The Tax Gap
This is the deciding factor.
JEPQ uses ELNs. These are debt instruments. The "income" they pay is legally interest. It is taxed at your highest marginal rate (up to 37% Federal + State).
QQQI trades Section 1256 contracts on the Nasdaq 100 Index directly. The IRS taxes these as 60% Long Term Capital Gains and 40% Short Term.
The $10,000 Test
If you earn $10,000 in dividends and are in the 32% bracket:
- JEPQ Tax: $3,200
- QQQI Tax: ~$2,300
QQQI saves you ~$900 per $10k of income.
The Verdict
Does JEPQ still have a place? Yes.
Winner: JEPQ 🏆
Best for: IRAs and 401(k)s. inside a tax-advantaged account, JEPQ's tax disadvantage disappears. J.P. Morgan's massive liquidity and slightly lower volatility make it a great "Core" holding.
Winner: QQQI 🏆
Best for: Taxable Brokerage Accounts. If you are building an income bridge before age 59.5, QQQI is mathematically superior due to Section 1256 treatment and higher raw yield.