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 W-2 vs 1099 offer comparison remains single-filer. The dedicated 1099 tax-planning calculators can instead use the published 2026 Single, MFJ, HOH or MFS federal schedule.
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 1099 tax-planning engine estimates the section 199A qualified business income deduction using the selected federal filing status, including the 20% framework, taxable-income cap, 2026 filing-status threshold/phase-in logic, SSTB handling and the 2026 minimum-deduction rule for qualifying active QBI. For MFJ spouse self-employment profit, ordinary active QBI is aggregated in the joint planning model. The standalone QBI exploration tool retains its separately documented scope.
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 single-filer 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. For MFJ, HOH and MFS, those zero-broad-income-tax states can be combined with the federal filing-status model without inventing state brackets; taxable-state non-single paths remain blocked until separately validated. 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% above the IRS higher-income threshold: generally prior-year AGI over $150,000, or over $75,000 when Married Filing Separately. 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 federal schedules for Single, MFJ, HOH and MFS in the 1099 tax planners; standard deduction $16,100 Single/MFS, $32,200 MFJ and $24,150 HOH. The core offer-comparison experience remains single-filer. | 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.