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Treasury Ladder Income Forecast Estimator

The Treasury Ladder Income Forecast Estimator projects annual and cumulative interest from a Treasury ladder using a starting principal, average yield, forecast horizon, and reinvestment percentage. It also estimates after-federal-tax interest, while treating Treasury interest as exempt from state and local income tax.

The tool is intended for high-level cash-flow planning. Treasury bills, notes, bonds, TIPS, and floating-rate notes have different payment mechanics, so a single average-yield model cannot reproduce every real-world cash flow. It is most useful for comparing scenarios on a consistent basis.

Inputs

USD
%
years
%
%
Result
—
Forecast cumulative after-tax interest
First-year gross interest—
First-year after-tax interest—
Ending modeled principal—

1. Enter principal
Use the amount allocated to the Treasury ladder at the start.

2. Enter average yield
Use an annualized portfolio-level Treasury yield assumption.

3. Choose forecast years
Set how long the interest forecast should run.

4. Choose reinvestment share
Only the entered share of after-tax interest is added back to modeled principal.

5. Enter federal rate
The model applies federal income tax to interest and no state/local income tax.

6. Review cumulative net interest
Use the result alongside first-year income and ending modeled principal to understand the forecast path.

Gross interest_t = Principal_t × y
After-tax interest_t = Gross interest_t × (1 − f)
Principal_(t+1) = Principal_t + After-tax interest_t × r

r is the reinvestment fraction. Cumulative after-tax interest adds all yearly after-tax interest, including the part spent and the part reinvested.

What the result means

The main result is the sum of modeled Treasury interest remaining after federal income tax over the selected horizon.

The estimate assumes a constant yield and marginal federal rate; actual Treasury cash flows and future rates can differ.

Given: $300,000 principal, 4.10% yield, 10 years, 25% reinvestment, and a 24% federal rate.

Calculation: First-year gross interest = $12,300. After federal tax, $12,300 × 76% = $9,348. Reinvested amount = $2,337, raising the modeled principal for year 2.

Result: Repeating the process for 10 years produces cumulative after-tax interest of roughly $96,826 and an ending modeled principal near $324,206.

Interpretation: Partial reinvestment creates modest growth in the income base while most net interest remains available as cash.

Does the forecast include state tax?

No. Marketable Treasury interest is exempt from state and local income tax under current U.S. rules, so only the entered federal rate reduces modeled interest.

Why reinvest after-tax interest rather than gross interest?

The model assumes federal tax is paid from the interest before any remaining amount is reinvested. That produces a conservative taxable-account planning path.

Are Treasury bill discount earnings treated as interest here?

Yes at a high level. Treasury bill earnings are generally the difference between purchase price and face value, but this calculator converts the expected return to an annualized yield for forecasting.

Can I use 100% reinvestment?

Yes. Then all modeled after-tax interest is added to principal each year, increasing later interest if the yield remains constant.

Does this model inflation?

No. Results are nominal dollars. For purchasing-power planning, compare the forecast with a separate inflation assumption.