Hold JEPQ inside an IRA or Roth and SCHD in a taxable brokerage to match each fund's tax treatment to the right account. JEPQ 's distributions are taxed as ordinary income, shrinking its 8.5% headline yield to roughly 6.5% after federal tax for investors in the 24% bracket. JEPQ’s distributions come largely from option premium (equity-linked notes), which the IRS treats as ordinary income. In the 2026 federal brackets, ordinary income at $105,700 for singles hits the 24% marginal rate, climbing to 32% above $201,775 and 35% above $256,225. A 3% SCHD yield growing 7% to 8% annually doubles the income stream in roughly nine years.