Tax planning and filing doesn't need to be difficult. This calculator can help with estimating taxes and provide guidance for tax minimization both now and in the future.
Year: Your tax year.
Filing Status: Your tax filing status - Married filing jointly or separately, Single, Head of Household. This decides which standard deduction and tax brackets apply (see details here.)
Ordinary Income: Job & self-employment income, interest, non-qualified dividends, short-term capital gains, taxable retirement income, etc... Put the sum of all ordinary income here.
Qualified Income: Qualified dividends and long-term capital gains.
Adjustments: Top of the line deductions - IRA contributions, student loan interest, 1/2 of self-employment taxes, etc...
Itemized Deductions: The sum of all itemized deductions (if applicable)
Foreign Earned Income: The sum of all foreign earned income eligible for the Foreign Earned Income Exclusion (FEIE.)
Adjusted Gross Income (AGI): Total income minus adjustments.
Taxable Income: AGI minus deductions (Standard or Itemized).
Tax on Ordinary Income: Calculated tax burden on ordinary income.
Tax on Qualified Income: Calculated tax burden on qualified income.
Total tax: The sum of tax for both Ordinary and Qualified income.
Tax on Foreign Earned Income: Calculated tax burden on the excluded income.
Total Tax with FEIE: Total tax minus tax on excluded income.
Long-term thinking is at the heart of any good tax minimization strategy, including our own efforts to Never Pay Taxes Again. To think long term, we need to understand our marginal tax rate and options for tax-free income and growth.
The US tax code is rather simplistic and straight forward for the vast majority of tax-payers. By trying to cover the weird cases that apply to only a few people, most tax calculators are needlessly complex and time consuming. Instead of using unhelpful tools, I built my own.
This tax calculator will estimate tax burden, yes, but by sharing marginal rate info and opportunities for tax-free Roth conversions and capital gain harvests it also is helpful for minimizing tax burden today and in the future.
Federal taxes are only one aspect of tax burden - if you live within the US, you are also probably subject to State taxes and maybe get insurance through the ACA Health Exchange (which acts as a tax.) Increasing AGI may impact the ability to take deductions and may eliminate or reduce other subsidies, such as the Saver's credit and Earned Income Tax Credit and Student Aid. It is important to consider all angles.
To better understand how ACA subsidies change with income, see our ACA Premium and Subsidy Calculator.
Tax law is always changing and the future is unknowable. Maybe tax rates will increase or means testing will be implemented for retirement benefits. What is an effective strategy today may not be so tomorrow.
To decide how to prioritize Roth conversions and Capital gain harvests, see Roth Conversions vs Capital Gain Harvesting.
As the focus of this calculator is on low/zero tax optimization, it does not (yet?) include the Net Investment Income Tax (NIIT.)
Disclaimer: Always consult with a professional before taking action. This calculator may not produce accurate results in all scenarios, including those most important to you. I am at best an amateur coder and my knowledge in financial matters is limited and often inaccurate.
Latest update: July 31, 2021 - added basic NIIT support on qualified income only.