Compound Interest Calculator
Free compound interest calculator with monthly contributions, inflation adjustment, and tax-on-interest modelling for HYSAs, CDs, and Roth IRAs.
Future value
$47,527
Growth over time
| year | Deposits | Interest | Balance |
|---|---|---|---|
| 1 | $2,400 | $567 | $12,967 |
| 2 | $2,400 | $719 | $16,087 |
| 3 | $2,400 | $879 | $19,365 |
| 4 | $2,400 | $1,047 | $22,812 |
| 5 | $2,400 | $1,223 | $26,435 |
| 6 | $2,400 | $1,408 | $30,243 |
| 7 | $2,400 | $1,603 | $34,246 |
| 8 | $2,400 | $1,808 | $38,454 |
| 9 | $2,400 | $2,023 | $42,877 |
| 10 | $2,400 | $2,249 | $47,527 |
For estimation purposes only. Actual returns and tax treatment depend on your specific bank, broker, and tax situation — consult a financial advisor.
How compound interest works
Compound interest is interest paid on your original deposit plus all the interest that account has already earned. Every time interest is credited to your balance, it becomes principal for the next compounding period, so your money grows at an accelerating pace the longer it stays invested.
For example, $10,000 deposited into a high-yield savings account (HYSA) paying 5% a year, compounded monthly, with $200 added every month, doesn't grow in a straight line — the growth curve gets steeper over time because later years are compounding on a much larger base than the first year was. The compounding frequency you choose (daily, monthly, annually) determines how often that happens; daily compounding, common on many online HYSAs, produces a slightly higher effective annual yield than the same nominal rate compounded monthly or annually.
How the IRS taxes interest income
In the US, interest from a taxable account — a regular savings account, a high-yield savings account, or a certificate of deposit (CD) — is taxed as ordinary income at your federal marginal tax rate, the same bracket that applies to your wages. According to the IRS's Topic no. 403, Interest received (irs.gov/taxtopics/tc403), banks and other payers must report interest paid to you on Form 1099-INT, and you're required to report all taxable interest on your federal return whether or not you actually receive a 1099-INT — for example, if the amount fell under the $10 reporting threshold. Interest is taxed in the year it's credited to your account, not when you eventually withdraw it.
Most states also tax interest income as part of ordinary income, though rules and rates vary considerably by state, and a few states levy no personal income tax at all — check your own state's rules rather than assuming a single rate applies everywhere. Interest from US Treasury securities is exempt from state and local tax even though it remains federally taxable.
A Roth IRA works differently: contributions are made with after-tax money, but qualified withdrawals — including all the interest and growth accumulated inside the account — are completely tax-free, which is why this calculator's Roth IRA setting applies no tax at all to the projected growth.
HYSA, CD, or Roth IRA — how they compare
A high-yield savings account keeps your cash fully liquid while paying a rate well above a typical brick-and-mortar bank's savings account — but that rate floats, so it can fall if the Federal Reserve cuts its benchmark rate. A CD locks your rate in for a fixed term, commonly ranging from a few months to five years, in exchange for an early-withdrawal penalty if you need the money out sooner. Both are taxed identically as ordinary interest income under the rules above.
A Roth IRA is a retirement account, not a savings account, and it comes with annual contribution limits and rules about qualified withdrawals — but for money you don't need before retirement, tax-free compounding over decades can make a substantial difference compared with a taxable account paying the same rate.
Example: $10,000 plus $200 a month at 5% for 10 years
Starting with a $10,000 deposit, contributing $200 every month, at a 5% annual rate compounded monthly, this calculator projects a future value of $47,527 after 10 years. Of that, $34,000 is your own money ($10,000 initial deposit plus $24,000 in contributions over the decade) and $13,527 is interest the account has earned. Monthly compounding lifts the effective annual rate to 5.12%, a bit above the quoted 5% nominal rate. At 5%, a lump sum left alone would take about 13.9 years to double.
Example: the same $10,000 with no ongoing contributions
Deposit the same $10,000 at 5% compounded monthly with no further contributions, and after 10 years it grows to $16,470 — $6,470 of that being interest. The gap between $16,470 and the $47,527 result above shows how much of your eventual balance comes from consistently adding $200 a month rather than from the initial deposit alone.
HYSA rates in the US have stayed well above the near-zero levels common through the 2010s, tracking the Federal Reserve's benchmark rate — but they can move quickly in either direction after Fed rate decisions, so a rate you lock into a CD today may not be available to renew at the same level later.
