Methodology

01 / Vesting compensation and incremental federal tax

Federal incremental tax is 2026 regular income tax on taxable income plus the vest, minus tax on taxable income without the vest. Only single and married-filing-jointly schedules are supported.

02 / Supplemental-wage withholding

Federal withholding below $1 million of annual supplemental wages uses the entered rate (22% default). The portion above that threshold uses 37%. Withholding is a prepayment, not a final tax calculation.

03 / Payroll-tax caps and thresholds

Social Security withholding uses the 2026 $184,500 wage base and 6.2% employee rate. Medicare uses 1.45%, plus 0.9% employer withholding above $200,000 of this employer’s annual wages.

04 / State/local assumptions and tax reserves

Incremental Additional Medicare liability uses annual household Medicare wages and the relevant single ($200,000) or joint ($250,000) threshold. Multiple-employer Social Security refunds are not modeled.

05 / Later sale and unmodeled tax rules

State/local taxes use supplied marginal assumptions, not state brackets. AMT, deduction phaseouts, credits, NIIT on other income, multi-state allocation, and deferred-settlement RSUs are outside scope. Later positive capital gains are taxed separately; losses receive no assumed tax benefit.

Handling invalid and missing inputs

Unsupported or invalid inputs stop the calculation instead of producing a plausible-looking fallback. Missing borrow fees, missing returns, missing dates, and unavailable cutoffs are retained as missing or unavailable rather than replaced with zero. CSV imports are checked for required columns, duplicate records, date formats, and domain-specific consistency.

Sources