Tax Policy Calculator Documentation

August 9, 2013

Overview

This calculator estimates a given taxpayer's federal individual income tax liability under three scenarios: (1) the tax they owed in 2012 according to the laws in place at the time; (2) the tax they will owe in 2013 as a result of the tax bill passed in January; (3) what they would have owed this year had the January tax bill not been passed.

These scenarios are the default one enabled in the calculator, but the user can hover over them to change the tax year and enable/disable pieces of legislation.

The calculator was developed by Nicholas Kasprak with assistance provided by Gerald Prante and Mark Robyn. The original version of the calculator was released in July 2010 and was updated throughout the year. We've brought it back and rewritten it from the ground up in 2012, and first released this new version on April 16th. We are continually revising and updating the calculator, and sometimes change the default scenarios displayed.

The calculator has many assumptions embedded in it in order to make the calculator simple for use by ordinary citizens. Unfortunately, the tax code is even more complicated than this calculator would lead one to believe. With calculators like this one for public consumption, there is always a trade-off between simplicity for ease of use by the general public and accuracy for those who want a very detailed and accurate estimate. In building the calculator in its current format (most notably with the "catch all"/"other income category), we sought to strike the right balance between these competing desires (simplicity for average users and accuracy for those with more detailed knowledge of the tax code).

Assumptions

Aside from the AMT, for which patches can be turned on and off, we assume that various "tax extenders" that are typically extended every year by Congress (e.g., standard deduction for property taxes, above-the-line deduction for tuition and fees) are extended. Parameters have been adjusted for expected inflation per the IRS method for adjusting tax parameters for annual changes in the monthly CPI average. Some projection is required, so these may differ slightly with the projections of CBO, JCT, or the Tax Policy Center.

For a complete list of the assumed parameter amounts and tax parameters under the three default scenarios, click here.

The "Buffett Rule" is not formally in Obama's FY2013 budget, but we include it as a separate option that can be turned off or on.

In order to avoid a long list of questions pertaining to college expenses and students, this calculator makes simple assumptions regarding the tuition tax breaks a family receives, such as each student paying the same tuition in families with multiple college students.

Disclaimer

This calculator should not be used for calculating one's own official income tax. No information entered into the tax calculator is stored in any way. If you find any odd results in the calculator that you feel may be incorrect, please e-mail the Tax Foundation immediately.

Note that the Tax Foundation is not a place that gives personalized tax consulting. Please see a tax lawyer or accountant for that.

Calculator is the property of the Tax Foundation. Click here for more legal information pertaining to the calculator.


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