Every formula, every source, every constant. If you want to know exactly how we calculate your tax numbers — it's all here.
Our calculators use the same formulas a CPA uses. The math is deterministic — not AI-generated. Given the same inputs, you get the same result every time. AI is used only for personalized written analysis in premium reports, and the numbers feeding that analysis are always formula-calculated first. We disclose every source, every constant, and every limitation on this page so you can verify our work.
How each tool works under the hood — what formulas we apply, in what order, and what IRS guidance drives each calculation.
Net self-employment income is multiplied by 92.35% to get the SE tax base (reflecting the 7.65% employer-equivalent deduction under IRC § 1402(a)(12)). Social Security tax applies at 12.4% on the SE base up to the $184,500 SS wage base. Medicare applies at 2.9% on all SE base income. An additional 0.9% Medicare surtax applies to SE base above $200,000 (single) or $250,000 (MFJ) under IRC § 3101(b)(2).
Federal income tax uses 2026 seven-bracket rates from IRS Rev. Proc. 2025-61. Standard deductions apply before bracket calculation. State tax applies as a flat effective rate on the same adjusted base (AGI minus standard deduction).
IRS Pub. 533 — Self-Employment Tax →The calculator computes after-tax income independently for three entity structures and compares them side by side.
LLC / Sole Prop: Full SE tax on all net income (formula above), plus QBI deduction (23% of net income under IRC § 199A, OBBBA), federal brackets applied to adjusted taxable income, and state tax on AGI minus standard deduction.
S-Corp: Net income is split between W-2 salary and distributions. Salary is subject to FICA (employer 7.65% + employee 7.65% capped at SS wage base for SS portion). Distributions avoid FICA entirely. QBI applies to distributions only. Federal income tax applies to the full taxable income. S-Corp compliance costs (~$2,600/yr) are shown but excluded from the base tax comparison to isolate the tax math.
C-Corp: Corporate income is taxed at a flat 21% (IRC § 11). After-tax profit distributed as qualified dividends is taxed at 0%, 15%, or 20% depending on the owner's total taxable income bracket (IRC § 1(h)). NIIT of 3.8% applies to qualified dividends above NIIT thresholds.
Annual tax liability is estimated from projected net income using the same SE + federal income tax formulas above. That annual liability is divided into four quarterly payments. The safe harbor threshold is 90% of current year estimated tax, or 100% of the prior year's actual tax (110% if prior-year AGI exceeded $150,000) under IRC § 6654.
Two calculation methods are modeled side by side:
Simplified Method: $5 per square foot of dedicated business space, capped at 300 sq ft (max $1,500). No depreciation recapture on sale.
Regular Method: Business percentage (office sq ft ÷ total home sq ft) applied to actual home expenses (mortgage interest/rent, utilities, insurance, property tax, repairs). Depreciation is calculated on the business-use portion of home basis at 39 years (nonresidential) under IRC § 168.
This tool generates a business expense policy document, not a tax calculation. The document is AI-generated (GPT-4o) and grounded in: IRS accountable plan rules (IRC § 62(c)), 2026 GSA standard mileage rate of $0.70/mile, the $75 receipt documentation threshold, and per diem rates from IRS Rev. Proc. 2025-43.
The mileage rate ($0.70/mile) and receipt threshold ($75) are the only fixed constants. All other policy language is AI-generated based on your business inputs. Review the output for accuracy before implementation.
IRC § 62(c) — Accountable Plans →Generates S-Corp election documents using AI (GPT-4o). The AI drafts the Form 2553 cover letter, board resolution, and state-specific checklist. Filing deadlines and form references are hardcoded (not AI-generated): Form 2553 must be filed by March 15 of the tax year the election is to take effect, or within 2 months and 15 days of business formation.
No tax math is performed in this tool. It is a document generator. All generated documents should be reviewed by a licensed attorney or CPA before filing.
Every number in TaxStackHub calculators traces back to an official source. Here's the complete list.
Tax withholding and estimated tax. Source for quarterly due dates, safe harbor rules, and underpayment penalty thresholds.
irs.gov/publications/p505 →Self-employment tax. Source for SE tax computation methodology, the 92.35% net factor, and the above-the-line deduction.
irs.gov/publications/p533 →Business use of your home. Source for home office deduction rules, simplified method ($5/sq ft), and regular method formula.
irs.gov/publications/p587 →How to depreciate property. Source for 39-year depreciation schedule applied to home office regular method calculations.
irs.gov/publications/p946 →2026 inflation adjustments. Source for all 2026 federal income tax bracket thresholds, standard deductions, and other indexed amounts.
irs.gov/pub/irs-drop/rp-25-61.pdf →Statutory authority for the 15.3% self-employment tax rate (12.4% SS + 2.9% Medicare) and the 0.9% Additional Medicare Tax.
uscode.house.gov — IRC § 1401 →Qualified Business Income deduction (23%, raised from 20% by OBBBA) for pass-through businesses. Made permanent under OBBBA. Applied to all LLC and S-Corp calculations.
uscode.house.gov — IRC § 199A →Statutory flat 21% C-Corporation income tax rate. Enacted by TCJA 2017, maintained by OBBBA. Applied to all C-Corp entity comparison calculations.
uscode.house.gov — IRC § 11 →Social Security Administration publishes the annual SS wage base. 2026 base is $184,500. Used in all SE tax and FICA calculations.
ssa.gov — SS Contribution Bases →State income tax effective rates sourced from individual state Department of Revenue publications. Rates represent approximate effective marginal rates for self-employed individuals.
Tax Foundation — State Rates →2026 standard mileage rate and per diem rates used in Expense Policy Generator. Standard mileage rate: $0.70/mile for business use.
irs.gov — Mileage Rates →Net Investment Income Tax (3.8%) applied to qualified dividends in C-Corp calculations above $200K (single) / $250K (MFJ) thresholds.
uscode.house.gov — IRC § 1411 →Every numeric constant used in our calculations. Verify them against the sources above. Last verified April 12, 2026.
| Constant | Value | Source | Authority |
|---|---|---|---|
| Self-Employment Tax | |||
| SE tax net factor | 92.35% | IRS Pub. 533 | IRC § 1402(a)(12) |
| SS tax rate (SE) | 12.4% | SSA.gov | IRC § 1401(a) |
| Medicare tax rate (SE) | 2.9% | IRS Pub. 533 | IRC § 1401(b) |
| Additional Medicare surtax | 0.9% | IRS Rev. Proc. 2025-61 | IRC § 3101(b)(2) |
| SS wage base | $184,500 | SSA.gov | SSA COLA notice |
| Add. Medicare threshold (Single) | $200,000 | IRS Rev. Proc. 2025-61 | IRC § 3101(b)(2) |
| Add. Medicare threshold (MFJ) | $250,000 | IRS Rev. Proc. 2025-61 | IRC § 3101(b)(2) |
| Standard Deductions (2026) | |||
| Single filer | $15,000 | IRS Rev. Proc. 2025-61 | IRC § 63(c) |
| Married filing jointly | $30,000 | IRS Rev. Proc. 2025-61 | IRC § 63(c) |
| Married filing separately | $15,000 | IRS Rev. Proc. 2025-61 | IRC § 63(c) |
| Head of household | $22,500 | IRS Rev. Proc. 2025-61 | IRC § 63(c) |
| Federal Income Tax Brackets — Single Filers (2026) | |||
| 10% bracket top | $11,925 | IRS Rev. Proc. 2025-61 | IRC § 1(j) |
| 12% bracket top | $48,475 | IRS Rev. Proc. 2025-61 | IRC § 1(j) |
| 22% bracket top | $103,350 | IRS Rev. Proc. 2025-61 | IRC § 1(j) |
| 24% bracket top | $197,300 | IRS Rev. Proc. 2025-61 | IRC § 1(j) |
| 32% bracket top | $250,525 | IRS Rev. Proc. 2025-61 | IRC § 1(j) |
| 35% bracket top | $626,350 | IRS Rev. Proc. 2025-61 | IRC § 1(j) |
| 37% bracket (top rate) | Above $626,350 | IRS Rev. Proc. 2025-61 | IRC § 1(j) |
| Entity & Investment Constants | |||
| QBI deduction rate | 23% | OBBBA (2026) | IRC § 199A (permanent) |
| C-Corp tax rate | 21% | TCJA 2017 / OBBBA | IRC § 11(b) |
| NIIT rate | 3.8% | IRS | IRC § 1411 |
| NIIT threshold (Single) | $200,000 | IRS | IRC § 1411(b) |
| Qualified div rate (0%) | ≤ $47,025 (Single) | IRS Rev. Proc. 2025-61 | IRC § 1(h) |
| Qualified div rate (15%) | $47,025–$518,900 | IRS Rev. Proc. 2025-61 | IRC § 1(h) |
| Qualified div rate (20%) | Above $518,900 | IRS Rev. Proc. 2025-61 | IRC § 1(h) |
| Home Office Constants | |||
| Simplified method rate | $5.00/sq ft | IRS Pub. 587 | IRC § 280A(c)(5) |
| Simplified method cap | 300 sq ft ($1,500 max) | IRS Pub. 587 | IRC § 280A(c)(5) |
| Residential depreciation life | 27.5 years | IRS Pub. 946 | IRC § 168 |
| Expense Policy Constants | |||
| Standard mileage rate (2026) | $0.70/mile | IRS Rev. Proc. 2025-43 | IRC § 62(a)(2)(A) |
| Receipt documentation threshold | $75 | IRS Publication 463 | IRC § 274 |
We use AI in one place. Here's exactly what it does and what it doesn't do.
The premium Tax Optimization Report ($39) uses GPT-4o to generate personalized written analysis — the narrative sections, recommendations, and 90-day action plan. The underlying tax numbers that feed that analysis are always formula-calculated first. AI writes the interpretation, not the math.
Document generators (Expense Policy, S-Corp Election package) also use GPT-4o to draft the policy text. Filing dates, mileage rates, and form references in those documents are hardcoded constants — not AI-generated.
How we build a fair, apples-to-apples comparison between LLC, S-Corp, and C-Corp.
Honesty builds trust. Here are the things our tools don't model, and why. None of these limitations invalidate the planning value — they're guardrails for where to engage a CPA.
When we updated each tool's tax data, what changed, and what IRS guidance triggered the update.
TaxStackHub scans IRS.gov and SSA.gov weekly for tax law changes. When a source changes, affected tools are flagged and subscribers are notified automatically.
The math is transparent. Now put it to work on your actual income.