What is your actual purchasing-power gain after inflation and taxes?
How to Read This Chart
A nominal return of 5% sounds healthy — but after inflation and taxes it may be far less impressive,
or even negative. This tool shows the real after-tax return (actual change in
purchasing power) for six common tax brackets across a range of nominal growth rates.
The Key Insight
Suppose you earn 2.50% nominal and inflation is 2.50%.
Intuitively it seems like a wash — but if you pay 25% tax on the gain, your
after-tax return is only 1.875%. Inflation still takes 2.50%, so you lose
~0.61% of purchasing power per year.
To merely break even at 25% tax and 2.50% inflation you need:
g = 2.50% ÷ (1 − 0.25) = 3.33% nominal.
Every increase in tax rate raises this bar further.
Inputs
Inflation Rate
Annual CPI rate. This raises the bar that nominal returns must clear just to preserve purchasing power. Even at modest inflation, taxes can tip a mediocre return into a real loss.
Interest/Growth Rate
Your nominal (pre-tax) annual return. The actual return on your accounts — HYSA (High Yield Savings Account), CDs, money markets, bond funds.
State Tax Rate
Your marginal state income tax rate. It is added to each federal bracket to form the combined rate used in all calculations. When non-zero, the bracket card headers update to show the federal rate, state rate, and their sum. Set to 0 for states with no income tax.
Bracket Cards
Real Return
Your actual purchasing-power change at the current growth rate, in that bracket. Green = gaining; red = losing. Compare the after-tax and pre-tax accounts with what can be earned in a Roth.
Break-even
The minimum nominal return needed at that tax rate and inflation level to neither gain nor lose purchasing power. Lines on the chart cross 0% real return exactly at this nominal rate.
Chart
Each colored line is one tax bracket's real after-tax return across all nominal growth rates. The dashed gray line at 0% is break-even. The vertical dashed line marks your current growth rate. Lines below 0% represent a loss of purchasing power — the shaded area to the left of the vertical line and below 0% is where your money loses value in real terms.
Formula
Real after-tax return
(1 + g × (1 − t)) ÷ (1 + π) − 1
g = nominal growth rate · t = tax rate · π = inflation
Break-even nominal
π ÷ (1 − t) — the minimum g for zero real return
3.80%
4.50%
0.00%
Your state's marginal income tax rate, added to each Federal bracket. Set 0 for no-income-tax states (TX, FL, WA, NV…).
Roth / Tax Free
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break-even: —
0% bracket
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break-even: —
12% bracket
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break-even: —
22% bracket
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break-even: —
24% bracket
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break-even: —
32% bracket
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break-even: —
37% bracket
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break-even: —
Real after-tax return vs. nominal growth rate — by tax bracket
Above 0% = gaining purchasing power · Below 0% = losing purchasing power
Real after-tax return = (1 + g × (1 − t)) / (1 + π) − 1
g = nominal growth rate · t = total marginal tax rate · π = inflation rate
Break-even nominal rate = π / (1 − t) — the minimum return to preserve purchasing power