Methodology

Income tax calculations

Federal income tax

We compute federal income tax using the IRS 2024 marginal tax brackets and standard deductions. We assume the taxpayer takes the standard deduction (not itemized) — this is the majority case since the Tax Cuts and Jobs Act of 2017.

2024 standard deductions:

• Single or Married Filing Separately: $14,600
• Married Filing Jointly: $29,200
• Head of Household: $21,900

2024 federal tax brackets (single):

Tax = sum over brackets of (rate × min(taxable, bracketUpper - prevBracketUpper))

10% on $0 – $11,600
12% on $11,600 – $47,150
22% on $47,150 – $100,525
24% on $100,525 – $191,950
32% on $191,950 – $243,725
35% on $243,725 – $609,350
37% on $609,350+
      

Source: IRS Revenue Procedure 2023-34 (inflation adjustments).

FICA (Social Security + Medicare)

All wages are subject to FICA payroll taxes:

• Social Security: 6.2% on wages up to $168,600 (2024 wage base)
• Medicare: 1.45% on all wages (no cap)
• Additional Medicare: +0.9% on wages above $200K (single), $250K (MFJ), $125K (MFS)

Source: SSA.gov, IRS Publication 15 (Circular E), 2024.

State income tax

State income tax models vary by state type:

• No income tax: AK, FL, NV, SD, TN, TX, WA, WY — tax = $0
• Flat rate: e.g., CO 4.4%, IL 4.95%, PA 3.07% (+ local). See calculator for full list.
• Progressive: CA, NY use bracket tables (see calculator state data)

Important simplifications: Our state calculations:

1. Do not model state-specific deductions, credits, or exemptions.
2. For most flat-tax states we apply the top published marginal rate to gross income.
3. For progressive states (CA, NY) we apply a simplified standard deduction (~10% of income, min $2,000).
4. Local taxes (NYC, Yonkers, Ohio cities, Maryland counties, Indiana counties) are noted but not added to the estimate.

Real state tax liability may differ materially. Always verify with your state's revenue department or a tax professional.

Compound interest & savings

Standard compound interest formula with monthly compounding (n=12):

A = P(1 + r/n)^(n·t) + PMT × [((1 + r/n)^(n·t) - 1) / (r/n)]

where:
  P   = initial principal
  r   = annual interest rate (decimal, e.g., 0.07 for 7%)
  n   = compounding periods per year (12 for monthly)
  t   = time in years
  PMT = periodic contribution (added at end of each period)
      

Source: Standard formula taught in FIN 301 / corporate finance textbooks; verified against investor.gov compound calculator.

Mortgage & loan amortization

M = P × [r(1+r)^n] / [(1+r)^n - 1]

where:
  P = loan principal
  r = monthly interest rate (annual / 12)
  n = total number of monthly payments (years × 12)
      

This formula computes the level monthly payment for a fully-amortizing fixed-rate loan. Our mortgage calculator does not include property taxes, homeowners insurance, PMI, or HOA — those vary too much by location. The "monthly payment" shown is principal + interest only.

Retirement projections

Retirement, 401(k), and Roth IRA calculators reuse the compound interest formula with additional assumptions:

• 4% rule for safe withdrawal (Trinity Study, 1998)
• Employer match modeled as additional contribution up to specified cap
• Roth vs Traditional tax treatment differences noted in calculator copy

We do not model sequence-of-returns risk, inflation-adjusted withdrawal, or Social Security timing in basic projections.

Capital gains

2024 long-term capital gains brackets (single)

• 0% rate: taxable income up to $47,025
• 15% rate: $47,025 – $518,900
• 20% rate: above $518,900

Plus Net Investment Income Tax (NIIT) of 3.8% on the lesser of investment income or modified AGI above $200K (single) / $250K (MFJ).

Short-term gains (assets held ≤ 1 year) taxed as ordinary income at federal income tax rates.

Self-employment tax

SE tax = 15.3% × 92.35% × net SE income

  = (12.4% Social Security up to $168,600 + 2.9% Medicare) × 0.9235 × net SE income

Half of SE tax is deductible from gross income.
      

Data sources

• Federal tax brackets, deductions: IRS Revenue Procedure 2023-34
• FICA rates, wage base: SSA.gov, IRS Publication 15 (2024)
• State income tax rates: State department of revenue websites, Federation of Tax Administrators (2024)
• State sales tax: Tax Foundation 2024 state + local average combined rates
• Capital gains / NIIT: IRS Publication 505, 2024
• Standard formulas: amortization (any finance textbook); compound interest (investor.gov reference); 4% rule (Trinity Study, Cooley et al. 1998)

Limitations

These calculators produce estimates suitable for general planning. They are not a substitute for:

• Tax preparation software (TurboTax, FreeTaxUSA, etc.)
• A certified public accountant (CPA)
• A fee-only financial advisor
• The actual IRS Form 1040 instructions

See our full disclaimer.

Update cadence

• Annually (Oct–Nov): IRS inflation adjustments → federal brackets, deductions, FICA wage base
• Quarterly: review of state tax rate changes
• As needed: any material tax law changes (e.g., TCJA expirations in 2026)