While we cannot be as precise as your actual tax returns, we do take into account the most important aspects of your expected taxes. We estimate your annual income taxes deduced from the projected amount of your pre-tax earnings in addition to accounting for the deduction of mortgage interest, dividend and capital gains taxes from investments, and tax deferred growth in retirement accounts. We currently do not model state income taxes, but we plan on including them in the near future, once we begin to track your state of residence.
A tip for the curious: if you look closely, you will see that your wealth projection has a bit of a sawtooth shape, especially prior to retirement. That’s the effect of the tax calculations -- we compute and withdraw taxes owed once every 12 months, much like you do that every April 15.