Educational use only. This guide is for
general educational purposes and is not financial, tax, legal, or accounting advice. Tax
rules can change and individual facts matter. Verify the information with official
sources and a qualified professional before making tax or financial decisions.
1. Build Federal AGI
Federal AGI = total gross wages - pre-tax medical - pre-tax 401(k) -
pre-tax FSA - pre-tax HSA
2. Subtract the Deduction
| 2025 standard deduction | Amount |
|---|---|
| Single | $15,750 |
| Married filing jointly | $31,500 |
| Married filing separately | $15,750 |
| Head of household | $23,625 |
SALT paid = state income tax paid + state payroll tax paid + property
tax paid
SALT cap = max($10,000, filing-status cap - max(0, Federal AGI - phaseout threshold) × 30%)
Deductible mortgage interest = mortgage interest paid × min(1, $750,000 ÷ average mortgage balance)
Itemized deduction = min(SALT paid, SALT cap) + deductible mortgage interest
SALT cap = max($10,000, filing-status cap - max(0, Federal AGI - phaseout threshold) × 30%)
Deductible mortgage interest = mortgage interest paid × min(1, $750,000 ÷ average mortgage balance)
Itemized deduction = min(SALT paid, SALT cap) + deductible mortgage interest
| Status | 2025 SALT cap | Phaseout begins |
|---|---|---|
| Single | $40,000 | $500,000 |
| Married filing jointly | $40,000 | $500,000 |
| Married filing separately | $20,000 | $250,000 |
| Head of household | $40,000 | $500,000 |
3. Calculate the Child Tax Credit
Maximum credit = eligible children × $2,000
Reduction steps = ceil(max(0, Federal AGI - threshold) ÷ $1,000)
Child Tax Credit = max(0, maximum credit - reduction steps × $50)
Reduction steps = ceil(max(0, Federal AGI - threshold) ÷ $1,000)
Child Tax Credit = max(0, maximum credit - reduction steps × $50)
| Status | Phaseout threshold |
|---|---|
| Single | $200,000 |
| Married filing jointly | $400,000 |
| Married filing separately | $200,000 |
| Head of household | $200,000 |
4. Apply 2025 Federal Brackets
| Status | 10% | 12% | 22% | 24% | 32% | 35% | 37% |
|---|---|---|---|---|---|---|---|
| Single | $0-$11,925 | $11,925-$48,475 | $48,475-$103,350 | $103,350-$197,300 | $197,300-$250,525 | $250,525-$626,350 | Over $626,350 |
| Married filing jointly | $0-$23,850 | $23,850-$96,950 | $96,950-$206,700 | $206,700-$394,600 | $394,600-$501,050 | $501,050-$751,600 | Over $751,600 |
| Married filing separately | $0-$11,925 | $11,925-$48,475 | $48,475-$103,350 | $103,350-$197,300 | $197,300-$250,525 | $250,525-$375,800 | Over $375,800 |
| Head of household | $0-$17,000 | $17,000-$64,850 | $64,850-$103,350 | $103,350-$197,300 | $197,300-$250,500 | $250,500-$626,350 | Over $626,350 |
5. Finish the Federal Tax Calculation
Federal taxable income = max(0, Federal AGI - selected deduction)
Federal income tax = max(0, bracket tax - Child Tax Credit)
Federal income tax = max(0, bracket tax - Child Tax Credit)