ISA / IRA Tax-Free Growth Calculator | ISA, Lifetime ISA, IRA vs Taxable

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ISA / IRA Tax-Free Growth Calculator Compare tax-free wrapper growth against a taxable investment account

This page compares UK ISA, UK Lifetime ISA, US IRA and a taxable account. If your yearly contribution exceeds the wrapper cap, the calculator clips the wrapper contribution, flags the excess, and still compares it against a taxable account honestly.

Country Display

Wrapper mode

Section 1: Investment plan

Current age

Used for IRA catch-up and Lifetime ISA eligibility.

Investment horizon (years)

How long the money stays invested.

Starting amount

Initial amount invested today.

Monthly contribution

Converted into yearly wrapper contributions.

Annual contribution increase (%)

Raises your yearly contribution over time.

Section 2: Growth and tax comparison

Expected annual return (%)

Applied yearly to wrapper and taxable accounts.

Inflation (%)

Used for inflation-adjusted final value.

Include tax drag

›

Turn off to make both paths identical for testing.

Capital gains tax (%)

Used only in taxable comparison.

Dividend / yearly tax drag (%)

Used for annual drag mode.

Tax timing

›

Choose ongoing drag or end-only capital gains tax.

Tax-free final value

—

wrapper balance at the end

Taxable final value

—

comparison account after tax

Tax saved

—

wrapper advantage vs taxable

This year wrapper limit

—

current cap for the selected wrapper

Tax-free growth vs taxable growth

Tax-free wrapper

Taxable account

Year-by-year projection

Year	Age	Contribution	Bonus / tax	Tax-free balance	Taxable balance	Tax paid cumulative

ISA / IRA tax-free growth summary

Selected wrapper—

Starting amount—

Yearly contribution now—

This year cap—

Excess above wrapper cap this year—

Total contributions into wrapper—

Total LISA bonus—

Total tax paid in taxable comparison—

Final tax-free value—

Final taxable value—

Tax advantage amount—

Real final value—

Plan signal—

✦ Cal, AI Tax Wrapper Analysis

Cal is analysing your tax-free growth result...

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Your ISA / IRA comparison is ready. Ask whether the wrapper is worth it, how much tax drag hurts, or whether you are hitting the contribution cap.

What an ISA / IRA tax-free growth calculator actually tells you

This calculator shows how much long-term compounding improves when growth happens inside a tax-free or tax-advantaged wrapper instead of a taxable account. Two accounts can earn the same market return and still finish with very different values once tax drag is applied.

Time matters because tax drag compounds too. Wrapper choice matters because ISA, Lifetime ISA and IRA rules each set different caps and age logic. Contribution limits matter because the amount you want to invest is not always the amount the wrapper legally allows.

How annual contribution limits change long-term growth

A wrapper can only shelter what the rules allow. A UK ISA uses a £20,000 annual subscription limit. A UK Lifetime ISA uses a lower £4,000 annual contribution limit, but adds a 25% government bonus. A US IRA uses a separate annual cap, with higher room from age 50 onward. [oai_citation:1‡GOV.UK](https://www.gov.uk/government/publications/budget-2025-overview-of-tax-legislation-and-rates-ootlar/annex-a-rates-and-allowances?utm_source=chatgpt.com)

This page does not silently accept contributions above the wrapper cap. If your planned amount is too high, the wrapper contribution is clipped, the excess is flagged clearly, and the taxable comparison still reflects the full taxable path honestly.

The core formula

Tax-free wrapper balance = (Starting balance + Contribution + Bonus) × (1 + Return)
Taxable annual-drag balance = Starting balance + Contribution + Net growth after yearly tax
Taxable end-only balance = Final pre-tax value − Capital gains tax on total gain
Real value = Final value ÷ (1 + Inflation) ^ Years

This calculator projects year by year, applies annual caps, clips excess contributions, handles LISA eligibility rules, and compares the wrapper path against a taxable path using the tax timing you select.

Wrapper limits reference

Wrapper	Annual cap	Special rule
UK ISA	£20,000	General annual ISA subscription cap
UK Lifetime ISA	£4,000	25% bonus, counts within ISA allowance, contributions until age 50, first payment before 40
US IRA	$7,500	$8,600 from age 50+
Taxable account	No wrapper cap	Used only for comparison

📊 Quick reference

Wrapper	Rule
ISA	£20,000 limit
Lifetime ISA	£4,000 + 25% bonus
LISA age rule	First payment before 40
LISA contribution rule	Contribute until 50
IRA	$7,500, or $8,600 age 50+

⚡ Tips

Longer horizons usually make tax drag much more visible.

LISA bonus boosts contributions immediately, which improves compounding.

IRA catch-up starts at age 50, which changes contribution room.

If tax drag is turned off, both paths should match exactly.

Wrapper caps matter more when contributions rise each year.

Frequently Asked Questions

What is an ISA / IRA tax-free growth calculator?+

It is a projection tool that compares long-term growth inside a tax-free or tax-advantaged wrapper against a taxable investment account. It helps show how much tax drag may reduce your ending value over time.

What is the difference between an ISA and an IRA?+

An ISA is a UK savings and investing wrapper. An IRA is a US retirement account. They have different rules, different annual caps, and different age logic, so this page keeps them in separate modes instead of treating them as interchangeable.

How does a Lifetime ISA bonus work?+

A Lifetime ISA adds a 25% government bonus to eligible contributions, up to the annual LISA limit. In this calculator, that bonus is added to the wrapper balance each year that LISA contributions are still allowed. [oai_citation:2‡GOV.UK](https://www.gov.uk/lifetime-isa?utm_source=chatgpt.com)

When does IRA catch-up start?+

For this 2026 build, IRA catch-up starts at age 50, raising annual contribution room above the base IRA limit. The calculator applies that higher cap automatically once the age threshold is reached. [oai_citation:3‡Internal Revenue Service](https://www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500?utm_source=chatgpt.com)

Why does tax drag matter?+

Because money lost to tax no longer compounds. Even a small annual drag can create a large gap over long periods, especially when contributions keep rising.

Why can two accounts with the same return end at different values?+

Because the gross return can be the same while the net return differs after taxes, bonuses, or wrapper rules. The gap is not coming from different markets, but from different tax treatment.