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Boston - To help U.S. individual taxpayers and their advisors understand the taxes that apply to their investment income and gains so they can make better portfolio decisions, we have updated the Eaton Vance Parametric Investment Tax Calculator with enhanced features and functionality for 2021.

How does the Investment Tax Calculator work?

Based on user inputs of annual taxable income, tax filing status and place of residence, the calculator determines the total tax rate — including federal, state and local income — that applies to an incremental dollar of an investor's in-state and out-of-state municipal bond interest income, U.S. Treasury interest income, other taxable interest income, qualified and non-qualified dividend income, net realized long-term and short-term capital gains, and qualified retirement plan withdrawals.

The Eaton Vance Parametric Investment Tax Calculator provides comprehensive coverage of the federal, state, city, county and other local income taxes applicable to the investment income and gains of resident individual taxpayers across the 50 states and the District of Columbia.

With a series of tools in the Investment Tax Calculator that take individual tax circumstances into account, taxpaying investors and their advisors are able to:

  • Compare the after-tax yields of in-state municipal bonds versus out-of-state municipal bonds, U.S. Treasurys and fully taxable income investments
  • Evaluate the tax consequences of selling concentrated stock positions versus diversifying on a tax-deferred basis
  • Analyze the impact of changes in interest rates on the returns of laddered bond investments and the potential tax alpha1 from harvesting capital losses2 in a rising interest rate environment for a laddered municipal bond portfolio

What changed for 2021?

The latest update reflects available adjustments to federal, state and local income tax rates and income brackets for 2021, as well as changes in the treatment of taxable income and gains taking effect this year. The 2021 Investment Tax Calculator also enables investors to evaluate the potential impact on their taxes of the increases in federal income tax rates proposed by President Biden during the 2020 campaign.

Bottom line: We think the Eaton Vance Parametric Investment Tax Calculator can be a valuable resource for advisors and their clients. By making these tools available, we hope to promote a deeper understanding of how taxes may affect their individual investment returns. With potentially significant changes in investment taxes on the horizon, we believe this is an especially important time for investors to assess their personal tax situations.

  1. Tax alpha can be generated through tax management, which entails applying knowledge about the tax code in a comprehensive and disciplined manner to seek to minimize the effect of taxes on returns.
  2. Tax loss harvesting is a strategy for managing taxes in an investment portfolio. Selling a security that's trading at a loss creates a realized tax loss, which can be used to offset a capital gain realized in the same year.

tax forward

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Investment Tax Calculator at eatonvance.com/mytaxrate

Tax-Equivalent Yield Calculator at eatonvance.com/yield

Concentrated Stock Position Calculator at eatonvance.com/concentrated

Laddered Investing Interest Rate Scenario Calculator at eatonvance.com/ladders