How We Calculate
Our methodology, formulas, and data sources
General Calculation Principles
All calculations on ByteJSON run entirely client-side in your browser. Your financial data is never sent to any server — there is no backend processing, no logging, and no data collection. This ensures complete privacy for sensitive tax and income information.
Our formulas are based on official IRS publications and Social Security Administration (SSA) documentation. We implement the same computation methods described in IRS worksheets, instructions, and revenue procedures, adapting them for interactive use.
While we strive for accuracy, our calculators are designed for estimation and planning purposes. They do not constitute tax advice. Always consult a qualified tax professional for decisions involving your specific situation.
Self-Employment Tax
The self-employment (SE) tax is calculated using the formula from IRS Schedule SE. It consists of two components applied to your net self-employment income:
SE Tax Formula
The combined base rate is 15.3% (12.4% + 2.9%) on income up to the Social Security wage base. Above the wage base, only the 2.9% Medicare portion applies, plus the 0.9% Additional Medicare Tax above $200K.
Deductible half of SE tax: Per IRS rules, you can deduct 50% of your self-employment tax when calculating your adjusted gross income (AGI). This deduction effectively reduces the net cost of the SE tax and is factored into our calculator.
Net SE income is computed as 92.35% of your net profit from self-employment, consistent with the Schedule SE methodology that approximates the employer-equivalent portion.
1099 vs W-2 Comparison
Our 1099 vs W-2 calculator computes the take-home pay for both classifications so you can make an informed decision about your employment arrangement. Here is how each side is calculated:
W-2 Employee
- FICA: The employer pays 7.65% (6.2% Social Security + 1.45% Medicare) and the employee pays 7.65% from their paycheck. Only the employee portion reduces your take-home pay.
- Federal income tax: Applied using the 2026 tax brackets after the standard deduction.
- State income tax: Applied at the marginal rate for your state, if applicable.
1099 Independent Contractor
- Self-employment tax: You pay the full 15.3% (both employer and employee portions), computed via Schedule SE as described above.
- QBI deduction: Eligible self-employed individuals may deduct up to 20% of qualified business income (QBI) under Section 199A. Our calculator applies this deduction where applicable.
- Federal income tax: Applied using the 2026 tax brackets after the standard deduction and the deductible half of SE tax.
- State income tax: Applied at the marginal rate for your state, if applicable.
The comparison highlights the total tax burden difference, including the employer-side FICA that W-2 employees do not see on their pay stubs but that represents a real cost to the employer.
Roth Conversion
The Roth conversion calculator evaluates the tax impact of converting funds from a traditional IRA or 401(k) to a Roth IRA. It considers several important factors:
Marginal Rate Analysis
The conversion amount is taxed as ordinary income. We calculate which tax brackets the conversion fills and apply the corresponding marginal rates, showing you the exact tax cost at each bracket level.
Fill-the-Bracket Strategy
We show how much you can convert while staying within your current bracket, helping you avoid pushing yourself into a higher marginal rate unnecessarily. This is the core of a tax-efficient conversion strategy.
IRMAA Thresholds
Converting increases your adjusted gross income, which may push you above Income Related Monthly Adjustment Amount (IRMAA) thresholds for Medicare Part B and D premiums. We flag when your projected income crosses these thresholds.
NIIT Implications
The Net Investment Income Tax (3.8%) may apply if your modified AGI exceeds $200,000 (single) or $250,000 (married filing jointly). We account for this additional tax in the conversion cost.
Pro-Rata Rule
If you hold both pre-tax and after-tax (non-deductible) funds in any traditional IRA, the pro-rata rule requires that any conversion includes a proportional mix of both. Our calculator factors this in when you provide your IRA basis.
Federal Income Tax
Our calculators use the 2026 federal income tax brackets with seven marginal rates ranging from 10% to 37%. The brackets differ by filing status (single, married filing jointly, married filing separately, head of household).
How marginal rates work: Only the income within each bracket is taxed at that bracket's rate. For example, if you are a single filer with $100,000 in taxable income, the first portion is taxed at 10%, the next portion at 12%, and so on through the brackets your income reaches. Your effective (average) tax rate will always be lower than your top marginal rate.
The standard deduction is subtracted from gross income before applying the tax brackets. For 2026, the standard deduction amounts vary by filing status. Our calculators apply the standard deduction by default.
All bracket thresholds and deduction amounts are sourced from the IRS official publications for the 2026 tax year.
Data Currency
2026 tax year figures. Last updated June 2026.
Tax brackets, standard deductions, Social Security wage base limits, and all other numerical thresholds reflect the most recently published IRS and SSA data for the 2026 tax year. When the IRS publishes updated figures, we update our calculators promptly.
Verification
Each calculator's outputs are manually verified against IRS worksheets and published examples. We cross-reference our results with the step-by-step computations shown in IRS instructions to ensure our formulas produce correct outputs for a range of test scenarios.
If you find a discrepancy or have a question about a specific calculation, please contact us and we will investigate promptly.