withdrawals from a traditional IRA plan are treated as ordinary income for federal tax purposes, and are not subject to NII tax. IL, MS, NH and PA exempt qualified IRA withdrawals from state income tax, the benefit of which is shown; other states provide limited exclusions, the benefit of which is not shown. For MI residents, qualified IRA withdrawals are not subject to local income tax where applicable, the benefit of which is shown. For this analysis, it is assumed that only pretax dollars were contributed, and the entire withdrawal is taxed. Withdrawals before age 59½ are generally subject to an additional 10% federal tax (and may be subject to additional state and local tax), the impact of which is not shown.

11 Qualified withdrawals from a traditional 401(k) plan are treated as ordinary income for federal tax purposes, and are not subject to NII tax. IL, MS, NH and PA exempt qualified 401(k) withdrawals from state income tax, the benefit of which is shown; other states provide limited exclusions, the benefit of which is not shown. For MI residents, qualified 401(k) withdrawals are not subject to local income tax where applicable, the benefit of which is shown. For this analysis, it is assumed that only pretax dollars were contributed, and the entire withdrawal is taxed. Withdrawals before age 59½ are generally subject to an additional 10% federal tax (and may be subject to additional state and local tax), the impact of which is not shown.