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Accrual Equivalent Tax Rate
Definition
A method of measuring tax drag that finds the annual accrual tax rate that would produce the same after-tax accumulation as a tax system base in some way on deferred realized gains.
Using the term Accrual Equivalent Tax Rate :
This method is a meaningful measure when thinking about after tax return targets. Ensure you are able to achieve your investment objectives on an after-tax basis.
Pay Special Attention To :
Make sure your calculations are correct. Also, always be aware of potential and actual changes to the tax code that may lead to a need to rebalance your portfolio.
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Related terms
Accrual Equivalent After Tax Return
