Calculate Deductions – Loan calculator

Tax Deductions Calculator

Gross Annual Income ($):

Student Loan Interest Paid ($):

IRA Contributions Made ($):

Medical Expenses Paid ($):

State & Local Taxes Paid (SALT) ($):

Charitable Cash Contributions ($):

Standard Deduction Amount (e.g., Single Filer 2023) ($):

Calculation Results

Total Above-the-Line Deductions: $0.00

Adjusted Gross Income (AGI): $0.00

Deductible Medical Expenses (above 7.5% AGI): $0.00

Deductible State & Local Taxes (SALT Cap $10,000): $0.00

Deductible Charitable Contributions: $0.00

Total Itemized Deductions: $0.00

Total Deductions Applied (Itemized vs. Standard): $0.00

Estimated Taxable Income: $0.00

Income Reduction from Deductions: $0.00

function calculateDeductions() { // Get input values var grossAnnualIncome = parseFloat(document.getElementById("grossAnnualIncome").value); var studentLoanInterestPaid = parseFloat(document.getElementById("studentLoanInterestPaid").value); var iraContributionsMade = parseFloat(document.getElementById("iraContributionsMade").value); var medicalExpensesPaid = parseFloat(document.getElementById("medicalExpensesPaid").value); var stateLocalTaxesPaid = parseFloat(document.getElementById("stateLocalTaxesPaid").value); var charitableCashContributions = parseFloat(document.getElementById("charitableCashContributions").value); var standardDeductionAmount = parseFloat(document.getElementById("standardDeductionAmount").value); // Validate inputs if (isNaN(grossAnnualIncome) || grossAnnualIncome < 0) grossAnnualIncome = 0; if (isNaN(studentLoanInterestPaid) || studentLoanInterestPaid < 0) studentLoanInterestPaid = 0; if (isNaN(iraContributionsMade) || iraContributionsMade < 0) iraContributionsMade = 0; if (isNaN(medicalExpensesPaid) || medicalExpensesPaid < 0) medicalExpensesPaid = 0; if (isNaN(stateLocalTaxesPaid) || stateLocalTaxesPaid < 0) stateLocalTaxesPaid = 0; if (isNaN(charitableCashContributions) || charitableCashContributions < 0) charitableCashContributions = 0; if (isNaN(standardDeductionAmount) || standardDeductionAmount < 0) standardDeductionAmount = 0; // — Above-the-Line Deductions (reduce AGI) — var maxStudentLoanInterest = 2500; // Max deduction for student loan interest var maxIraContributions = 6500; // Simplified max for IRA contributions (under 50) var actualStudentLoanInterestDeduction = Math.min(studentLoanInterestPaid, maxStudentLoanInterest); var actualIraContributionsDeduction = Math.min(iraContributionsMade, maxIraContributions); var totalAboveTheLineDeductions = actualStudentLoanInterestDeduction + actualIraContributionsDeduction; var adjustedGrossIncome = grossAnnualIncome – totalAboveTheLineDeductions; if (adjustedGrossIncome < 0) adjustedGrossIncome = 0; // AGI cannot be negative // — Itemized Deductions — // Medical Expenses: Deductible amount exceeds 7.5% of AGI var medicalDeductionThreshold = adjustedGrossIncome * 0.075; var deductibleMedical = Math.max(0, medicalExpensesPaid – medicalDeductionThreshold); // State and Local Taxes (SALT): Capped at $10,000 var saltCap = 10000; var deductibleStateLocalTaxes = Math.min(stateLocalTaxesPaid, saltCap); // Charitable Contributions: For simplicity, we'll take the input value, assuming it's within AGI limits (e.g., 60% for cash) var deductibleCharitable = charitableCashContributions; var totalItemizedDeductions = deductibleMedical + deductibleStateLocalTaxes + deductibleCharitable; // — Compare Itemized vs. Standard Deduction — var deductionsUsed = Math.max(totalItemizedDeductions, standardDeductionAmount); // — Calculate Taxable Income — var taxableIncome = adjustedGrossIncome – deductionsUsed; if (taxableIncome < 0) taxableIncome = 0; // Taxable income cannot be negative // — Calculate Income Reduction — var incomeReduction = grossAnnualIncome – taxableIncome; // Display results document.getElementById("totalAboveTheLineDeductions").innerText = "$" + totalAboveTheLineDeductions.toFixed(2); document.getElementById("adjustedGrossIncome").innerText = "$" + adjustedGrossIncome.toFixed(2); document.getElementById("deductibleMedicalExpenses").innerText = "$" + deductibleMedical.toFixed(2); document.getElementById("deductibleStateLocalTaxes").innerText = "$" + deductibleStateLocalTaxes.toFixed(2); document.getElementById("deductibleCharitableContributions").innerText = "$" + deductibleCharitable.toFixed(2); document.getElementById("totalItemizedDeductions").innerText = "$" + totalItemizedDeductions.toFixed(2); document.getElementById("deductionsUsed").innerText = "$" + deductionsUsed.toFixed(2); document.getElementById("taxableIncome").innerText = "$" + taxableIncome.toFixed(2); document.getElementById("incomeReduction").innerText = "$" + incomeReduction.toFixed(2); } // Run calculation on page load with default values window.onload = calculateDeductions;

Understanding Tax Deductions and How They Reduce Your Taxable Income

Tax deductions are a powerful tool for reducing your overall tax burden. Unlike tax credits, which directly reduce the amount of tax you owe, deductions reduce your taxable income. This means that less of your income is subject to taxation, potentially lowering your tax bracket and the total amount of tax you pay.

How Deductions Work

When you file your taxes, you start with your gross income. From this, certain deductions are subtracted to arrive at your Adjusted Gross Income (AGI). Then, from your AGI, you subtract either the standard deduction or your total itemized deductions (whichever is greater) to arrive at your taxable income. The lower your taxable income, the less you pay in taxes.

Types of Deductions Explained

1. Above-the-Line Deductions (Reduce AGI)

These deductions are subtracted from your gross income before your AGI is calculated. They are particularly valuable because they lower your AGI, which can impact eligibility for other tax benefits and credits that have AGI limitations.

Student Loan Interest Paid: You can deduct the amount of interest you paid during the year on a qualified student loan, up to a maximum of $2,500.
IRA Contributions Made: Contributions to a traditional IRA may be tax-deductible, depending on your income and whether you (or your spouse) are covered by a retirement plan at work. For 2023, the maximum deduction for those under 50 is generally $6,500.

2. Itemized Deductions (Reduce Taxable Income from AGI)

After calculating your AGI, you have a choice: take the standard deduction or itemize your deductions. You should choose whichever results in a larger deduction.

Medical Expenses Paid: You can deduct the amount of medical expenses that exceeds 7.5% of your Adjusted Gross Income (AGI). For example, if your AGI is $50,000, you can only deduct medical expenses above $3,750 (7.5% of $50,000).
State & Local Taxes Paid (SALT): This includes property taxes, state income taxes, or state sales taxes. However, there's a federal cap of $10,000 per household for the total amount of state and local taxes you can deduct.
Charitable Cash Contributions: Donations to qualified charities can be deducted. For cash contributions, you can generally deduct up to 60% of your AGI.

3. Standard Deduction

The standard deduction is a fixed dollar amount that reduces your taxable income. It's an alternative to itemizing deductions. The amount depends on your filing status (e.g., Single, Married Filing Jointly, Head of Household) and whether you are over 65 or blind. For a single filer in 2023, the standard deduction was $13,850.

Using the Calculator

Our Tax Deductions Calculator helps you estimate your total deductions and how they impact your taxable income. Simply input your relevant financial figures:

Gross Annual Income: Your total income before any deductions.
Student Loan Interest Paid: The total interest you paid on qualified student loans.
IRA Contributions Made: Your contributions to a traditional IRA.
Medical Expenses Paid: Your total out-of-pocket medical costs.
State & Local Taxes Paid (SALT): The sum of your state income/sales tax and property taxes.
Charitable Cash Contributions: Your cash donations to qualified charities.
Standard Deduction Amount: The standard deduction applicable to your filing status (pre-filled with a common value, but editable).

The calculator will then show you:

Your total above-the-line deductions and resulting AGI.
Your calculated itemized deductions, including the specific limits for medical expenses and SALT.
A comparison of your total itemized deductions versus the standard deduction, indicating which amount will be applied.
Your estimated taxable income after all deductions.
The total reduction in your income due to these deductions.

Disclaimer: This calculator provides a simplified estimate based on common tax rules and is for informational purposes only. Tax laws are complex and subject to change. It does not account for all possible deductions, credits, or specific individual circumstances. Please consult with a qualified tax professional for personalized advice.