Methodology & Data Sources

Every number on TheTaxCalc.com is derived from official government publications. This page documents exactly which sources we use, how each tax is calculated, and what assumptions go into our 2026 calculators.

Last updated: January 2026 · Tax year: 2026

Federal Income Tax

Federal income tax is computed using the progressive bracket system defined in IRS Revenue Procedure 2025-25 and IRS Publication 15-T (Percentage Method Tables for Income Tax Withholding). For the 2026 tax year, there are seven brackets ranging from 10% to 37%. The standard deduction amounts are $16,100 for Single filers, $32,200 for Married Filing Jointly, and $24,150 for Head of Household. Our paycheck calculator applies these brackets sequentially to taxable income (gross income minus pre-tax deductions and the standard deduction), exactly as the IRS prescribes.

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FICA: Social Security & Medicare

FICA taxes are calculated at 6.2% for Social Security (OASDI) on earnings up to the annual wage base limit, and 1.45% for Medicare (HI) on all earnings with no cap. For 2026, the Social Security wage base is $184,500, as announced by the Social Security Administration. An Additional Medicare Tax of 0.9% applies to earned income exceeding $200,000 for single filers ($250,000 for married filing jointly). Pre-tax deductions such as 401(k) contributions do not reduce FICA taxable income — only federal and state income tax. This is correctly reflected in all our calculators.

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State Income Tax

State income tax calculations vary significantly by state. We support all 50 states with the following approach: for states with progressive bracket systems (e.g., California, New York, Georgia), we apply each state’s published brackets to state taxable income. For flat-tax states (e.g., Illinois at 4.95%, Pennsylvania at 3.07%), we apply a single rate. For states with no individual income tax (e.g., Texas, Florida, Washington, Tennessee, Wyoming, Nevada, South Dakota, Alaska, New Hampshire), the state income tax component is zero. State standard deductions and personal exemptions are factored in where applicable. Our data is sourced directly from each state’s Department of Revenue or equivalent authority.

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401(k) & Retirement Projections

Our 401(k) calculator projects future retirement balances using compound growth with the formula: Balance = P × (1 + r)n+ C × [((1 + r)n− 1) / r], where P is the current balance, r is the assumed annual rate of return, n is the number of years, and C is the total annual contribution (employee + employer match). The 2026 401(k) contribution limit is $23,500 for those under 50, with an additional $7,500 catch-up contribution for those aged 50+, as set by the IRS. Employer match is applied according to the most common formula (50% match on the first 6% of salary). Projections are estimates only; actual returns will vary based on market conditions.

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Capital Gains Tax

Capital gains tax rates depend on the holding period and the taxpayer’s total taxable income. Short-term gains (assets held one year or less) are taxed as ordinary income using the federal brackets. Long-term gains (held more than one year) benefit from preferential rates: 0%, 15%, or 20%, depending on income level. For 2026, the 0% rate applies to taxable income up to $48,350 (single) or $96,700 (married filing jointly). The Net Investment Income Tax (NIIT) adds an additional 3.8% on investment income for individuals with modified AGI exceeding $200,000 (single) or $250,000 (MFJ). Our calculator factors in both the long-term rates and the NIIT surcharge.

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Self-Employment Tax

Self-employment tax covers both the employer and employee portions of FICA for freelancers and independent contractors. The total rate is 15.3%: 12.4% for Social Security (on net earnings up to the $184,500 wage base) and 2.9% for Medicare (on all net earnings). However, only 92.35% of net self-employment income is subject to SE tax, and half of the total SE tax is deductible against ordinary income. Our calculator applies these rules exactly as specified in IRS Schedule SE and Publication 533.

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Sales Tax

Our sales tax calculator uses combined rates that include the state base rate plus average local rates. For example, Texas has a 6.25% state sales tax but the average combined rate including local add-ons is approximately 8.2%. Five states (Oregon, Montana, Delaware, New Hampshire, Alaska) have no statewide sales tax, though Alaska and some others allow local sales taxes. Rates are sourced from each state’s revenue department and cross-referenced with the Tax Foundation’s annual state and local sales tax report.

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Property Tax

Property tax estimates are based on effective tax rates, calculated as the median annual property tax paid divided by the median home value in each state. These rates vary significantly: from approximately 0.28% in Hawaii to over 2.21% in New Jersey. Our data is drawn from the U.S. Census Bureau and Tax Foundation analyses. The calculator multiplies the home’s assessed value by the state’s average effective rate to produce an annual estimate. Actual property tax bills depend on local millage rates, assessment ratios, and exemptions (e.g., homestead exemptions in Florida), which vary by county.

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Payroll Deductions & Supplemental Income

For bonuses, overtime, and other supplemental wages, our calculators apply the IRS supplemental withholding rate of 22% for amounts under $1 million and 37% for amounts exceeding $1 million, as defined in IRS Publication 15-T. State supplemental rates are applied according to each state’s published rules. The lottery tax calculator applies the mandatory 24% federal withholding on winnings over $5,000, plus applicable state withholding, and then computes the actual tax liability at the taxpayer’s marginal rate (which may be higher than the withholding).

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Privacy & Client-Side Computation

All tax calculations on TheTaxCalc.com are performed entirely in your browser using JavaScript. Your income, deductions, and tax figures are never transmitted to our servers or stored in any database. The only data we collect is standard web analytics (page views, referral sources) and email addresses if you voluntarily subscribe to our newsletter. This architecture ensures that your sensitive financial information remains private and secure on your own device.

Important Disclaimer

The calculations provided by TheTaxCalc.com are estimates for informational and educational purposes only. They do not constitute tax advice, and should not be used as the sole basis for financial decisions or tax filing. Individual tax situations vary based on many factors including but not limited to: additional deductions, credits, alternative minimum tax, foreign income, stock compensation, and multi-state filing obligations.

We strongly recommend consulting a qualified tax professional (CPA, EA, or tax attorney) for advice specific to your situation. While we make every effort to ensure accuracy by sourcing data from official government publications, tax law changes frequently and errors may occur. Use of this tool constitutes acceptance of our Terms of Use.

Update Schedule

We update our tax data on the following schedule to ensure accuracy:

  • JanAnnual IRS inflation adjustments and new bracket/rate data published
  • Oct–NovSSA announces the upcoming year’s Social Security wage base
  • OngoingState legislative changes incorporated within 30 days of enactment
  • QuarterlyFull review of all calculator logic and data sources for consistency