Investors, and the financial industry, love to look at gross investment returns. But focusing solely on gross returns can obfuscate the truth: investment returns are net of the taxes created by those returns. At One Day In July, we work with clients to help minimize the tax bill associated with their investments, allowing them to keep more of their returns.
Different types of investment accounts come with different tax consequences. Understanding the differences is an important part of investing wisely. Taxable brokerage accounts generally require the investor to pay taxes on dividends, interest, and realized capital gains each year. This contrasts with tax-advantaged accounts like Traditional IRAs and 401(k)s that allow your investments to grow tax-deferred until withdrawals are made. Roth accounts, meanwhile, are funded with after-tax dollars and allow the investor to enjoy tax-free growth and withdrawals (the taxes were paid before money was invested), assuming all rules are followed.
Because each account type is taxed differently, choosing where to hold your investments can have a meaningful impact on your long-term after-tax returns.
Estate planning and investing are closely connected, especially when it comes to taxes. The way assets are owned, transferred, and inherited, can have a significant impact on the value of your wealth after it has been passed on. Different investments are taxed in different ways, and tax rules can change at death, sometimes creating opportunities to reduce future tax burdens. Thoughtful planning can help minimize unnecessary estate, gift, and income taxes while preserving flexibility and control.
Taxes play a critical role in investing, which is why reducing their impact on clients is a priority for us. We build tax mitigation strategies into your portfolio from the very beginning. We are also able to collaborate with your accountant to navigate the often complicated and evolving tax rules that may affect your investments, addressing both current and long-term planning needs.
These articles should not be construed as tax or estate planning advice. Please consult with a tax professional or estate attorney to make decisions concerning such matters.
Tax Planning: Updated Rates, Deductions, and What They Mean
Tax Planning
The IRS has released updated federal tax brackets and standard deduction amounts for 2026, reflecting annual inflation adjustments and recent changes under the One, Big, Beautiful Bill.
Tax Planning: Marginal vs. Effective Taxes
Tax Planning
The United States operates on a progressive tax system. Instead of applying one flat tax rate to all income, the system uses seven tax brackets, meaning different portions of income are taxed at different rates.
Tips for Managing Capital Gains
Tax Planning
When you purchase an asset, hold it for some time, and then sell it, you will incur a capital gain if you make any profit. The taxes associated with these capital gains can strike fear into the hearts of investors, but there is context and strategy to consider when rationalizing that fear.
Estate Planning: Generation-Skipping Tax
Estate Planning
Like many things in the tax code, what once was an opportunity to avoid tax (gifting assets to other generations to avoid paying additional estate taxes) has been replaced with a tax.
Estate Planning: Federal Estate Taxes
Estate Planning
It’s essential to design your estate plan around relevant estate tax, inheritance tax, and gift tax rules. You may be exposed to the estate, inheritance, gift tax, or generation skipping tax depending on your circumstances.
Estate Planning: State Estate Taxes
Estate Planning
Even if Federal estate tax does not apply, you may still be exposed to state estate or inheritance taxes. Each state has its own rules governing these taxes.
How Investment Account Choices Shape your Tax Bill
Taxes on Investments
The type of account an investor uses for their investments will dictate how they will be taxed and may apply to specific investors in different ways.
Taxes Generated within Mutual Funds or ETFs
Taxes on Investments
When reviewing the investment costs, an attuned investor will recognize a mutual fund or exchange-traded fund's (ETFs) expense ratio as the price paid to generate the fund's investment returns.
How are Social Security Benefits Taxed?
Taxes on Investments
Social Security benefits are a crucial source of income for many retirees and disabled individuals in the U.S., yet many don’t understand the tax treatment of these benefits.
Charitable Giving & Tax Strategies
Charitable Giving
As many of us know, giving can be beneficial to both the recipient and the giver. Not only are many charitable organizations dependent on the generosity of donors to operate their services, but the act of giving can be empowering for donors too.
Investing and Taxes: Important Considerations
Taxes on Investments
Most everyone can agree that we still don't have a tax system that looks like someone designed it on purpose. There is certainly a lot to know, and included in this article are a few tax-related concepts that we focus on at One Day In July.
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