Paying taxes on investment gains each year vs. deferring until the end makes an enormous difference over time. See the dollar cost of annual taxation vs. a buy-and-hold deferred approach.
Annual gross return before tax
Your marginal capital gains tax rate
Max 50 years
Annual tax: Each year, you pay your tax rate on all gains. Your effective after-tax return is r × (1 − t) and you compound on that lower rate for the full horizon.
Deferred tax (buy-and-hold): You grow at the full pre-tax rate, then pay tax only on the total gain at the end. The formula is P + (FinalValue − P) × (1 − t). The tax base is the same, but compounding runs untaxed for longer.
Use your marginal long-term capital gains rate. For most US taxpayers this is 15% or 20% depending on income. Short-term gains (held under 1 year) are taxed as ordinary income, which can be 22–37%.
No — this calculator models a simple price-appreciation scenario. Dividends paid and taxed annually create additional drag not captured here.
Yes — upload your brokerage export to XIRR Auditor. It computes FIFO-based short-term and long-term realized gains from your actual transaction history.