This project is developing a new dataset for use by income and payroll tax microsimulation models. The project is progressing in several phases. At the end of each phase the current dataset is used as input to a tax microsimulation model to generate several basic tax estimates for calendar years 2023 and 2026. These estimates are then compared with corresponding estimates generated by federal agencies using their more comprehensive data. Examining the differences between the estimates generated from this project's data and the estimates published by the federal agencies should provide ideas about how to improve the development of this project's dataset in subsequent phases.
For more on the source of the federal agency estimates and on how the model-plus-dataset estimates are generated, see the examination methods document. The model used to generate the following Phase 2 estimates is Tax-Calculator 3.5.3 version.
CY2023 and CY2026 Payroll Tax Liability ($ billion)
(federal employee plus employer share)
| CY23 Amount | CY26 Amount | Estimate Source |
|---|---|---|
| 1580.0 | 1829.9 | CBO |
| 1605.6 | 1830.6 | Tax-Calculator + phase 2 dataset |
| 1489.3 | 1711.0 | Tax-Calculator + taxdata dataset |
CY2023 and CY2026 Individual Income Tax Liability ($ billion)
(federal individual income tax)
| CY23 Amount | CY26 Amount | Estimate Source |
|---|---|---|
| 2512.3 | 2849.4 | CBO |
| 2302.2 | 2934.8 | Tax-Calculator + phase 2 dataset |
| 2247.8 | 2742.1 | Tax-Calculator + taxdata dataset |
CY2023 and CY2026 CTC Tax Expenditure ($ billion)
(from the federal child tax credit)
| CY23 Amount | CY26 Amount | Estimate Source |
|---|---|---|
| 122.1 | 57.6 | JCT |
| 108.6 | 55.7 | TSY |
| 125.4 | 44.8 | Tax-Calculator + phase 2 dataset |
| 126.2 | 43.1 | Tax-Calculator + taxdata dataset |
CY2023 and CY2026 EITC Tax Expenditure ($ billion)
(from the federal earned income credit)
| CY23 Amount | CY26 Amount | Estimate Source |
|---|---|---|
| 71.9 | 78.0 | JCT |
| 63.6 | 71.2 | TSY |
| 68.6 | 77.7 | Tax-Calculator + phase 2 dataset |
| 73.5 | 82.0 | Tax-Calculator + taxdata dataset |
CY2023 and CY2026 SSBEN Tax Expenditure ($ billion)
(from excluding some social security benefits from federal AGI)
| CY23 Amount | CY26 Amount | Estimate Source |
|---|---|---|
| 45.9 | 56.4 | JCT |
| 31.4 | 38.4 | TSY |
| 76.6 | 102.3 | Tax-Calculator + phase 2 dataset |
| 62.7 | 89.5 | Tax-Calculator + taxdata dataset |
CY2023 and CY2026 NIIT Tax Expenditure ($ billion)
(from the 3.8% federal surtax on investment income)
| CY23 Amount | CY26 Amount | Estimate Source |
|---|---|---|
| -56.5 | -53.8 | JCT |
| ---- | ---- | TSY |
| -65.2 | -63.4 | Tax-Calculator + phase 2 dataset |
| -55.8 | -52.1 | Tax-Calculator + taxdata dataset |
CY2023 and CY2026 CGQD Tax Expenditure ($ billion)
(from taxing long-term capital gains and qualified dividends at lower federal rates)
| CY23 Amount | CY26 Amount | Estimate Source |
|---|---|---|
| 259.3 | 239.8 | JCT |
| 153.9 | 182.4 | TSY |
| 265.0 | 271.5 | Tax-Calculator + phase 2 dataset |
| 217.7 | 223.6 | Tax-Calculator + taxdata dataset |
CY2023 and CY2026 QBID Tax Expenditure ($ billion)
(from the 20% federal qualified business income deduction)
| CY23 Amount | CY26 Amount | Estimate Source |
|---|---|---|
| 56.2 | 0.0 | JCT |
| 50.4 | 0.0 | TSY |
| 58.4 | 0.0 | Tax-Calculator + phase 2 dataset |
| 19.3 | 0.0 | Tax-Calculator + taxdata dataset |
CY2023 and CY2026 SALT Tax Expenditure ($ billion)
(from itemized deduction of state and local income/sales/property taxes)
| CY23 Amount | CY26 Amount | Estimate Source |
|---|---|---|
| 21.2 | 151.3 | JCT |
| 26.5 | 149.0 | TSY |
| 14.9 | 154.6 | Tax-Calculator + phase 2 dataset |
| 29.4 | 185.5 | Tax-Calculator + taxdata dataset |
The above results for the phase 2 dataset, plus other data-quality issues, will be investigated in phase 3 as part of this project's continuous-improvement procedures.