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Methodology Tax year 2026 Last updated September 5, 2026

About & Methodology

PaycheckForge is a source-cited paycheck utility: every number traces back to a primary document, every simplification is written down, and every page shows when it was last verified.

Data sources (tax year 2026)

How calculations work

  • Annual liability is computed on annualized income, then divided evenly across pay periods (simplified percentage method — IRS Pub 15-T tables are not replicated).
  • The retirement field models traditional 401(k) deferrals: they reduce federal taxable income but stay subject to FICA. Pennsylvania keeps these contributions in its state base. Other retirement plans are not modeled. Eligible payroll §125 deductions reduce the modeled federal and FICA bases.
  • State taxable income uses state-eligible modeled deductions, the state standard deduction and dollar personal exemptions where applicable.

What isn't included

  • Local income tax is modeled for RESIDENTS of: all 24 Maryland local jurisdictions (23 counties + Baltimore City, including the graduated Anne Arundel and Frederick rates), all 92 Indiana counties, New York City and Yonkers (16.75% resident surcharge on state tax). Every other local income tax is still excluded — including Ohio municipal and school-district taxes, Pennsylvania EIT/LST, Kentucky, Michigan, Missouri, Alabama, Oregon and Colorado local taxes. Work-location (commuter) liability is not modeled anywhere: selecting a county or city applies the resident rate only, and the Yonkers non-resident earnings tax is not modeled. Maryland and Indiana rates are the authorities’ published 2026 figures; the New York City schedule and Yonkers surcharge are the most recent published New York figures (tax year 2025), as New York had not issued 2026 forms when checked.
  • State disability and payroll taxes such as CA SDI, NJ and WA Cares are excluded.
  • The retirement field models a traditional 401(k): PA employee contributions remain in the state tax base, while NJ excludes them. Other retirement plan types are not modeled.
  • Credit-style exemptions are not modeled unless documented by the calculator.
  • Employer cost: employer FICA and FUTA use the published federal rates under the stated assumptions; state unemployment and workers’ compensation are taken from the rate and wage base you enter, and FUTA credit-reduction states are not modelled.
  • Head of household uses 2026 federal HoH brackets and the $24,150 standard deduction. State-specific HoH deductions and exemptions are used only where explicitly modeled (currently Mississippi); every other state falls back to single-filer brackets/deduction for HoH, which overstates the real state tax owed by HoH filers there.
  • The federal Child Tax Credit is modeled ($2,200 per qualifying child under 17 for 2026, phased out above $200,000 single/HoH or $400,000 MFJ AGI) as a direct, non-refundable-style reduction of federal tax liability. The Earned Income Tax Credit and all other federal and state credits are NOT modeled — filers who qualify for the EITC or other credits will owe substantially less than shown.
  • Traditional 401(k) deferrals are capped at the 2026 §402(g) annual limit ($24,500); a requested contribution above that is capped in the model and flagged. Negative gross pay is clamped to $0, and combined pre-tax deductions (retirement + §125) are capped at gross pay — either case is flagged rather than shown as a negative or misleading result.
  • The 1099-vs-W2 tool models the federal §199A Qualified Business Income deduction (20% of qualified business income, capped by taxable income) at or below the 2026 taxable-income-before-QBI threshold ($201,750 single/HoH; $403,500 MFJ; IRS Rev. Proc. 2025-32 section 4.26). Above that threshold, the model applies $0 QBI deduction because SSTB and W-2-wage/UBIA phase-in rules are not supported; this may overstate tax and is not a finding of ineligibility. Capital gains, loss carryforwards and the eligibility-dependent $400 minimum deduction for 2026 are not modeled. Business expenses and self-employed benefits must be considered separately.
Planning estimatesAnnual tax liability is estimated and spread evenly across pay periods; employer withholding tables can differ. Estimates are for planning only — not tax, legal or financial advice.

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