Tax modeling

Tax year and sources

The tax year applied is shown inside the product beside every tax figure.

The engine applies one tax year consistently: 2026 law, including the senior bonus deduction enacted for tax years 2025 through 2028, is applied to every projected year. Multi-year projections hold brackets and thresholds at current-year levels; inside the Quantum Retirement Score simulation, taxes are computed on inflation-adjusted income, which is equivalent to indexing every threshold at the plan's inflation rate.

Federal methodology

Modeled, for all five filing statuses:

• Ordinary income tax across the seven statutory brackets (10% through 37%), from IRS Revenue Procedure 2025-32.
• The standard deduction, the §63(f) additional deduction at age 65, and itemized deductions taken as the greater of the two from an advisor-entered total.
• The senior bonus deduction under OBBBA §70103, with its income phase-out.
• Social Security inclusion under IRC §86: provisional income tested against the statutory thresholds, with the 50% and 85% inclusion tiers.
• Long-term capital gains stacked on top of ordinary taxable income at the 0%, 15%, and 20% rates.
• The 3.8% net investment income tax under §1411 in the current-year income analysis.
• Self-employment tax per earner, and the 10% additional tax on early distributions under §72(t) where the advisor applies it.

The Delta Method

The cost of a decision — most often a Roth conversion — is the household's total tax with the decision minus its total tax without it, each side a complete recomputation of the year. That difference captures every knock-on effect the decision creates: the additional Social Security income it makes taxable, the bracket it crosses, the state exclusion it does or does not qualify for, and the Medicare IRMAA tier it lands in. The Delta Method is a single-year measure; the lifetime comparison on the Roth conversion page is a separate calculation built from many such years.

State methodology

All 50 states and the District of Columbia — 51 jurisdictions — are modeled and verified to tax year 2026 against each Department of Revenue's primary documents, with a regression fixture per state. Each jurisdiction's configuration carries its rate structure (progressive or flat), its standard deduction by filing status, its Social Security rule (one of five kinds, from full exemption to income-tested phase-outs and credits), and its retirement-income exclusion rule (one of seven kinds, including age-tiered caps, income cliffs, and pension exclusions reduced by Social Security). Where a state's statute treats IRA distributions as excludable retirement income, a Roth conversion flows through that exclusion; where the exclusion is pension-only, it does not.

State-specific mechanics that are also modeled: high-income standard-deduction phase-outs, minimum taxes, the New York and Arkansas supplemental recapture of lower-bracket benefits, Alabama's deduction for federal income tax, and Iowa's alternate tax computation.

Social Security, RMDs, and Medicare IRMAA

Required minimum distributions begin at the SECURE 2.0 start age derived from the client's birth year — 72, 73, or 75 — and use the IRS Uniform Lifetime Table (Publication 590-B).

Medicare IRMAA uses the tax year 2026 tier tables for Part B and Part D, verified against SSA POMS HI 01101.020, applied per Medicare beneficiary in the household (two on a joint return only when both spouses are 65 or older). Multi-year projections and the Roth conversion ledger apply the two-year income lookback; the single-year Tax Analysis figure and the Roth option cards show the same-year effect. IRMAA income includes tax-exempt interest, which is excluded from the net investment income tax base as the statute requires.

Filing statuses

The engine carries brackets, deductions, Social Security thresholds, and IRMAA tiers for five filing statuses. Married Filing Jointly, Single, and Head of Household are each verified for every jurisdiction.

Assumptions

Questions advisors ask about tax modeling

Which tax year does Quantum apply?

Tax year 2026, for every projected year. The federal tables come from IRS Revenue Procedure 2025-32, the IRMAA tiers from SSA POMS HI 01101.020, and each state's tables from its Department of Revenue. The tax year is shown in the product beside every tax figure.

Does Quantum model all 50 states?

Yes — all 50 states and the District of Columbia, each verified against primary documents with a regression fixture, including each state's Social Security rule and retirement-income exclusion.

What is the Delta Method?

The tax created by a single decision, measured as the household's total tax with the decision minus its total tax without it, each side fully recomputed. It captures Social Security inclusion, bracket, state exclusion, and IRMAA effects together rather than applying a marginal rate.

How is Medicare IRMAA modeled?

With the tax-year tier tables for Part B and Part D, applied per Medicare beneficiary, and — in multi-year views and the Roth conversion ledger — with the two-year income lookback. Single-year views show the same-year effect and say so.

Every tax figure shows its tax year and sources

See it on a real client

Run a client through the Tax Analysis tab and open the assumptions behind each figure. Licensed to financial professionals.