💡 How much more yield could I keep after taxes with a tax efficient fund?

If you're pulling income from a taxable account, the IRS is kind of our silent partner hanging out there. Every distribution that we get gets categorized, reported, and taxed, but not all distributions are taxed the same way. By understanding the exact tax character of what you own, you can make better decisions about where you hold things and maximize your actual take-home income.

Enter your total investment and the fund's overall yield. Then, break down how the fund classifies its distributions (you can usually find this on the fund's website or your 1099 form).

Ordinary income is taxed at your highest rate, qualified dividends get a discount, and Return of Capital (ROC) defers current-year taxes entirely. As Wealth Adventures puts it, ROC is not taxed when you receive it, it reduces your cost basis instead, so you defer the tax until you sell.

Input your personal federal and state tax rates. If you are retired and living off your investments, your marginal rate might be significantly lower than someone in their peak earning years.

The difference between a fund that's 35% taxable and one that's 5% taxable is massive over time. The math below reveals your true after-tax yield based on your specific brackets.