Question 1

What is LevyIO?

Accepted Answer

LevyIO is a free collection of tax calculators for individuals, freelancers, and small businesses. We cover income tax, self-employment tax, capital gains, payroll, and more. Every calculator uses current IRS rates and runs entirely in your browser with no sign-up required.

Question 2

Is LevyIO completely free?

Accepted Answer

Yes, LevyIO is 100% free with no hidden fees, premium tiers, or paywalls. All calculators are available instantly without creating an account. We believe tax estimation tools should be accessible to everyone regardless of their financial situation.

Question 3

How accurate are LevyIO calculators?

Accepted Answer

Our calculators use official 2025 IRS tax brackets, standard deduction amounts, and current federal rates. Results are reliable estimates for planning purposes. However, actual tax liability depends on your complete financial picture, so always consult a qualified tax professional for filing.

Question 4

Do you store my financial data?

Accepted Answer

No. All calculations happen locally in your browser. We never collect, store, transmit, or sell any financial data you enter. There are no cookies tracking your inputs, no accounts to worry about, and no data shared with third parties. Your privacy is fully protected.

Question 5

How do federal tax brackets work?

Accepted Answer

The U.S. uses a progressive tax system with seven brackets (10%, 12%, 22%, 24%, 32%, 35%, 37%). Each bracket only applies to income within that range, not your entire income. For example, if you earn $50,000 as a single filer, only the amount above $47,150 is taxed at 22% while lower portions are taxed at 10% and 12%.

Question 6

What is the difference between marginal and effective tax rate?

Accepted Answer

Your marginal tax rate is the bracket percentage applied to your last dollar of income. Your effective tax rate is the actual percentage of total income you pay in taxes. Effective rates are always lower than marginal rates because of progressive brackets. Someone in the 24% bracket might have an effective rate of only 15%.

Question 7

Should I take the standard deduction or itemize?

Accepted Answer

Take the standard deduction ($15,000 single, $30,000 married filing jointly for 2025) unless your itemized deductions exceed it. Common itemized deductions include mortgage interest, state and local taxes (capped at $10,000), charitable contributions, and medical expenses above 7.5% of AGI. About 87% of filers use the standard deduction.

Question 8

How does filing status affect my taxes?

Accepted Answer

Your filing status determines your bracket thresholds, standard deduction, and eligibility for certain credits. Married filing jointly generally offers the widest brackets and largest deduction. Head of household provides better rates than single. Choosing the wrong status can cost hundreds or thousands of dollars in unnecessary taxes.

Question 9

What is the Alternative Minimum Tax (AMT)?

Accepted Answer

The AMT is a parallel tax system that prevents high-income taxpayers from using too many deductions to avoid taxes. It recalculates your tax without certain deductions like state and local taxes. The 2025 AMT exemption is $88,100 for singles and $137,000 for married couples. Most taxpayers are not affected after the 2017 tax reform.

Question 10

How do tax withholdings from my paycheck work?

Accepted Answer

Your employer withholds federal income tax each pay period based on your W-4 form selections. The amount depends on your filing status, number of dependents, and any additional withholding you request. If too much is withheld you get a refund; too little means you owe at filing. Adjust your W-4 to get closer to breaking even.

Question 11

How is self-employment tax calculated?

Accepted Answer

Self-employment tax is 15.3% of your net self-employment income (12.4% Social Security + 2.9% Medicare). You can deduct half of the SE tax from your adjusted gross income. Social Security tax applies only to the first $176,100 of combined wages and SE income in 2025. Medicare has no cap and adds 0.9% above $200,000.

Question 12

When do I need to pay quarterly estimated taxes?

Accepted Answer

If you expect to owe $1,000 or more in taxes after subtracting withholding and credits, you must pay quarterly estimated taxes. Due dates are April 15, June 15, September 15, and January 15. Missing payments triggers underpayment penalties. Use Form 1040-ES or IRS Direct Pay to submit quarterly payments.

Question 13

What business expenses can I deduct?

Accepted Answer

Common deductible business expenses include home office costs, vehicle mileage (70 cents per mile in 2025), internet and phone bills, software subscriptions, professional development, health insurance premiums, and office supplies. Expenses must be ordinary and necessary for your business. Keep detailed records and receipts for all deductions.

Question 14

Should I elect S-Corp status for my LLC?

Accepted Answer

S-Corp election can save self-employment tax if your business earns above roughly $50,000-$60,000 in net profit. As an S-Corp, you pay yourself a reasonable salary (subject to payroll tax) and take remaining profits as distributions (no SE tax). However, S-Corps require payroll processing, additional filings, and more bookkeeping complexity.

Question 15

What is the Qualified Business Income (QBI) deduction?

Accepted Answer

The QBI deduction (Section 199A) allows eligible self-employed individuals and pass-through business owners to deduct up to 20% of qualified business income from their taxable income. Phase-outs begin at $191,950 for single filers and $383,900 for married filing jointly. Specified service businesses face additional limitations above these thresholds.

Question 16

What is the difference between short-term and long-term capital gains?

Accepted Answer

Short-term capital gains apply to assets held one year or less and are taxed at your ordinary income tax rate (up to 37%). Long-term capital gains apply to assets held longer than one year and are taxed at preferential rates of 0%, 15%, or 20% depending on your taxable income. Holding investments longer can significantly reduce your tax bill.

Question 17

How are cryptocurrency gains taxed?

Accepted Answer

Cryptocurrency is treated as property by the IRS. Selling, trading, or spending crypto triggers a taxable event. Gains follow the same short-term and long-term capital gains rules as stocks. You must track your cost basis for every transaction. Receiving crypto as payment is taxed as ordinary income at fair market value.

Question 18

What is tax-loss harvesting?

Accepted Answer

Tax-loss harvesting involves selling investments at a loss to offset capital gains and reduce your tax bill. You can deduct up to $3,000 of net capital losses against ordinary income per year, carrying excess losses forward. The wash-sale rule prevents repurchasing substantially identical securities within 30 days before or after the sale.

Question 19

How are dividends taxed?

Accepted Answer

Qualified dividends from U.S. corporations held for at least 60 days are taxed at long-term capital gains rates (0%, 15%, or 20%). Non-qualified (ordinary) dividends are taxed at your regular income tax rate. Most dividends from major U.S. companies are qualified. REITs and foreign company dividends are generally non-qualified.

Question 20

What are estate and gift tax rules?

Accepted Answer

The 2025 federal estate tax exemption is $13.99 million per person ($27.98 million for married couples). Estates above this threshold are taxed at rates up to 40%. The annual gift tax exclusion is $19,000 per recipient. Gifts above this reduce your lifetime estate tax exemption but rarely trigger immediate tax for most people.

Question 21

When should I do a Roth IRA conversion?

Accepted Answer

A Roth conversion makes sense when your current tax rate is lower than your expected future rate, such as during a low-income year, early retirement, or before Required Minimum Distributions begin. You pay taxes on the converted amount now but enjoy tax-free growth and withdrawals later. Consider converting gradually to avoid jumping tax brackets.

Question 22

How does getting married affect my taxes?

Accepted Answer

Marriage can create a tax bonus or penalty depending on income disparity. Couples with one high earner and one low earner typically benefit from wider brackets and a larger standard deduction. Two similar high earners may face a marriage penalty where combined income pushes them into higher brackets than if they filed separately.

Question 23

How can I reduce my state tax burden?

Accepted Answer

Nine states have no income tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming). Remote workers may be able to relocate for savings. Other strategies include maximizing retirement contributions, using 529 plans with state deductions, and timing income recognition. Always verify residency rules carefully.

Question 24

How do retirement contributions reduce my taxes?

Accepted Answer

Traditional 401(k) and IRA contributions reduce your taxable income dollar-for-dollar. In 2025, you can contribute up to $23,500 to a 401(k) and $7,000 to an IRA ($31,000 and $8,000 if age 50+). Someone in the 24% bracket saves $5,640 in taxes by maxing out their 401(k). This is one of the most powerful tax reduction strategies available.

Question 25

What tax strategies work for side hustles and gig workers?

Accepted Answer

Track all business expenses meticulously, including mileage, home office, equipment, and supplies. Set aside 25-30% of income for taxes and make quarterly estimated payments. Consider opening a SEP-IRA or Solo 401(k) to shelter income. If net profit exceeds $50,000, evaluate S-Corp election to reduce self-employment tax.

Question 26

Which calculator should I start with?

Accepted Answer

Start with the Income Tax Calculator for a complete federal tax estimate. If you are self-employed, follow up with the Self-Employment Tax calculator. For investment income, use the Capital Gains Tax calculator. The Effective Tax Rate calculator shows your true tax burden across all income types combined.

Question 27

How accurate are these calculators for tax preparation?

Accepted Answer

Our calculators provide reliable estimates using current IRS rates and formulas. They are excellent for planning, budgeting, and understanding your tax situation. However, they cannot replace professional tax preparation software or a CPA because they do not account for every possible credit, deduction, or special circumstance in your return.

Question 28

Can I use LevyIO results for actual tax filing?

Accepted Answer

LevyIO calculators are designed for estimation and education, not for filing tax returns. Use our results to understand your tax liability, plan withholdings, and make informed financial decisions. For actual filing, use IRS-approved tax preparation software or work with a licensed tax professional who can review your complete situation.

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