Methodology
How we calculate your rate
The math behind every calculator on this site is documented in plain English, with sources for every constant. Tax data verified for tax year 2026.
The full stack, in order
Federal income tax depends on AGI. AGI depends on the deductible portion of self-employment tax. Self-employment tax depends on your net business income. We can't just compute taxes — we have to solve for the revenue that produces your target take-home once every tax has been applied. Each step below is a discrete module in our codebase.
- 1Self-employment tax (Schedule SE)
12.4% Social Security up to the annual wage base, 2.9% Medicare uncapped, plus 0.9% additional Medicare above the filing-status threshold.
- 2AGI and deductions
Net SE income minus the deductible half of SE tax, retirement contributions, and self-employed health insurance — plus any other income for bracket placement.
- 3QBI deduction (Section 199A)
20% of qualified business income, capped at 20% of taxable income before QBI and conservatively limited at the SSTB phase-out threshold.
- 4Federal income tax
Standard deduction subtracted, then the federal bracket schedule applied for your filing status. Sourced from the IRS Revenue Procedure for the current tax year.
- 5State income tax
Dispatched on three structures — none, flat, or progressive — across all 50 states + DC, sourced from each state's department of revenue.
- 6Binary-search revenue solver
Take-home is monotonic in revenue, so we bisect on the revenue figure that lands on your target take-home, with a $1 tolerance.
Read the full step-by-step methodology on the calculator page, including the formulas we use for each step.
Data sources
Every constant we use is sourced from a primary publication. We re-verify each January when the IRS Revenue Procedure and state DOR releases land.
- IRS Revenue Procedure (annual inflation adjustments)
Federal brackets, standard deductions, the QBI threshold, and additional Medicare thresholds for the current tax year.
- IRS Topic 560 — Additional Medicare Tax
Filing-status thresholds for the 0.9% additional Medicare surtax.
- IRS Schedule SE
Self-employment tax computation, the 92.35% factor, and the wage base treatment.
- Social Security Administration — Contribution and Benefit Base
Annual Social Security wage base used in the 12.4% calculation.
- IRS Form 8995 / 8995-A — QBI Deduction
Section 199A QBI deduction rules including the SSTB phase-out and W-2-wage limits.
- Tax Foundation — State Individual Income Tax Rates and Brackets
Cross-checked annually against each state's department of revenue.
What we don't model
City and local income tax (NYC, Yonkers, Pennsylvania local EIT, Maryland counties), Mental Health Services Tax (CA's 1% above $1M), Massachusetts's 4% surtax above $1M, Washington's capital-gains tax, S-corp election effects, multi-state or part-year residency, the alternative minimum tax, and the SSTB QBI phase-out range. Output is an informational estimate only — see our Terms and consult a CPA or Enrolled Agent for any binding decision.
Update cadence
Federal constants are reviewed annually each January using the most recent IRS Revenue Procedure. State constants are reviewed using each state's department of revenue page and cross-checked against the Tax Foundation's annual summary. When a major jurisdiction makes a mid-year change (e.g., Louisiana's recent shift to a flat tax), we ship the update as soon as the official guidance is published.