Analyze My Income is a planning calculator, not tax-return preparation software. This page documents the production model: the tax year, formulas, assumptions, source hierarchy, state-tax treatment, break-even method and known limitations behind the results.
The model starts with W-2 gross wages, applies supported above-the-line adjustments when supplied, and subtracts the 2026 standard deduction. The core production comparison uses the single-filer federal bracket table.
Employee FICA uses 6.2% Social Security tax up to the 2026 Social Security wage base and 1.45% Medicare tax without a wage cap. The model also applies the 0.9% Additional Medicare Tax when the relevant filing-status threshold is exceeded.
Federal income tax is computed progressively from taxable income. State tax is calculated through the selected state's 2026 path rather than applying one generic national state-tax percentage.
The standard quick comparison subtracts modeled employee FICA, federal income tax and selected-state individual income tax from gross wages.
Gross 1099 revenue is reduced by the annual business-expense input. The result is the model's Schedule C-style net profit used for the self-employment calculation.
The model multiplies net profit by 92.35% to estimate net earnings from self-employment. Regular self-employment tax combines 12.4% Social Security, subject to the remaining Social Security wage base, and 2.9% Medicare. The 0.9% Additional Medicare Tax is applied separately when required.
The adjustment to income is one-half of the regular Social Security and Medicare portions of self-employment tax. Additional Medicare Tax is not included in this deductible half.
The calculator uses a simplified Form 7206-style scope for eligible premiums. The modeled deduction is limited by business income after the deductible employer-equivalent portion of self-employment tax. Health-insurance premiums are still treated as a cash outflow in take-home.
The model estimates the section 199A qualified business income deduction for the supported single-filer scenario, including the 20% framework, taxable-income cap, 2026 threshold/phase-in logic, SSTB handling and the 2026 minimum-deduction rule for qualifying active QBI.
After federal taxable income and state tax are calculated, estimated take-home subtracts business expenses, health-insurance cash cost, self-employment tax, federal income tax and state individual income tax from gross contractor revenue.
The break-even result is not a fixed “add 20%” rule. Analyze My Income first calculates the estimated W-2 take-home under the selected scenario. It then repeatedly recalculates the contractor side at different gross 1099 amounts until it finds the lowest contractor gross amount whose modeled take-home is at least equal to the W-2 take-home.
The standard engine uses a bounded numerical binary-search process for this comparison. The hourly break-even is then the break-even annual contractor gross divided by the user's annual billable-hours assumption.
Because business expenses, health-insurance cost, state taxes and billable hours are explicit inputs, two people with the same W-2 salary can receive different contractor break-even results.
The state layer is separate from the federal engine. Each selected state can use its own starting-income basis, deduction, exemption, flat rate, progressive brackets or special path. This matters because state systems do not all begin from the same federal number and some require state-specific adjustments.
The production model includes all 50 states. States without a broad individual income tax on wages are modeled as zero for that state individual-income-tax component. A zero state result does not mean the person has no other state or local taxes.
Source policy: state values are reviewed against official state revenue/tax authority material. The IRS maintains an official state government website directory that links taxpayers to each state's government and taxation resources.
Local-tax limitation: city, county, municipal, school-district and other local income/payroll taxes are not part of the standard 50-state comparison unless a page explicitly says otherwise. This is especially important in locations with material local income taxes.
The quarterly planner estimates current-year federal income tax plus self-employment tax, then considers federal withholding, prior estimated payments and, when supplied, prior-year tax and prior-year AGI.
For the standard safe-harbor path, the required annual payment is based on the smaller of 90% of projected current-year federal tax or 100% of prior-year tax. The prior-year percentage becomes 110% for the higher-income threshold used by the IRS. The model also applies the general $1,000 expected-balance trigger used for individual estimated-tax planning.
For calendar-year 2026 planning, the standard installment dates used by the engine are April 15, 2026; June 15, 2026; September 15, 2026; and January 15, 2027. The planner spreads the remaining modeled safe-harbor amount across remaining standard installments.
Limitation: this simplified planner does not reproduce every Form 2210 exception or annualized-income installment calculation. People with uneven income, farming/fishing income, unusual withholding patterns or other special rules should use the IRS forms or a qualified tax professional.
| Model component | 2026 treatment | Primary source |
|---|---|---|
| Federal brackets & standard deduction | 2026 single-filer tax brackets; $16,100 standard deduction in the core single-filer model. | IRS 2026 inflation adjustments / Rev. Proc. 2025-32 |
| Social Security & Medicare rates | 6.2% employee Social Security; 12.4% self-employed Social Security; 1.45% employee Medicare; 2.9% self-employed Medicare. | IRS Topic 751 |
| 2026 Social Security wage base | $184,500 taxable maximum for Social Security. | Social Security Administration contribution and benefit base |
| Self-employment tax | Schedule SE framework, including net earnings from self-employment and the deductible employer-equivalent portion. | IRS self-employment tax guidance · Schedule SE |
| Additional Medicare Tax | 0.9% additional tax above the filing-status threshold; wages and self-employment income coordinated for the threshold calculation. | IRS Topic 560 · Form 8959 |
| Self-employed health insurance | Simplified deduction scope based on the self-employed health-insurance rules and business-income limitation. | IRS Form 7206 |
| Qualified Business Income (QBI) | 20% framework, 2026 single-filer threshold/phase-in treatment, SSTB/wage-property logic where supported, and the 2026 $400 minimum deduction when qualifying active QBI reaches the statutory minimum. | IRS Internal Revenue Bulletin 2025-45 / Rev. Proc. 2025-32 |
| Federal estimated tax | General $1,000 trigger; 90% current-year or 100%/110% prior-year safe-harbor framework; standard installment schedule. | IRS Form 1040-ES · IRS Publication 505 |
| State income tax | State-specific 2026 tax path using the applicable official state tax authority as the authority for rates, brackets, deductions and special rules. | IRS directory of official state government tax resources |
Run the standard take-home and contractor break-even comparison.
Calculate an annual and hourly contractor target from your current salary.
See the modeled tax, take-home and amount still to fund.
Estimate the next federal safe-harbor payment and standard deadline.