How we calculate every estimate.

Ground rules

• Public sources only. IRS, U.S. Treasury, Bureau of Labor Statistics, state revenue departments, county tax authorities. No vendor data we can't cite.
• Every formula is shown on the calculator's page — and again here.
• Dates are honest. “Last reviewed” updates when we genuinely recheck the math against the source.
• Estimates only. Outputs are not professional advice. We are not CPAs. For real decisions, consult one.

2026 Federal Income Tax

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Sources

• IRS Rev. Proc. 2025-32 (2026 inflation adjustments)
• IRS Publication 17, current revision
• OBBB §§70101–70120 for new/modified provisions

Formula

taxable_income = max(gross_income − pre_tax_deductions − standard_deduction, 0)
tax = sum over brackets of:
        (min(taxable_income, top) − bottom) × rate
        for each bracket where bottom < taxable_income
effective_rate = tax / gross_income
marginal_rate  = rate of the highest bracket reached

Assumptions

Standard deduction 2026:

$16,100 Single, $32,200 MFJ, $24,150 HoH (Rev. Proc. 2025-32)

Itemized deductions:

Not modeled — only standard deduction in base calculator

State / local tax:

Not included

Credits:

CTC, EITC, education credits not modeled

Mortgage Payment

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Sources

Standard amortization formula (closed-form, no source-data refresh needed). PMI rate range from Fannie Mae/Freddie Mac historical pricing.

Formula

P = home_price − down_payment           ; loan principal
r = annual_rate / 100 / 12             ; monthly rate
n = years × 12                          ; total payments
M = P × [r(1+r)^n] / [(1+r)^n − 1]    ; monthly P&I
PITI = M + (annual_tax / 12) + (annual_insurance / 12) + monthly_hoa + PMI

Assumptions

Loan type:

Fixed-rate fully-amortizing only — no ARM, balloon, or interest-only

Points / closing costs:

Not modeled

PMI:

Estimated when down payment < 20%; not auto-removed at 80% LTV

U.S. Inflation

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Sources

Bureau of Labor Statistics CPI-U annual averages (series CUUR0000SA0), 1913–2025.

Formula

adjusted_amount      = amount × (CPI_target_year / CPI_source_year)
cumulative_inflation = (CPI_target_year / CPI_source_year) − 1
annualized_rate      = (CPI_target_year / CPI_source_year)^(1 / years) − 1

Assumptions

Index:

CPI-U (urban consumers), all items, U.S. city average

Year handling:

Annual averages, not month-end points

Range:

1913 to 2025 (latest full calendar year)

Chained CPI / PCE:

Not modeled

Self-Employment Tax

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Sources

IRS Schedule SE instructions + SSA 2026 COLA wage-base announcement ($184,500) + OBBB §70105 (QBI permanent).

Formula

netEarningsSE = netProfit * 0.9235
SS_SE_tax     = min(netEarningsSE, max(0, 184500 - w2wages)) * 0.124
Medicare_SE   = netEarningsSE * 0.029
SE_tax        = SS_SE_tax + Medicare_SE
deductibleHalf = SE_tax / 2
QBI (simplified) = min(20% * (netProfit - halfSE), 20% * taxableIncome)

Capital Gains Tax

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Sources

IRS Rev. Proc. 2025-32 LTCG thresholds + IRC § 1411 (NIIT). OBBB §70101 made 0%/15%/20% structure permanent.

Formula

stackBase = ordinaryTaxableIncome
ltcgAt0% = max(0, min(gain, threshold0% - stackBase))
ltcgAt15% = max(0, min(gain, threshold15% - max(stackBase, threshold0%)))
ltcgAt20% = max(0, gain - ltcgAt0% - ltcgAt15%)
NIIT = 3.8% * min(netInvestIncome, max(0, MAGI - niitThreshold))
  niitThreshold: $200K Single, $250K MFJ, $125K MFS

RMD Calculator

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Sources

IRS Publication 590-B + IRS Uniform Lifetime Table (Table III, 2022 revision) + SECURE 2.0 Act (age 73 start).

Formula

RMD = priorYearEndBalance / distributionPeriod
distributionPeriod: IRS Uniform Lifetime Table (Table III)
  Age 73 → 26.5  |  Age 75 → 24.6  |  Age 80 → 20.2
  Age 85 → 16.0  |  Age 90 → 12.2  |  Age 95 → 8.9

OBBB Tax Impact

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Sources

• One Big Beautiful Bill Act (OBBB), Public Law 119-21, §§70101–70502
• IRS Rev. Proc. 2025-32 (2026 inflation-adjusted tax parameters)
• IRS Notice 2025-69 (FLSA qualifying overtime premium definition)

Formula

// Tips deduction (§70201)
tipsDeduction = max(0, min(qualifiedTips, 25000) - phaseOut(MAGI, 150000/300000))

// Overtime deduction (§70202)
premiumPortion = totalOT * (multiplier - 1) / multiplier
otDeduction = max(0, min(premiumPortion, 12500/25000) - phaseOut(MAGI, 150000/300000))

// Combined federal income tax savings
savings = (tipsDeduction + otDeduction) * marginalRate

phaseOut(magi, threshold) = floor(max(0, magi - threshold) / 1000) * 100

Assumptions

Sunset:

Deductions available 2025–2028 only unless extended

FICA:

Tips and overtime remain subject to Social Security and Medicare taxes

MFS:

Married Filing Separately is ineligible for both deductions

Occupation:

Tip eligibility requires IRS-designated customarily tipped occupation with valid SSN

Refresh cadence

Reviewed when IRS issues additional guidance on §70201/§70202 qualifying rules. Next expected: IRS final regulations on FLSA overtime premium definition.

No Tax on Tips

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Sources

• OBBB §70201 — qualified tip income deduction
• IRS Notice 2025-XX (qualifying occupations guidance)
• IRC §3101 (FICA — Social Security and Medicare taxes on tips)

Formula

baseDeduction = min(qualifiedTips, 25000)
phaseOutReduction = floor(max(0, MAGI - threshold) / 1000) * 100
allowedDeduction = max(0, baseDeduction - phaseOutReduction)
threshold = $300,000 (MFJ) or $150,000 (Single/HoH)
taxSavings = allowedDeduction * marginalRate

Assumptions

Cap:

$25,000 maximum deduction per year (2025–2028)

Eligibility:

Customarily and regularly tipped occupations only, per IRS guidance

Self-employed cap:

Deduction limited to net business income from tipped activity

FICA:

Tips remain subject to Social Security 6.2% + Medicare 1.45%

Refresh cadence

Reviewed on IRS guidance updates to qualifying occupations list. Deduction caps are statutory and fixed through 2028.

No Tax on Overtime

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Sources

• OBBB §70202 — qualified overtime premium compensation deduction
• IRS Notice 2025-69 (FLSA overtime premium definition)
• Fair Labor Standards Act (FLSA), 29 U.S.C. §207 (time-and-a-half requirement)

Formula

// Premium portion: the extra 0.5× on a 1.5× rate
premiumPortion = totalOvertimePay * (multiplier - 1) / multiplier
// For 1.5×: premiumPortion = totalOT / 3
// For 2.0×: premiumPortion = totalOT / 2

cap = $12,500 (Single/HoH/MFS) or $25,000 (MFJ)
phaseOut = floor(max(0, MAGI - threshold) / 1000) * 100
allowedDeduction = max(0, min(premiumPortion, cap) - phaseOut)
threshold = $150,000 (Single) or $300,000 (MFJ)

Assumptions

FLSA required:

Only FLSA-mandated overtime qualifies — state-only, CBA, or daily overtime may not

MFS:

Married Filing Separately is ineligible

FICA:

Overtime premium remains subject to payroll taxes; deduction is federal income tax only

Sunset:

Available 2025–2028 unless extended by Congress

Refresh cadence

Reviewed on IRS final regulations under §70202. IRS Notice 2025-69 is the current operative guidance; updated when superseded.

SALT Deduction

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Sources

• OBBB §70120 — SALT cap increased to $40,400 (MFJ) / $20,200 (Single/HoH/MFS) for 2026
• IRC §164(b)(6) as amended by OBBB
• IRS Rev. Proc. 2025-32 (2026 standard deduction for itemizing comparison)

Formula

saltCap = $40,400 (MFJ) or $20,200 (Single/HoH/MFS)
// Phase-down: cap reduced by 30% when MAGI > threshold
// threshold: $505,050 (Single) or $1,010,100 (MFJ)
phaseDownFactor = MAGI > threshold ? 0.70 : 1.0
effectiveCap = saltCap * phaseDownFactor
allowedSALT = min(stateTaxPaid + localTaxPaid + propertyTaxPaid, effectiveCap)
itemizedBenefit = max(0, allowedSALT + otherItemized - standardDeduction)

Assumptions

Cap (2026):

$40,400 MFJ / $20,200 Single per OBBB §70120

Itemizing required:

SALT is an itemized deduction — only beneficial if total itemized > standard deduction

State conformity:

State tax treatment varies; not modeled

Phase-down:

30% cap reduction for high earners per OBBB §70120(b)

Refresh cadence

Cap amounts are inflation-indexed starting 2027. Reviewed annually when IRS issues Rev. Proc. for following tax year.

2026 Tax Bracket

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Sources

• IRS Rev. Proc. 2025-32, Table 1 (2026 tax rate schedules)
• IRC §1(f) (inflation indexing of brackets)
• OBBB §70101 (made TCJA 7-bracket structure permanent)

Formula

// 2026 brackets — Single filer (Rev. Proc. 2025-32)
// 10%: $0 – $11,925
// 12%: $11,926 – $48,475
// 22%: $48,476 – $103,350
// 24%: $103,351 – $197,300
// 32%: $197,301 – $250,525
// 35%: $250,526 – $626,350
// 37%: > $626,350
tax = sum of (rate × income_in_bracket) for each bracket reached
marginalRate = rate of highest bracket containing taxable income

Assumptions

Permanent structure:

OBBB §70101 made the 7-bracket TCJA structure permanent; no 2026 revert to pre-TCJA rates

Inflation indexing:

Bracket thresholds from Rev. Proc. 2025-32 (Chained CPI indexed)

Taxable income:

Calculator applies standard deduction; itemized deductions not modeled in this tool

Refresh cadence

Bracket thresholds updated annually in November/December when IRS publishes the following year's Rev. Proc. for inflation adjustments.

EV Tax Credit Phase-Out

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Sources

• IRC §30D (Clean Vehicle Credit) as modified by OBBB §70502
• OBBB §70502 — phase-out of new EV credit effective September 30, 2025
• IRC §25E (used clean vehicle credit) and IRC §45W (commercial clean vehicle credit)
• IRS guidance on MSRP caps and income limits (Notice 2023-1, updated)

Formula

// New EV credit (§30D) — vehicles purchased before 9/30/2025
creditNew = $7,500 if vehicle meets battery/assembly requirements; else $0
// Income limits: $150K Single / $300K MFJ / $225K HoH (MAGI)
eligibleNew = MAGI <= incomeLimit && MSRP <= msrpCap

// Used EV credit (§25E) — not affected by OBBB
creditUsed = min($4,000, salePrice * 0.30)
// Income limits: $75K Single / $150K MFJ (MAGI)

// Credit is non-refundable; limited to tax liability
allowedCredit = min(credit, federalTaxLiability)

Assumptions

§30D phase-out:

New EV credit eliminated for vehicles delivered on or after September 30, 2025 per OBBB §70502

§25E:

Used clean vehicle credit not eliminated by OBBB; remains available through 2032

MSRP caps:

$80,000 SUV/truck/van; $55,000 other (pre-phase-out §30D purchases)

Non-refundable:

Credit cannot exceed federal income tax liability; no refund if credit exceeds tax

Refresh cadence

No further updates expected for §30D new vehicle credit (eliminated). §25E and §45W reviewed when IRS issues updated guidance or Treasury publishes new approved vehicle lists.

Mortgage Interest Deduction

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Sources

• OBBB §70108 — permanently extended $750,000 acquisition debt cap (TCJA §163(h)(3))
• IRC §163(h)(3)(E) — PMI deductibility made permanent by OBBB §70108
• IRS Rev. Proc. 2025-32 (standard deduction figures for itemizing comparison)

Formula

cap = $750,000 (post-12/15/2017 loans) or $1,000,000 (pre-12/16/2017 loans)
MFS_cap = cap / 2
prorationFactor = min(1, cap / averageBalance)
deductibleInterest = interestPaid * prorationFactor
deductiblePMI = pmiPaid   // acquisition debt only; AGI phase-out simplified
totalMortgageDeduction = deductibleInterest + deductiblePMI
// Benefit only when itemized total > standard deduction
netBenefit = max(0, (totalMortgageDeduction + otherItemized - standardDeduction)) * marginalRate

Assumptions

$750K cap:

Permanent per OBBB §70108 — TCJA sunset removed; pre-2018 loans still grandfathered at $1M

Acquisition debt:

Only debt to buy, build, or substantially improve the home qualifies

PMI phase-out:

Simplified — AGI phase-out for PMI not fully modeled

Itemizing required:

Schedule A itemization required; calculator shows itemized vs. standard comparison

Refresh cadence

Cap is now permanent; reviewed annually only for standard deduction comparison figures (from IRS Rev. Proc. each November).

Property Tax

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Sources

• Tax Foundation — State and Local Property Tax Burdens by State, 2025
• State revenue departments and county assessor data (50 states + DC)
• OBBB §70120 — SALT cap increase (affects deductibility of property taxes on Schedule A)

Formula

// Effective rate method (when using state average)
estimatedTax = assessedValue * effectiveRate
effectiveRate: state-level average from Tax Foundation 2025 data

// Custom rate method
estimatedTax = assessedValue * (customRate / 100)

// SALT deductibility (federal Schedule A)
deductiblePropertyTax = min(propertyTax, remainingSALTCap)
remainingSALTCap = max(0, saltCap - stateIncomeTaxPaid)
saltCap = $40,400 (MFJ) or $20,200 (Single) per OBBB §70120

Assumptions

Effective rate:

State averages from Tax Foundation; individual properties may differ significantly by county/municipality

Assessed value:

Calculator uses entered value; many states assess at fraction of market value — enter assessed value, not market value, for accuracy

Exemptions:

Homestead, senior, veteran, and disability exemptions not modeled

SALT deductibility:

Federal deduction only; property tax state-level deductibility not modeled

Refresh cadence

State effective rate table refreshed annually when Tax Foundation publishes updated state property tax data (typically Q1). SALT cap reviewed when IRS publishes inflation-adjusted figures.

Compound Interest

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Sources

• Standard compound interest and future value of annuity formulas (no live source-data)
• BLS CPI-U series CUUR0000SA0 — 2025 annual average 315.6 (for inflation-adjusted real value)

Formula

// Lump-sum future value
FV_lump = P * (1 + r/n)^(n*t)

// Future value with regular contributions (end-of-period)
FV_annuity = PMT * [(1 + r/n)^(n*t) - 1] / (r/n)

FV_total = FV_lump + FV_annuity

// Inflation-adjusted real value
realValue = FV_total / (1 + inflationRate)^years

where:
  P   = principal
  r   = nominal annual rate (decimal)
  n   = compounding periods per year (1=annual, 12=monthly, etc.)
  t   = years
  PMT = periodic contribution

Assumptions

Contributions:

Added at end of each contribution period (ordinary annuity)

Rate:

Nominal annual rate — not inflation-adjusted; apply after-tax rate for post-tax estimates

Constant rate:

Assumes fixed return throughout — actual investment returns fluctuate

Taxes:

Not modeled — no capital gains or interest tax applied to interim growth

Refresh cadence

Formula is closed-form; no source-data refresh needed. Inflation default rate updated annually using BLS CPI-U CUUR0000SA0 annual average (series updated each January for prior full year).

What we won't include (and why)

• State income tax. Fifty separate rule sets, each with its own deductions and credits. Doing it well is a year of work; doing it poorly is misleading.
• Tax credits (CTC, EITC, education, etc.). These have eligibility tests our simplified calculators can't honestly resolve.
• AMT. Out of scope for a back-of-envelope tool. If your income makes AMT plausible, you should be working with a CPA anyway.
• Inherited IRA rules. The 10-year rule and annual distribution requirements for non-spouse beneficiaries are not modeled in the RMD calculator.

Sources, in one list

1. IRS Publication 17 — irs.gov/publications/p17
2. IRS Revenue Procedures — irs.gov/internal-revenue-bulletins
3. BLS CPI-U series CUUR0000SA0 — bls.gov/cpi
4. IRS Publication 590-B (RMD tables) — irs.gov/publications/p590b
5. Tax Foundation property tax data — taxfoundation.org
6. SSA wage base — ssa.gov/oact/cola/cbb.html
7. OBBB (One Big Beautiful Bill Act, Pub. L. 119-21) §§70101–70502 — congress.gov
8. IRS Notice 2025-69 (FLSA overtime premium definition) — irs.gov
9. Fair Labor Standards Act, 29 U.S.C. §207 — dol.gov
10. IRC §30D, §25E, §45W (clean vehicle credits) — irs.gov