A stata program that calculates federal tax liability and marginal tax rates from nominal taxable income (years 1913 to 2013).

Install taxliab by opening Stata and running the command:

net install taxliab, from(

The documentation for taxliab is included with the installation. To read the documentation, run the command:

help taxliab

The revolutionary stata command taxsim9 calculates federal and state income tax liability from 21 input variables. The command is indeed very sophisticated, determining, for instance, whether a tax filer is better off itemizing or claiming the standard deduction. However, to the best of my knowledge taxsim9 is less useful for more basic calculations such as estimating tax liability and marginal tax rates given taxable income (rather than gross or adjusted gross income with deductions). Another stata command, taxcalc (available from the NBER by request), calculates tax liability from more basic inputs, but is still quite sophisticated in terms of the inputs it receives and, more importantly, is limited to PUF and INSOLE data. You can read the NBER comparison of the commands here. Because taxsim9, taxcalc, or—to Hautahi Kingi and I's knowledge—any other stata command cannot perform analyses on the aggregated IRS SOI data on taxable income, we wrote taxliab.

For Matlab code that calculates tax liability and marginal tax rates given taxable income, please download the zip file below or visit its GitHub repository here. The zip file contains a Matlab file (taxliab.m) and dataset necessary to calculate tax liability and marginal tax rates as well as example Matlab code (taxliab_example.m) to run the command.