By reducing the amount of taxes paid on investment earnings you may increase the amount of after-tax funds. Depending on the type of account you establish, the earnings may grow tax-free or tax-deferred and you may have more after-tax funds available.
Specific Details
A taxpayer in the 35% tax bracket would need to get a 9.3% rate of return in a taxable account to achieve the same yield as a tax-free account earning 6%.
Potential Savings
By reducing the amount of taxes paid on investment earnings it will increase the amount of after-tax funds. Depending on the type of account established, the earnings may grow tax-free or tax-deferred.