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Passive Income Target Calculator

Work out passive income target instantly with clear inputs, formula shown and shareable results.

About Passive Income Target Calculator

Passive income capital is the gross income needed divided by the portfolio yield, and the gross figure must be grossed up for tax. At a 6% yield and 20% tax, every unit of net monthly income needs about 250 units of capital.

Formula

Passive income capital

Capital = target income × 12 / (1 - tax rate) / portfolio yield

Worked example

With the default values below, Passive Income Target Calculator returns Capital Required of $20,000,000. Change any input above and every figure here is recalculated in your browser.

Inputs used

Target Monthly Passive Incomeminimum 0
80,000
Expected Portfolio Yieldaccepts 0.5–20 %
6 %
Tax On The Incomeaccepts 0–60 %
20 %

Results

Capital Required
$20,000,000
Gross Annual Income Needed
$1,200,000.00
Net Annual Income Target
$960,000.00
Capital As A Multiple Of Net Income
20.83

Step by step

  1. 1Values used
  2. 2Passive income capital
  3. 3Capital Required= 20,000,000
  4. 4Gross Annual Income Needed= 1,200,000.00
  5. 5Net Annual Income Target= 960,000.00
  6. 6Capital As A Multiple Of Net Income= 20.83

Assumptions and limits

  • The result is derived only from the 3 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, fees or charges or compounding frequency into account.
  • Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • Figures are estimates for planning only. Prices, returns, inflation and personal circumstances all change. This is not financial or tax advice — speak to a qualified adviser before making decisions.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Figures are estimates for planning only. Prices, returns, inflation and personal circumstances all change. This is not financial or tax advice — speak to a qualified adviser before making decisions.

Frequently Asked Questions

Why is the capital requirement so large?

Because a sustainable yield is a small percentage. Chasing a higher yield to reduce it usually adds capital risk.

Should the yield include capital growth?

Only if you plan to sell assets. Living on yield alone preserves the capital and its future income.

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