The Federal Tax Detail report can be found in the Spending Overview report. This worksheet can give you a broad overview of the federal tax calculations and tax brackets that lead to Net Tax.
What follows are notes or explanations for each of the columns in this report.
Adjusted Gross Income
The AGI includes the real value of the total nominal return on regular assets, earned income, and adjustments. Note that it includes the nominal return, not the real return, since you are taxed on total nominal return.
For example, if you had $10,000 in regular assets, a nominal rate of return of 6%, and inflation of 4%, then your total nominal return that is included in AGI will be $600. But since you live on real return, only $192 will be included in Total Income report in the Regular Asset Income column.
It's not uncommon to observe an AGI amount that is greater than the total income. This is because total income includes any real (net of inflation) earnings. The AGI, on the other hand, accounts for the full nominal return including ordinary income and capital gains.
All numbers in all reports are in real, current-year dollars.
Exemption
As current tax law is written, after December 31, 2025, the 2017 Tax Cuts and Jobs Act will revert back to the user of exemption deduction that was eliminated in the TCJA. If you choose "current tax law" in Settings > Taxes, you may see this column populate in 2026 and beyond if applicable.
Taxable Income
The taxable income is the AGI minus the deduction and/or exemption.
Tax
The tax is the calculated federal tax based on your taxable income.
Marginal Tax Rate
You pay tax as a percentage of your income in layers called tax brackets. As your income goes up, the tax rate on the next layer of income is higher. When your income jumps to a higher tax bracket, you don't pay the higher rate on your entire income.
Effective Tax Rate
Your federal effective tax rate is the total percentage of your income you pay in federal income tax, calculated by dividing what you owe in taxes by your total income. It essentially sums up how much you owe for each tax bracket into one percentage.
Alternative Minimum Tax
Alternative minimum tax (AMT) is a tax system that runs parallel to the standard tax system but has different tax rates. AMT payers, who generally have relatively high incomes, essentially calculate their income tax twice — under regular tax rules and under AMT rules — and then pay the higher amount owed.
Tax Credits
A tax credit is a financial benefit provided by the government. It is an amount of money that reduces the dollar amount of taxes owed. Refundable tax credits provide a refund of the amount of the credit that still exists after reducing taxes owed to zero. Nonrefundable tax credits allow for no such refund.
For example, a tax credit is available that rewards people for installing solar panels for home use. Other tax credits help offset the costs of child and dependent care, education, and adoption.
Tax credits are more favorable than tax deductions because tax credits reduce tax liability dollar for dollar. While a deduction still reduces the final tax liability, it only does so within an individual’s marginal tax rate.
Net Tax
The net tax column shows the tax minus the AMT, Credits, and Net Investment Income Tax (column not shown).
For more detail on federal taxes, see the Year at a Glance report and drill down in any given year to view the components that make up AGI.
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