Tax Alpha Scenario Calculator
Fill in both columns of assumptions, or load the hypothetical worked example to see how the fields fit together. Dollar fields take whole or decimal dollars, return fields take percent (8 means 8%). Taxes, fees, and deferral fields left blank count as 0.
All arithmetic runs in your browser. Nothing you enter is sent to Swoopr Investment's servers. No live market or tax data is used.
Assumptions Built Into the Calculator
- Every input is yours. The calculator never looks up a tax rate, bracket, holding period, or account type.
- Gross gain is starting value times the pre-tax return. Ending value is starting value plus gross gain, minus taxes paid, minus incremental fees, plus the deferral-value adjustment you entered.
- After-tax return is ending value divided by starting value, minus one. Tax alpha is the strategy's after-tax return minus the baseline's, in percentage points.
- Taxes, fees, and deferral values cannot be negative. The deferral-value adjustment is not estimated here: if you include one, it comes from a separate analysis you did.
- Both sides start from the same portfolio value and cover the same single period. Multi-year compounding, future tax-law changes, and liquidation taxes are not modeled.
- The worked example uses hypothetical numbers. It is not market data and not anyone's result.
Worked Example (Hypothetical)
Suppose both sides start at $100,000 and earn 8% before tax. The tax-aware strategy pays $5,000 in taxes and $500 in incremental fees. The baseline pays $7,000 in taxes and no incremental fees. Neither has a deferral-value adjustment.
- Strategy ending value: $100,000 + $8,000 − $5,000 − $500 = $102,500, an after-tax return of 2.50%.
- Baseline ending value: $100,000 + $8,000 − $7,000 = $101,000, an after-tax return of 1.00%.
- Scenario tax-alpha estimate under entered assumptions: 2.50% − 1.00% = 1.50 percentage points, or $1,500 of ending value.
Raise the strategy's incremental fees to $2,500 and the same scenario drops to a difference of −0.50 percentage points: the fee exceeds the tax difference. Use the button above to load these numbers and change them.
Related Reading
- What Is Tax Alpha?: the concept, how it is measured, and why it depends on entered assumptions.
- After-Tax Tracking Error: how far an after-tax result can drift from its benchmark.
- Tracking Error and Tracking Difference: the pre-tax version of the same comparison.
- Taxes and Rules: the hub for tax treatment and regulatory rules.
Frequently Asked Questions
What does the tax alpha calculator compute?
It computes each side's ending value from the starting value, the pre-tax return, the taxes paid, the incremental fees, and any deferral-value adjustment you enter. It then converts each ending value to an after-tax return and subtracts the baseline from the strategy. That difference, in percentage points, is the scenario tax-alpha estimate under the entered assumptions.
Does the calculator work out my taxes?
No. It contains no tax-law lookup and does not infer a tax rate, bracket, or filing status. The taxes paid for each side are numbers you enter, usually from a separate tax estimate or a past statement. A different tax assumption produces a different result, so the output is only as meaningful as those entries.
What is the deferral-value adjustment?
It is an optional dollar amount you estimate separately for the benefit of postponing a tax bill, for example gains that stay invested instead of being realized. The calculator adds it to that side's ending value exactly as entered and does not estimate it. Leave it at zero if you have no separate estimate.
Is a positive result a forecast of future savings?
No. The result is arithmetic on one hypothetical scenario. Real returns, tax rules, realized gains, and fees differ from the numbers entered and change over time. The result describes the assumptions, not the future, and it is not tax or investment advice.
References
The formula is arithmetic and needs no external source. The two documents below describe how investment gains and capital gains are taxed in the United States, which is the context for the taxes-paid inputs. Verified in October 2026.
- IRS: Topic no. 409, Capital gains and losses: how realized gains and losses are treated for federal income tax.
- IRS: Publication 550, Investment Income and Expenses: reporting rules for investment income, and the expenses that can and cannot be deducted.
Jurisdiction: United States. Last reviewed by the Swoopr Editorial Team in October 2026. This page is educational and is not tax, legal, or personalized investment advice.