After-Tax Total Return
The dividends-vs-total-return question for a taxable account: dividends are taxed every year as they're paid, so part of the return never compounds for you. Here is pre-tax total return vs after-tax (dividends taxed annually, position held) on a $10,000 investment over 2020-07-01 → 2026-07-30 — sorted by the dividend tax drag.
taxable · 22% fed + 5% state qualified div 15% · ordinary at bracket reconciled close + dividends assumption, not advice
Pre-tax vs after-tax total return
| Fund | Qualified div | Pre-tax return | After-tax return | Dividend tax drag | Dividend tax cost |
|---|---|---|---|---|---|
| QYLD | 0% | +80.5% | +48.2% | 32.3 pts | $3,229 |
| JEPI | 17% | +88.3% | +64.5% | 23.7 pts | $2,375 |
| SCHD | 100% | +173.1% | +154.2% | 18.8 pts | $1,884 |
| VYM | 100% | +144.6% | +136.1% | 8.5 pts | $848 |
| VT | 85% | +133.1% | +127.3% | 5.8 pts | $576 |
| RSP | 98% | +132.6% | +128.1% | 4.6 pts | $456 |
| VOO | 98% | +160.3% | +155.9% | 4.5 pts | $446 |
| VTI | 95% | +155.6% | +151.3% | 4.4 pts | $436 |
| QQQ | 100% | +182.8% | +180.8% | 2.0 pts | $200 |
Only the dividend tax is shown — liquidation capital-gains tax is excluded (it scales with price gains and everyone pays it eventually; including it would make a flat-price fund look artificially tax-efficient). Qualified dividends (most index funds) are taxed at 15%; ordinary income — covered-call / option-income distributions like JEPI & QYLD — is taxed at your full bracket, so a high-yield ordinary-income fund gives up more of its yield to tax each year. Qualified-% is a prospectus/1099 estimate; returns trace to reconciled multi-source prices. See methodology.