Estimate how federal, state, and local marginal tax rates may reduce CD interest. The calculator compounds the entered principal for the holding period, applies the combined tax rate only to interest, and reports both after-tax earnings and a net-yield equivalent. It provides a clean comparison input for taxable CDs and other cash options, but does not determine your actual tax liability or account for special ownership structures.
Gross interest = principal × [(1 + APY)years − 1]
Estimated tax = gross interest × (federal rate + state/local rate)
Use the main result as a scenario estimate and compare it with alternative assumptions. Small changes in tax, return, inflation, or payment terms can compound into meaningful differences.
This is an educational estimate, not tax, investment, insurance, or legal advice. Actual taxes and contract benefits depend on jurisdiction and plan terms.
A $100,000 CD earning 4.5% for one year generates $4,500 of gross interest. At combined rates of 27%, estimated tax is $1,215 and net interest is $3,285.
This calculator assumes interest is taxed at the marginal rates you enter; actual treatment depends on your tax situation.
No. It applies tax only to estimated interest earnings.
Yes. Use zero when no state or local income tax applies to your estimate.
No. It estimates liability from entered rates, regardless of whether tax is withheld.
The model compounds annually at the entered APY, then applies tax to total interest for the comparison.
| Variable | Calculation role |
|---|---|
| Gross interest | Compounded earnings before tax |
| Combined rate | Federal + state/local rates |
| Net yield | Annualized return after estimated tax |