Question 1

What are the new OBBBA additional deductions after AGI?

Accepted Answer

Schedule 1-A provides additional deductions for qualified tips, qualified FLSA overtime premium, qualifying personal vehicle loan interest and eligible seniors for 2025–2028. These reduce taxable income after AGI, alongside the standard or itemized deduction; they do not reduce AGI or payroll tax. Caps, MAGI phase-outs and eligibility differ. Married-separate filers cannot claim tips, overtime or senior deductions. Use qualified amounts only; this illustration does not verify occupations, SSNs, VINs or all other legal requirements.

Question 2

What's the difference between effective rate and marginal rate?

Accepted Answer

Your marginal rate is the tax bracket that applies to your last dollar of taxable income — it's useful for evaluating the tax impact of an additional deduction or extra income. Your effective rate is your total tax divided by your gross income — the estimated average share of gross income paid in federal, state/local and payroll or self-employment taxes. Because this combines different taxes, it can exceed your federal marginal rate. The federal bracket breakdown separately shows how only the income in each slice is taxed at that rate. For example, if your last dollar of income falls in the 22% bracket but your federal income tax works out to 14% of your gross income, that gap exists because only your top slice of income is taxed at 22% — every dollar below each bracket threshold is still taxed at its own lower rate first, not retroactively at your highest rate.

Question 3

Should I itemize or take the standard deduction?

Accepted Answer

Take whichever is larger. This calculator automatically uses your itemized total (SALT capped, medical expenses above the 7.5%-of-AGI floor) only if it exceeds the standard deduction for your filing status and year — otherwise the standard deduction applies by default. For example, someone with $12,000 in mortgage interest, $8,000 in state and local taxes (subject to the SALT cap), and $3,000 in charitable gifts would have roughly $23,000 in itemized deductions — worth claiming only if that total exceeds their standard deduction for the year, which this calculator checks automatically so you don't have to run both scenarios by hand.

Question 4

How is self-employment tax different from FICA withholding?

Accepted Answer

W-2 employees split Social Security and Medicare tax with their employer (7.65% each). Self-employed individuals pay both halves themselves (15.3% total, known as self-employment tax) on 92.35% of net self-employment earnings, up to the Social Security wage base for the 12.4% portion — with the 2.9% Medicare portion applying to all net earnings, uncapped, plus a 0.9% Additional Medicare surtax above a filing-status-based threshold. For example, on $80,000 of net self-employment earnings, the SE tax base is $73,880 (92.35% of $80,000): the 12.4% Social Security portion applies up to that year's wage base, the 2.9% Medicare portion applies to the full $73,880 with no cap, and the 0.9% surtax only kicks in above your filing status's Additional Medicare threshold.

Question 5

Why is take-home pay lower than "income minus federal tax"?

Accepted Answer

Take-home pay in this calculator subtracts your full tax burden — federal income tax (after credits), state and local tax, and FICA or self-employment tax — not just the federal piece. FICA/SE tax alone is typically 7.65%-15.3% of income, so it's a meaningful chunk that "income minus federal tax" alone would miss. For example, on $70,000 of gross income with a combined 10% federal/state/local effective rate and standard 7.65% FICA withholding, take-home pay lands closer to $58,000 than the $63,000 you'd get by subtracting only the federal-plus-state piece — the FICA line by itself accounts for nearly the entire $5,000 gap.

Question 6

How accurate are the state and local tax figures?

Accepted Answer

This calculator applies your entered flat percentages to your adjusted gross income as an approximation — it doesn't model your specific state's actual bracket structure, credits, or deductions. Most states use their own progressive brackets, standard deductions, and credits, so a single flat-rate assumption will overstate your bill in a state with a low effective rate on your first bracket of income, and understate it in a state with a high top bracket. This approach is meant to give a fast, directional estimate for combined federal-plus-state planning — for an exact state figure, check your state's own tax calculator or consult a professional familiar with your state's rules.

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