Question 1

Should I pay off my car loan, student loan, or invest in stocks?

Accepted Answer

Paying off debt provides a guaranteed, tax-free return equal to the interest rate on the debt. Investing in stocks offers potentially higher returns but carries risk and is subject to annual tax drag (ordinary income tax on HYSA interest, or dividend and capital gains drag on index funds). This calculator accounts for W-2 income brackets and deductions to find the exact mathematical winner.

Question 2

Is it better to pay off a car loan or invest in stocks?

Accepted Answer

Unlike student loans and mortgages, car loan interest is generally not tax-deductible (except under special provisions like the OBBBA). Thus, paying off a car loan is equivalent to earning a guaranteed, tax-free return equal to the interest rate. If your tax-adjusted investment returns are lower than the car loan rate, payoff wins.

Question 3

Does HYSA interest get taxed and how does tax drag affect returns?

Accepted Answer

Yes, interest from High-Yield Savings Accounts (HYSAs) is taxed annually at your marginal ordinary income tax rate. For high earners, this tax drag can reduce your return by 30% to 40% or more (including federal tax, state tax, and the Net Investment Income Tax (NIIT)), making debt payoff much more attractive.

Question 4

Is mortgage interest tax deductible in 2026?

Accepted Answer

Under the current 2026 tax rules, mortgage interest is deductible only if you itemize deductions rather than taking the standard deduction ($16,100 Single / $32,200 MFJ). High earners with AGI exceeding the 37% federal ordinary bracket threshold ($640,600 Single / $768,700 MFJ) will also face a 2/37ths reduction in their itemized deduction benefits.

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