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Range Calc is a tool within Scenario Analysis that provides more detail than the "Solve for Min/Max" tool. Range Calc provides a visual depiction of the impacts of adding more ordinary or qualified income.
Check out our webinar below where we walk through the ins and outs (or peaks and valleys) of all things Range Calc!
The Solve for Min/Max button will tell you how much additional income it will take before a taxpayer moves to the next effective tax rate. But often, you may want to see how the effective rate changes as more components of the total tax bill come into focus.
To access Range Calc, click on the ellipsis (three dots) to the right of any editable scenario scenario title, and you will be taken to a new screen that illustrates the tax impact of the next $1,000, both for Ordinary Income and, separately, for Long-Term Capital Gains.
The "$0" value on the horizontal axis represents not $0 of taxable income, but the taxable income of the given scenario being analyzed. Moving to the right of the $0 point is the equivalent of adding ordinary income or qualified income (depending on which graph within Range Calc you are looking at) to your baseline. Below is an outline of some of the key controls within Range Calc and what each of them does.
Range Low End - Outlined in blue, this point serves as the origin of the x-axis on your graph. You can reset this number by clicking on the "Rewind" button circled in blue. This will return the figure for the low end range of the graph to be equal to negative taxable income minus $10,000.
Range High End - Outlined in red, this set the far range of your x-axis on the graph.
Step Width - outlined in green, this is the step interval of additional income (set to $1,000 by default) along the x-axis.
Update Chart/Summary Chart - Select "Update Chart" to reflect your changes to the range bounds and step width. You can also click on the "Summary Chart" button to access a chart of the effective rates along various amounts of income.
Advanced Settings -
As noted in the text outlined in orange in the screenshot above, you can adjust your "Range Low End" to be a negative number, to show the affects of not adding income, but instead of subtracting income. This may be helpful to show the tax implications reducing income (such as by making pre-tax contributions to retirement plans) or reducing the amount of planned Roth conversions would impact the overall tax picture.
The key to understanding Range Calc is that you’re looking at the effective marginal rate of adding $1,000. If there is no change in the effective rate, you’ll see a flat line.
Range Calc will also illustrate the attribution of the total tax rate using a color coding system. Depending on the scenario in question, the Range Calc chart may include some combination of the following:
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Black Line - Total Federal tax impact
- Light blue - taxes on ordinary income (i.e., marginal brackets)
- Red - taxes on long-term capital gains and qualified dividends
- Brown - Net Investment Income Tax (NIIT)
- Purple - Social Security becoming taxable
- Gray/black - Refundable child tax credit phase out
- Green - credit phase-ins
- Light purple - Qualified Business Income Deduction (QBID) phaseout
- Violet - Non-refundable child tax credit phase-out
If you are ever needing a refresher on what each of these colors mean and more details about why they appear (or disappear), you can check out the teal "What Does it Mean?" tab on the right side of the screen in Range Calc as outlined in yellow in the screenshot above.
In addition, though they are not a tax, you can see the impact additional income on any IRMAA (Income Related Monthly Adjustment Amount) surcharges on Medicare Part B and Part D premiums as indicated by the vertical, gray, dashed lines outlined in pink in the screenshot above.
Advanced Settings:
If any of the above features are missing from your view of Range Calc, it may be because of a setting on the Range Calc page. Click on the "Advanced Settings" link with the gear icon located at the top-right of the Range Calc screen, and you will see the following window.
Once within Advanced Settings, you can select the type of income - Ordinary Income & Capital gains or Incentive Stock Options; or the Marginal/Total Tax Rate. You can also check/uncheck the box to make the Medicare IRMAA Part B/D Annual Increase lines visible or not and check the box to add the state tax impact on top of the federal impact as income is added.
If you have questions or need further assistance, please Contact our Support Team!