Rex says
Money math without the spreadsheet headache. Plug in your numbers and I'll show you exactly where the dollars land.
Try a scenario
Click to load — tweak from there.Inputs
Result
Tax savings from optimal asset location
$24,300
Total tax drag, naive (same mix everywhere)
$33,300
Total tax drag, optimized placement
$9,000
Bonds left over in taxable account
$0
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How to use this
- 1Enter taxable brokerage account balance ($).
- 2Enter tax-deferred (401k/ira) balance ($).
- 3Enter bond/reit ordinary yield (%).
- 4Enter stock index fund qualified dividend + realized gain yield (%).
- 5Enter ordinary/marginal tax rate (%).
- 6Enter qualified dividend/ltcg tax rate (%).
- 7Enter years held.
- 8Read your tax savings from optimal asset location on the right — it updates as you type.
- 9Hit Share to keep the scenario or send it to someone.
About this calculator
Asset location — not to be confused with asset allocation — is about which account holds which investment, not what percentage you own of each. Tax-inefficient holdings like bonds, REITs, and actively managed funds that generate ordinary income or short-term gains belong in tax-deferred accounts (traditional 401(k)/IRA) where that income isn't taxed annually; tax-efficient holdings like broad index stock funds, which mostly generate qualified dividends and unrealized long-term gains, do fine in taxable accounts. Getting this backwards — bonds in taxable, stock index funds in the IRA — creates an annual tax drag that compounds over decades. This calculator estimates the extra after-tax value from optimal placement versus a naive 'same allocation in every account' approach, given your total portfolio split between account types and the tax characteristics of each asset class.
Worked example
Using the values the calculator loads with:
Inputs
- Taxable brokerage account balance: 200000 $
- Tax-deferred (401k/IRA) balance: 200000 $
- Bond/REIT ordinary yield: 4.5 %
- Stock index fund qualified dividend + realized gain yield: 1.5 %
- Ordinary/marginal tax rate: 32 %
- Qualified dividend/LTCG tax rate: 15 %
- Years held: 20
Results
- Tax savings from optimal asset location: $24,300
- Total tax drag, naive (same mix everywhere): $33,300
- Total tax drag, optimized placement: $9,000
- Bonds left over in taxable account: $0
What each field means
Inputs
- Taxable brokerage account balance ($)
- The taxable brokerage account balance used in the calculation, measured in $. Starts at 200000 $ so you have a working example on load.
- Tax-deferred (401k/IRA) balance ($)
- The tax-deferred (401k/ira) balance used in the calculation, measured in $. Starts at 200000 $ so you have a working example on load.
- Bond/REIT ordinary yield (%)
- The bond/reit ordinary yield used in the calculation, measured in %. Starts at 4.5 % so you have a working example on load. Accepted range: 0–10 %.
- Stock index fund qualified dividend + realized gain yield (%)
- The stock index fund qualified dividend + realized gain yield used in the calculation, measured in %. Starts at 1.5 % so you have a working example on load. Accepted range: 0–5 %.
- Ordinary/marginal tax rate (%)
- The ordinary/marginal tax rate used in the calculation, measured in %. Starts at 32 % so you have a working example on load. Accepted range: 0–50 %.
- Qualified dividend/LTCG tax rate (%)
- The qualified dividend/ltcg tax rate used in the calculation, measured in %. Starts at 15 % so you have a working example on load. Accepted range: 0–30 %.
- Years held
- The years held used in the calculation. Starts at 20 so you have a working example on load. Accepted range: 1–40.
Results
- Tax savings from optimal asset location
- Returned as a money amount in US dollars and shown as the headline result. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Total tax drag, naive (same mix everywhere)
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Total tax drag, optimized placement
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Bonds left over in taxable account
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
FAQ
What's the difference between asset location and asset allocation?
Allocation is your overall mix of stocks, bonds, and other assets across your entire portfolio. Location is which specific account — taxable, traditional IRA/401(k), or Roth — holds each piece of that mix. You can have identical allocation with wildly different tax outcomes depending on location, which is the whole point of this calculator.
Should Roth accounts hold the highest-growth assets?
Generally yes, when you have a choice. Because Roth withdrawals are entirely tax-free, the asset with the highest expected growth benefits the most from being shielded there — every dollar of growth avoids tax forever. Tax-deferred (traditional) accounts still owe ordinary tax eventually, so lower-growth, income-generating assets fit better there, saving the Roth's unlimited tax-free growth for higher-growth stock holdings.
Does this mean I should never hold bonds in a taxable account?
Not always — if your tax-deferred space isn't large enough to hold your full target bond allocation, some bonds have to sit in taxable, ideally using tax-exempt municipal bonds there instead of taxable bonds, which sidesteps much of the drag this calculator measures.
How much does asset location actually matter in dollar terms?
Academic studies and industry estimates commonly put the benefit at roughly 0.1–0.75% of extra annualized after-tax return depending on your tax bracket and account mix — meaningful over decades but usually smaller than getting your overall asset allocation and savings rate right. Treat it as a real but secondary lever.
Accuracy and limitations
- Results are estimates before tax, fees, and inflation unless an input explicitly covers them.
- Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.
- This is educational maths, not financial advice. Check anything contractual with the lender or your accountant.
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Cite this calculator
Writing about this topic? Grab a citation — every link helps keep these tools free.
RevenueLab. (2026). Asset Location Tax Efficiency Calculator. Retrieved from https://www.revenuelab.fyi/toolbox/asset-location-tax-efficiency
<p>Source: <a href="https://www.revenuelab.fyi/toolbox/asset-location-tax-efficiency" target="_blank" rel="noopener">Asset Location Tax Efficiency Calculator — RevenueLab</a> (2026).</p>
Source: [Asset Location Tax Efficiency Calculator — RevenueLab](https://www.revenuelab.fyi/toolbox/asset-location-tax-efficiency) (2026).