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How taxes are estimated

Last updated October 18, 2026

MangoDime estimates federal and state taxes, Social Security taxation, and required distributions using the 2026 tax rules, simplified in a few specific, disclosed ways.

Federal tax uses the real 2026 income tax brackets and standard deduction ($16,100 single / $32,200 married filing jointly), reused for every future year of your plan: the model doesn't project how brackets might change over time.

Withdrawals from a taxable account are taxed only on the gain portion of what you withdraw, at the long-term capital gains rates: 0% while your taxable income, gains included, stays under $49,450 single or $98,900 married filing jointly, 15% above that, and 20% above $545,500 or $613,700. The gains sit on top of your other income for the year, so the same sale can cost nothing in a quiet year and 15% in a busy one. The 3.8% net investment income tax is added above $200,000 or $250,000 of income. Gains are counted as long-term: the plan does not track how long each holding has been owned.

A taxable account also pays out income every year, taxed as it is paid even when you reinvest it: dividends on its stock share at 1.05% (the S&P 500's dividend yield) and interest on its bond share at 5.1% (the 10-year Treasury yield), both as of October 2026. Dividends are taxed at the capital-gains rates and interest as ordinary income, with the 3.8% on both above the line. The reinvested income is added to your cost basis, so when you later sell, the gain is smaller by exactly what was already taxed. All of the year's gains, dividends and interest are priced on the year's final income, so an IRA withdrawal later in the year moves them into a higher band, as it does on a real return.

Pensions are taxed as ordinary income by default (you can mark one as non-taxable). Social Security uses the IRS provisional-income rule: up to 50% or 85% of your benefit becomes taxable depending on your other income, at the same dollar thresholds the tax code sets. Those thresholds are not adjusted for inflation, in the law or here.

State income tax uses your state's own brackets, standard deduction and personal exemptions, and its own treatment of Social Security, retirement income and capital gains. Illinois and Mississippi don't tax retirement income, and Pennsylvania (from 59½) and Iowa (from 55) don't either. Most other states leave out part of it, per person, from an age you reach: Georgia leaves out $65,000 each from 65, for example, and New York $20,000 each from 59½. Those exclusions are applied to each of you separately, at your own age. Most states don't tax Social Security, and some tax it only above an income limit, which is applied too. Exemptions for government pensions only aren't applied, because the plan doesn't record which pensions are public, and a 401(k) is treated as rolled into an IRA when you retire.

Required minimum distributions (RMDs) start at 73 or 75, depending on your birth year, using the IRS Uniform Lifetime Table, tracked separately for each spouse. Medicare's IRMAA surcharge is estimated from your same-year income, where the real rule looks back two years. ACA marketplace subsidies use the 2027 rules, with no help above 400% of the federal poverty line, and a national-average benchmark premium rather than your own county's rate. Medicaid follows your state: in the 40 states and DC that expanded it, cover below 138% of the poverty line is free; in Wisconsin, below 100%. In the other nine states, an adult below 100% gets neither Medicaid nor a subsidy and pays the full price. Premiums are priced on the year's income as the IRS counts it, including IRA withdrawals, gains and all of Social Security.