Sample Report: Tax Projections

This sample report for Henry D. & Mary Price spans four years (2024–2027) across three states and models the impact of IRA distributions, capital gains, charitable giving, and changing household circumstances on federal and state tax liability.

Use this article to understand every section of the report, how to read each data table, and how to use the output in a planning conversation.

Case Overview: Henry D. & Mary Price

Section-by-Section Guide to the Report

The Tax Projections report is organised into ten data sections. Each section is explained below with a summary table drawn from the sample report and guidance on what to look for.

Section 1: Federal Overview (Page 1)

The opening section provides the headline federal tax figures across all four years. This is the first page to share with a client — it shows the trajectory of their tax burden at a glance.

Key insight: The client received a small refund in 2024 (-$842) but faces significant underpayment in every projection year — $41K in 2025, $34K in 2026, $63K in 2027. Total payments are held flat at $48,519 across all years, meaning estimated payments will need to increase substantially to avoid penalties.

Section 2: State Overview (Page 2)

The state overview shows how state tax liability changes as the clients move across three states. Oregon has the highest marginal rate (9.9%); Pennsylvania uses a flat rate (3.07%); North Carolina applies 3.99%. The dramatic drop in state tax from 2025 to 2026 reflects the move from Oregon to Pennsylvania.

Key insight: Relocating from Oregon to Pennsylvania saves approximately $27,000 in state taxes in 2026 alone, even with a higher income. This is a powerful illustration of how state of residence affects total tax burden and reinforces the value of multi-year projections.

Section 3: Summary Information (Page 2)

The summary section captures household-level filing variables that affect which credits, deductions, and thresholds apply. Key changes in this case include dependents increasing from 0 to 3 in 2025, and both filers crossing the age 65 threshold in 2027 (qualifying for the enhanced standard deduction).

Section 4: Gross Income (Pages 3–4)

The gross income section itemises every income source across the four years. The most significant driver of income growth in the projected years is taxable IRA distributions, which appear from 2025 onward. W-2 wages also increase in 2026–2027, likely reflecting a job change or new income source. Long-term capital gains remain constant at $132,600 across all years.

Key insight: The IRA distributions are the primary variable across the three projection years. At $174K, $140K, and $210K respectively, these likely represent a planned Roth conversion strategy. The Tax Projector should be used alongside the Roth Conversion Simulator to determine the optimal conversion amount for each year.

Section 5: AGI and Deductions (Pages 5–6)

AGI is reduced from Gross Income by Schedule 1 adjustments (held constant at approximately $64K across projected years). Deductions jump sharply in 2026 due to $35,000 in charitable contributions, which pushes the client above the standard deduction threshold and into itemised deductions.

Key insight: The $35,000 charitable contribution in 2026 reduces taxable income by approximately $39,000 compared to 2025 despite a higher AGI, and drops the federal tax bracket from 32% to 24%. This illustrates the power of deduction bunching — concentrating charitable giving in a single high-income year.

Section 6: Tax Calculation (Pages 6–7)

The taxes section shows the federal income tax calculation, additional taxes from Schedule 2, child tax credits, and other nonrefundable credits. Total Other Taxes (Schedule 2, Line 21) includes the net investment income tax (NIIT) of 3.8% on investment income above the MAGI threshold.

Section 7: Total Payments (Pages 7–8)

This section shows how the tax liability is being funded — through estimated quarterly payments and withholding. Estimated payments are held constant at $42,886 and withholding at $5,633 across all years, producing total payments of $48,519 regardless of the actual tax owed.

Action item: Estimated payments should be reviewed and increased to reflect the projected tax in each year. Underpayment penalties apply when total payments are less than 90% of the current-year tax or 100% of the prior-year tax (110% for AGI over $150K). With $63,400 owed in 2027, the client may face a significant penalty if payments are not adjusted.

Section 8: State Taxes (Pages 8–9)

The state tax section drills into each state’s computation, starting from federal AGI and applying state-specific deductions, exemptions, and rates. Key variables include the Oregon standard deduction ($5,600 in 2025), no state standard deduction in Pennsylvania, and a $25,500 deduction in North Carolina in 2027.

Section 9: Medicare Premium Adjustments (Page 9)

IRMAA (Income-Related Monthly Adjustment Amount) surcharges appear in 2027 — Part B adds $446 and Part D adds $83, for a combined $529 in additional Medicare premiums. These are triggered by the 2025 income (Medicare premiums operate on a two-year lag), which projects to $465,551 MAGI — well above the lowest IRMAA threshold. No AMT applies in any year.

Section 10: MAGI Tiers (Pages 10–11)

The MAGI tiers table is a quick-reference eligibility checker showing which credits, deductions, and thresholds the client falls Under, Over, or in the Phase-in range for. This is one of the most useful sections for identifying planning opportunities — any credit showing ‘Over’ is out of reach at current income levels.

Key insight: The child tax credit is available in 2024 (Under threshold) but lost in every projection year as income rises. Roth IRA contributions are over the limit in all years — a backdoor Roth strategy should be considered. SALT deductions move into Phase-in territory in 2027 as the client moves to North Carolina, where the cap structure differs.

How to Use This Report in Client Meetings

Key Planning Flags in This Report

Disclaimer: Information provided is for educational purposes. Your advisor does not provide tax, legal, or accounting advice. In considering this material, you should discuss your individual circumstances with professionals in those areas before making any decisions.