Methodology

Breakeven is arithmetic built on top of published IRS math. This page shows exactly which publications the engine reads, how it computes your withholding and liability, and what it intentionally does not model. If you want to check any number Breakeven shows you, every input is cited here.

Sources

The tax year 2026 engine is built from three public IRS documents. Every number in the calculator ultimately traces back to one of these:

• IRS Publication 15-T (2026), Federal Income Tax Withholding Methods. irs.gov/pub/irs-pdf/p15t.pdf. Provides the per-paycheck withholding tables (Worksheet 1A) for Single, Married Filing Jointly, and Head of Household, under both standard and checkbox (Step 2) methods.
• IRS Revenue Procedure 2025-32 — 2026 inflation adjustments. irs.gov/pub/irs-drop/rp-25-32.pdf. Provides the 2026 standard deduction amounts and marginal tax brackets used for annual liability.
• IRS Form W-4 (2026). irs.gov/pub/irs-pdf/fw4.pdf. The blank form the PDF generator stamps recommended values onto.

How withholding is computed

Per-paycheck federal income tax withholding follows Publication 15-T, Worksheet 1A — the same steps a payroll system runs. For each paycheck you enter, Breakeven:

• Annualizes your taxable pay (gross pay minus pre-tax deductions) by multiplying by the number of pay periods per year for your frequency.
• Applies the adjustments from Step 4(a) (other income) and Step 4(b) (deductions above the standard) from your W-4.
• Subtracts the Worksheet 1A line 1g adjustment for your filing status and Step 2 checkbox state.
• Looks the resulting annualized wage amount up in the applicable withholding table (standard or checkbox, by filing status) and computes annualized withholding from the bracket math.
• Divides by the number of pay periods to get per-paycheck withholding, then adds Step 3 credits and any Step 4(c) extra withholding from your W-4.

Projected annual withholding is the sum of your year-to-date actual withholding plus the per-paycheck expected withholding times the remaining pay periods in the year.

How annual liability is computed

Projected annual taxable wages are extrapolated from your YTD paychecks and pay frequency, then reduced by the 2026 standard deduction and any Step 4(b) deductions. Breakeven applies the 2026 marginal tax brackets from Revenue Procedure 2025-32 to that taxable income, row by row, to produce projected annual liability. Step 3 credits are subtracted at the end. The gap between projected withholding and projected liability is what the UI calls your refund or balance due.

Additional Medicare Tax (high-income wages)

The Additional Medicare Tax — 0.9% on wages above $200,000 (Single / Head of Household) or $250,000 (Married Filing Jointly) — is folded into the projected federal liability (Form 8959). Each employer is only required to begin withholding the surtax on wages it pays over $200,000, so multi-job and dual-earner households frequently owe the surtax at filing even when no individual paycheck triggered employer withholding for it. Breakeven treats this as part of the gap and recommends Step 4(c) extra withholding to cover it — which is the same fix the IRS recommends in the Form 8959 instructions. Regular FICA (6.2% Social Security plus 1.45% Medicare) is statutory and not adjustable, so it is not modeled separately.

Married Filing Jointly

MFJ households model each earner's paychecks and W-4 separately, then sum into a single household liability against the MFJ standard deduction and MFJ brackets. The recommender targets whichever W-4 the user chooses to adjust — usually Step 4(c) on the higher-earner's paycheck, because it closes the gap with the fewest per-paycheck dollars.

What Breakeven does not model

Phase 1 intentionally stays narrow. Your actual 2026 tax return can differ from Breakeven's projection if any of the following apply:

• Local and city income taxes.Breakeven handles federal and a growing list of state income taxes (see the calculator's state picker), but does not model municipal or county income tax. Notable examples that apply on top of state tax include Philadelphia (3.75% resident wage tax), New York City, Yonkers, Detroit and other Michigan cities, Ohio cities and school district taxes, Indiana counties, Kentucky counties, and Maryland counties. If you live or work somewhere with a local income tax, your actual paycheck withholding will be higher than Breakeven projects.
• State payroll surcharges (SDI / family leave). Several states collect small per-paycheck premiums on top of (or in lieu of) state income tax for disability or paid-family-leave insurance. Breakeven models these for California (CA SDI, 1.2% on all wages with no cap) and Washington(Paid Family and Medical Leave employee share, plus the WA Cares Fund long-term-care premium), and surfaces them on the projection under "Other state-level paycheck deductions." Breakeven does not yet model New York (SDI and Paid Family Leave), New Jersey (SDI/SUI/FLI), Rhode Island (TDI), Hawaii (TDI), or Oregon (Paid Leave Oregon). If you live in one of those states, your paycheck shows a small additional deduction Breakeven does not yet account for.
• Regular Social Security and Medicare (FICA) withholding. Both are statutory, not adjustable by the W-4, so there is no decision the calculator could recommend on them. If you had two jobs that combined pushed you past the Social Security wage base, the excess is refunded automatically when you file — your real outcome may be slightly better than projected here.
• Net Investment Income Tax (NIIT, 3.8%) on high-income investment earners.
• Self-employment income, 1099 income, or K-1 income.
• Capital gains, qualified dividends, rental income, or retirement account distributions — except amounts entered manually as Step 4(a) other income.
• Credits with income phaseouts. Breakeven treats the Step 3 dependents credit at face value and does not apply Modified Adjusted Gross Income limits.
• Itemized deductions — except the lump sum entered as Step 4(b).
• Head of Household, Married Filing Separately, and Qualifying Surviving Spouse filing statuses. Phase 1 supports Single and Married Filing Jointly.
• Tax years other than the one shown in the calculator headline.

Last verified

The engine's math was last cross-checked against the current IRS publications on 2026-04-28. If the IRS issues an amendment to Pub 15-T or a new Revenue Procedure, Breakeven is updated and this stamp refreshes.

Breakeven is a planning tool, not tax advice. For verification, use the IRS Tax Withholding Estimator. For the full list of exclusions and disclaimers, see the Terms of use.