Frequently Asked Questions about the Tax Policy Calculator

1. Why are the standard deduction and personal exemption different from my tax return?
Many parameters in the tax code are indexed for inflation, and rise slightly every year. Parameters for any given year are based on an IRS formula that adjusts tax parameters for inflation based on official numbers from the Bureau of Labor Statistics.

2. Why does your calculator show little or no AMT when my actual tax return shows a much larger AMT?
AMT depends on a large number of factors and is very sensitive to particular kinds of itemized deductions. Many of these are not things that we ask about - in making this calculator, the Tax Foundation strove to find a reasonable balance between simplicity and accuracy. The two most significant kinds of deductions that affect AMT are the real estate tax deduction and the local income tax deduction, which is why we specifically ask about them.

3. Where do I enter the deduction for state sales taxes?
This can be entered in the box for the local income tax deduction - they have the same effect. Note that you can choose only one or the other - you cannot deduct both state sales and income taxes.

4. Why don't your numbers line up exactly with my tax return?
The United States tax code is lengthy and complex - the instructions for the Form 1040 alone are 175 pages long. If we wanted to make a calculator that would give you an exact calculation of your tax, we'd have to ask you hundreds of questions about the most arcane details of your finances. Our goal was to make a relatively simple calculator that could give you a reasonable estimate of how the expiration of the Bush Tax Cuts could affect you. For most people, the estimate should be reasonably accurate, but if you have a particularly complicated return, our numbers may depart substantially from reality.

5. Who is the Tax Foundation?
The Tax Foundation is a non-partisan organization whose mission is to educate taxpayers about sound tax policy and the size of the tax burden borne by Americans at all levels of government. From its founding in 1937, the Tax Foundation has been grounded in the belief that the dissemination of basic information about government finance is the foundation of sound policy in a free society.

In programming this calculator we strove for the most accurate estimate possible, based on the best available evidence, and the most up-to-date proposals, and did not make any decisions to include or exclude certain questions or calculations based on how they would affect the outcome. All of our assumptions are publicly available and our calculator is written entirely in client-side Javascript, so anyone who wishes to can view our code and audit our calculation - we have nothing to hide. The code to the calculation itself is here: Javascript file
6. What are some specific examples I can run?
Low Income Single Parent: $20,000 income, 2 kids
Middle Income Family: $55,000 income, 2 kids
Wealthy Family: $300,000 income, 2 kids
Wealthier Family: $500,000 income, 2 kids
Very Wealthy Individual: $1.5 million income, single filer
President Obama’s Tax Return