Methodology

The math, the constants, and the assumptions behind every number we show. If something looks off, this is the page that explains why.

Federal income tax

We use the 2026 projected federal brackets, inflation-adjusted from the 2025 IRS values published in Rev. Proc. 2024-40. We update these values once the IRS publishes the official 2026 inflation adjustments (typically late 2025) and again if mid-year guidance changes anything.

The standard deduction is taken automatically based on filing status. If you enter a higher itemized total in advanced inputs, we use that instead.

FICA

• Social Security: 6.2% up to the 2026 projected wage base of $178,500.
• Medicare: 1.45% on all wages.
• Additional Medicare: 0.9% on combined wages above $200k single / $250k joint / $125k MFS / $200k HOH.

Self-employment tax

Net SE earnings × 92.35% × (12.4% Social Security up to wage base remaining after W-2 wages, plus 2.9% Medicare on all of it). The additional 0.9% Medicare is layered on combined earned income above the threshold for the filing status. Half of the SS+Medicare portion (not the additional 0.9%) is deductible above-the-line.

State income tax (for comparison pages)

Texas: $0. For comparison states, we use the 2026 projected bracket structure as published by each state’s Department of Revenue (or our best inflation projection where the state hasn’t published yet). California includes the 1.1% SDI on wages with no cap. Illinois, Colorado, Georgia, and Arizona use their flat rates. New York applies state-only — local NYC and Yonkers taxes are not modeled in the comparison tool.

Bonus / supplemental withholding

The IRS percentage method: 22% on supplemental wages up to $1M YTD, 37% above. We add FICA on the bonus, accounting for whether the year-to-date wages have already exceeded the SS wage base.

Pretax contributions

• 401(k) traditional reduces federal taxable income but not FICA wages.
• Section 125 (HSA, qualifying health premiums, FSA) reduces both federal taxable income and FICA wages.
• Roth 401(k) and after-tax are post-tax and do not reduce federal taxable income.

What we do not model

• The Net Investment Income Tax (3.8%) — only relevant for investment income above thresholds.
• Alternative Minimum Tax (AMT) — narrow population.
• Itemized deductions in detail (mortgage interest, SALT cap, charitable). We allow a manual override.
• Local income taxes outside of state comparisons.
• Quarterly estimated payment timing for SE workers.
• Premium tax credits, child tax credit, and EITC — they affect refunds, not employer withholding.

Sources

• IRS Revenue Procedure 2024-40 (2025 inflation adjustments).
• SSA Cost-of-Living Adjustment notice (annual SS wage base updates).
• State Departments of Revenue (each state for comparison data).
• Texas Comptroller (sales tax rates, franchise tax).
• Bureau of Economic Analysis & Census ACS (cost-of-living data).
• Texas county appraisal districts (property tax effective rates).

Disclaimer

Estimates are educational. They are not tax, legal, or financial advice. For filing your return, planning equity comp, or handling a residency audit, hire a licensed CPA or tax attorney.