Interest Calculator
Interest on a deposit plus regular contributions, with any compounding frequency — and what's left after tax on the interest and after inflation, year by year.
Interest Calculator: with the default inputs, ending balance is $110,581.33.
What is in the account on day one.
Added at the end of each period. Set to 0 for a lump sum only.
The nominal (stated) annual rate the bank quotes.
Before tax — what the statement says.
- Total interest earned
- $30,581.33
- Total you put in
- $80,000.00Starting principal plus every contribution.
- Tax paid on interest
- $6,455.79
- Balance after tax
- $102,888.70Tax on each year's interest paid out of the account.
- After tax and inflation
- $76,558.86The after-tax balance in today's purchasing power.
- Effective annual rate (APY)
- 5.116%
- Real after-tax rate
- 0.874%Roughly rate × (1 − tax) − inflation; negative means you are losing ground.
Assumptions
- Contributions are made at the end of each period and earn interest from the next period.
- Interest is credited at the account's compounding frequency; the monthly step uses the exact equivalent rate (1 + r/m)^(m/12) − 1.
- Tax is a flat marginal rate applied once a year to that year's interest and paid out of the account.
- The rate, tax rate and inflation rate are constant for the whole term.
| Year | Deposits | Interest | Tax | Balance | After tax | In today's dollars |
|---|---|---|---|---|---|---|
| 1 | $6,000 | $1,163 | $256 | $27,163 | $26,907 | $26,123 |
| 2 | $6,000 | $1,529 | $334 | $34,692 | $34,089 | $32,133 |
| 3 | $6,000 | $1,914 | $414 | $42,606 | $41,559 | $38,032 |
| 4 | $6,000 | $2,319 | $498 | $50,925 | $49,326 | $43,825 |
| 5 | $6,000 | $2,745 | $586 | $59,670 | $57,403 | $49,516 |
| 6 | $6,000 | $3,192 | $677 | $68,862 | $65,802 | $55,108 |
| 7 | $6,000 | $3,663 | $771 | $78,525 | $74,537 | $60,605 |
| 8 | $6,000 | $4,157 | $870 | $88,682 | $83,620 | $66,011 |
| 9 | $6,000 | $4,677 | $972 | $99,359 | $93,066 | $71,327 |
| 10 | $6,000 | $5,223 | $1,078 | $110,581 | $102,889 | $76,559 |
How this is worked out
The formula
Balance steps forward one month at a time at the effective monthly rate i = (1 + r/m)^(m/12) − 1, where r = nominal annual rate and m = compounding periods per year. Each month: balance = balance × (1 + i) + deposit Each year: balance = balance − (interest earned that year × tax rate) Today's dollars = after-tax balance ÷ (1 + inflation)^years APY = (1 + r/m)^m − 1
Open How it’s calculated above to see this worked through with your own numbers.
What you enter
- Starting principal
- What is in the account on day one.in dollars · 0 or more · defaults to 20000
- Regular contribution
- Added at the end of each period. Set to 0 for a lump sum only.in dollars · 0 or more · defaults to 500
- Contribution frequency
- Choose one of 2 options.Monthly · Annually
- Interest rate
- The nominal (stated) annual rate the bank quotes.a percentage · from 0 to 100 · defaults to 5
- Term
- A number.from 0 to 100 · whole numbers only · defaults to 10
- Compounding frequency
- Choose one of 5 options.Daily (365/yr) · Monthly · Quarterly · Semi-annually · Annually
- Tax rate on interest(under More options)
- Interest is ordinary income; use your marginal federal + state bracket. 0 for an IRA or 401(k).a percentage · from 0 to 60 · defaults to 22
- Inflation rate(under More options)
- US CPI has averaged roughly 3% a year over the long run.a percentage · from 0 to 50 · defaults to 3
What you get back
- Ending balancemain answer
- Before tax — what the statement says.
- Total interest earned
- Total you put in
- Starting principal plus every contribution.
- Tax paid on interest
- Balance after tax
- Tax on each year's interest paid out of the account.
- After tax and inflation
- The after-tax balance in today's purchasing power.
- Effective annual rate (APY)
- Real after-tax rate
- Roughly rate × (1 − tax) − inflation; negative means you are losing ground.
What this assumes
- Contributions are made at the end of each period and earn interest from the next period.
- Interest is credited at the account's compounding frequency; the monthly step uses the exact equivalent rate (1 + r/m)^(m/12) − 1.
- Tax is a flat marginal rate applied once a year to that year's interest and paid out of the account.
- The rate, tax rate and inflation rate are constant for the whole term.
About this calculator
Banks quote a nominal rate; what you keep is something else entirely. This calculator runs the account forward month by month, adds your deposits, applies the compounding frequency exactly, then subtracts the two things that quietly take most of the gain: tax on the interest, and inflation.
How to use it
Enter the starting principal, what you add and how often, the rate, and how long you'll leave it. Set the compounding frequency to match the account — most savings accounts and money market funds compound daily or monthly, CDs and bonds often semi-annually or annually. Under More options, set the tax rate on interest to your marginal bracket (federal plus state) for a taxable account, or 0 for an IRA, 401(k) or HSA, and set an inflation rate to see purchasing power.
Reading the results
- Ending balance is what the statement will say — before tax.
- Balance after tax assumes each year's interest is taxed as ordinary income and the tax is paid out of the account, which is how a taxable savings account actually behaves. Interest is taxed the year it's credited, even if you never withdraw it; banks report it on Form 1099-INT.
- After tax and inflation is the honest number. It is what the balance buys in today's money.
- Real after-tax rate is the same idea as a single figure: (1 + r(1 − t)) ÷ (1 + inflation) − 1. At 5% interest, a 22% bracket and 3% inflation it is about 0.8% — most of a "good" savings rate is not real growth.
Where the model simplifies
Tax is applied once a year at a flat rate; real brackets are progressive and interest can push you into a higher one. State treatment varies, and Treasury interest is exempt from state tax while bank interest isn't. The rate is assumed constant — savings rates float with the fed funds rate and CD rates are only fixed for the term. And deposits land at the end of each period; if yours arrive at the start, the balance runs slightly higher than shown.
Interest vs. compound interest
If you want the pure growth question without tax or contributions, the compound interest calculator is simpler. If you want to know what a specific savings goal needs, use the savings goal calculator. This one exists for the question those two skip: after the IRS and inflation take their share, what is actually left?
Frequently asked questions
▸Is interest taxed even if I leave it in the account?
Yes. Interest on a bank account, CD or bond is taxable in the year it is credited, not when you withdraw it, and the bank reports it on Form 1099-INT once it exceeds $10. Only tax-advantaged accounts (IRA, 401(k), HSA) defer or avoid it.
▸What tax rate should I enter?
Your marginal rate on ordinary income — the bracket your last dollar falls in — plus your state rate if your state taxes interest. Interest does not get the lower long-term capital gains rate.
▸Does compounding daily instead of monthly matter?
Barely. On 5%, daily compounding yields 5.127% APY against 5.116% monthly — about $1 a year per $10,000. The rate and the term matter far more.
▸Why is my real return so much lower than the rate?
Because tax comes off the nominal interest and inflation comes off the whole balance. At 5% with a 22% bracket you keep 3.9%; at 3% inflation that leaves under 1% of real growth.
▸How is this different from the compound interest calculator?
Same underlying math, different question. Compound interest shows gross growth; this one adds tax on the interest and shows the after-tax, after-inflation result year by year.
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