Top
Ongoing uncertainty over proposed major tax changes underscores the need for wealthy taxpayers to pay year-round attention to growing and preserving after-tax wealth. The Eaton Vance Parametric Investment Tax Calculator can help affluent U.S. individual taxpayers and their advisors navigate the taxes that apply to their investment income and gains so they can make better portfolio decisions. The likelihood of sweeping changes to U.S. tax laws amplifies the need for tax-savvy solutions to support each investor’s unique situation and goals.
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 includes the federal, state, city, county and other local income taxes applicable to the investment income and gains of resident individual taxpayers in the 50 states and the District of Columbia.
The Investment Tax Calculator considers individual tax circumstances, enabling taxpaying investors and their advisors to:
- Compare 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
Planning as Tax Law Changes Loom
High net worth (HNW) investors must be especially mindful of tax implications as U.S. taxpayers await potential major changes in tax laws. Congress is wrangling trillions of dollars in expiring tax breaks, after House Republicans passed a budget plan that paves the way to extend the Tax Cuts and Jobs Act (TCJA), enacted in 2017 during President Donald Trump’s first term.
Many cuts for individual taxpayers are set to expire after 2025, and the package at stake prioritizes tax cuts for the highest-income Americans over low-income and middle-class families. Most Americans receive smaller tax cuts than those going to the wealthiest Americans under the proposed plans to finance the package.
Bottom line: The Eaton Vance Parametric Investment Tax Calculator provides a valuable resource for advisors and their clients. With this tool, we seek to foster a comprehensive understanding of how taxes may affect individual investment returns. Amid growing uncertainty over various tax laws, we believe this is an especially important time for investors to assess their personal tax situations. Wealthy investors cannot ignore the impact of taxes, ever, and current conditions demand a careful analysis.
"Many cuts for individual taxpayers are set to expire after 2025, and the package at stake prioritizes tax cuts for the highest-income Americans over low-income and middle-class families.”
Featured Insights
Risk Considerations: The output of the Eaton Vance Parametric Investment Tax Calculator is for educational purposes only and should not be considered investment, legal or tax advice. It is intended for use by U.S. individual taxpayers residing in the 50 states or the District of Columbia, and is not applicable to trusts, estates, corporations or persons subject to special rules under federal, state or local income tax laws. The indicated tax treatment of investment income and gains applies to positions in securities held outside qualified retirement plans and other tax-deferred or tax-exempt investment vehicles. The output is general in nature and is not intended to serve as the primary or sole basis for investment or tax-planning decisions.
For more individualized information, investors should consult a tax advisor or an investment professional. Investors bear sole responsibility for any decisions they make based on the output of the Investment Tax Calculator. The calculator makes certain assumptions that may not apply to every investor. The calculator has many inherent limitations, and individual results may vary.
Disclaimer
Eaton Vance and Morgan Stanley do not provide legal, tax or accounting advice or services. Clients should consult with their own tax or legal advisor prior to entering into any transaction or strategy.
The views and opinions and/or analysis expressed are those of the author or the investment team as of the date of preparation of this material and are subject to change at any time without notice due to market or economic conditions and may not necessarily come to pass. Furthermore, the views will not be updated or otherwise revised to reflect information that subsequently becomes available or circumstances existing, or changes occurring, after the date of publication. The views expressed do not reflect the opinions of all investment personnel at Morgan Stanley Investment Management (MSIM) and its subsidiaries and affiliates (collectively “the Firm”), and may not be reflected in all the strategies and products that the Firm offers.
Forecasts and/or estimates provided herein are subject to change and may not actually come to pass. Information regarding expected market returns and market outlooks is based on the research, analysis and opinions of the authors or the investment team. These conclusions are speculative in nature, may not come to pass and are not intended to predict the future performance of any specific strategy or product the Firm offers. Future results may differ significantly depending on factors such as changes in securities or financial markets or general economic conditions.
This material has been prepared on the basis of publicly available information, internally developed data and other third-party sources believed to be reliable. However, no assurances are provided regarding the reliability of such information and the Firm has not sought to independently verify information taken from public and third-party sources.
This material is a general communication, which is not impartial and all information provided has been prepared solely for informational and educational purposes and does not constitute an offer or a recommendation to buy or sell any particular security or to adopt any specific investment strategy. The information herein has not been based on a consideration of any individual investor circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal or regulatory advice. To that end, investors should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision.
Charts and graphs provided herein are for illustrative purposes only. Past performance is no guarantee of future results. The indexes are unmanaged and do not include any expenses, fees or sales charges. It is not possible to invest directly in an index. Any index referred to herein is the intellectual property (including registered trademarks) of the applicable licensor. Any product based on an index is in no way sponsored, endorsed, sold or promoted by the applicable licensor and it shall not have any liability with respect thereto.
This image indicates content designed specifically for Financial Advisors / Investment Professionals. This material is not to be used with the public.