Is this a precise tax projection?

No. It is a rough apples-to-apples future-value sketch: same deposits, same pretax return, a simple taxable drag, and a 529 qualified vs 10%+ordinary non-qualified fork.

What drag does the brokerage pay?

Each year: dividend yield × qualified-dividend rate, plus leftover growth × turnover × long-term gains rate. A low-turnover index fund can make the gap small.

Optional. Many states deduct some 529 contributions; others do not. Recapture if you move or withdraw is not modeled.

What counts as qualified?

College, apprenticeship, K-12 tuition (federal cap), and a limited student-loan slice — confirm IRS Pub. 970. Non-qualified earnings pay ordinary income plus 10%.

Runs in your browser · Last updated 7 September 2026

Free 529 vs Taxable Brokerage Calculator

Free 529 vs taxable brokerage calculator. Rough future value with tax drag, state deduction, and a non-qualified 10% fork. Browser tool — nothing is uploaded.

Annual contribution ($)YearsPretax return %Brokerage dividend yield %Qualified-dividend tax %Annual turnover %Long-term gains tax %Non-qualified 529 ordinary tax %State 529 deduction rate %State deduction cap ($ / year)Reinvest state-tax savings in the 529

Same deposits and pretax return. Taxable drag ≈ dividend yield × QDI + leftover growth × turnover × LTCG (0.31% / year). 529 non-qualified = ordinary income + 10% on earnings only. Fees, gift tax, and state recapture are skipped.

529 if qualified

$339,990

Taxable brokerage

$330,116

Leads if qualified

529

529 if not qualified

$285,594

Invested

$180,000

State deduction saved

How to use this tool

Enter yearly savings, years, and a pretax return.
Set brokerage dividend yield, turnover, and tax rates.
Optionally add a state 529 deduction. Compare qualified 529 vs taxable vs non-qualified 529.

Worked example

$10,000 a year for 18 years at 7% pretax, 1.5% yield, 10% turnover, 15% QDI/LTCG: the 529 (qualified) finishes ahead of the brokerage because drag compounds. If you later spend the 529 on a non-qualified expense at a 24% ordinary rate, the 10% penalty on earnings can erase that lead.

Frequently asked questions

Is this a precise tax projection?: No. It is a rough apples-to-apples future-value sketch: same deposits, same pretax return, a simple taxable drag, and a 529 qualified vs 10%+ordinary non-qualified fork.
What drag does the brokerage pay?: Each year: dividend yield × qualified-dividend rate, plus leftover growth × turnover × long-term gains rate. A low-turnover index fund can make the gap small.
State deduction?: Optional. Many states deduct some 529 contributions; others do not. Recapture if you move or withdraw is not modeled.
What counts as qualified?: College, apprenticeship, K-12 tuition (federal cap), and a limited student-loan slice — confirm IRS Pub. 970. Non-qualified earnings pay ordinary income plus 10%.
Uploaded?: No.