The projection files a simplified return each simulated year: close enough to steer the big decisions, small enough to stay inspectable.
Modeled
- Federal ordinary brackets and the standard deduction use the current tax year's published figures, by filing status. Everything runs in today's dollars, so brackets being inflation-indexed means they stay constant in real terms. The panel that lists them names the year it is applying.
- The 65+ bonus deduction: $6,000 for each person aged 65 or older, on top of the standard deduction. Each person's $6,000 shrinks by 6 cents per dollar of income above $75,000 single / $150,000 married, rather than the couple's total shrinking once. A married couple where both qualify therefore gets exactly twice what one of them would, and their $12,000 is gone by $250,000 of income. Congress wrote it as flat dollars with no inflation adjustment, so the projection applies it in the year's own money: as prices rise the deduction quietly buys less in today's dollars, and a rising income eventually grows into the phase-out. It is also modeled with its scheduled sunset: 2025 through 2028 only, so a plan that starts after 2028 sees none of it, and a plan running now watches it lapse partway through.
- Social Security taxability via the provisional-income worksheet (0% / 50% / 85% inclusion), not a flat assumption.
- State tax as one flat rate you set.
- Short-term gains on taxable-account sales, via the taxable gain model.
- Medicare IRMAA premium cliffs: modeled as premiums (an expense) and available as ceilings for Roth conversions. IRMAA MAGI here is AGI-based (ordinary income plus the taxable part of Social Security), with the real two-year lookback. The tier floors, the Part B premium and the surcharges are the year's published figures; a MAGI landing exactly on the top tier's floor is charged that top tier, which is how the schedule is actually written.
Deliberately not modeled
- No preferential long-term capital-gains rates: taxable-sale gains are folded into the year's ordinary income and taxed at your bracket, which overstates tax for low-bracket LTCG years. (The assumed LTCG/STCG rates in your Household profile belong to the Rebalance Planner page's trade estimate; the projection does not read them.)
- No NIIT (the 3.8% net investment income surtax).
- No itemized deductions, credits, AMT, or local taxes. The extra standard deduction for being 65 or blind is also not modeled. That is a different rule from the 65+ bonus deduction above.
- Medicare premiums are held constant in real terms, like the brackets. They have historically risen faster than inflation, so long plans understate them. This is the one place this model's real-dollar convention leans optimistic.
The bias is knowable: where the model errs, it errs toward more tax, so a plan that succeeds here is unlikely to fail on real-world tax detail. If your situation leans heavily on LTCG rates, treat lifetime-tax comparisons as directional, not dollar-exact.