Which AI Calculates Taxes Correctly?

Several readers asked me whether they could use AI to calculate taxes after reading my previous post AI Gives Better Answers Than Google. They want a tax projection to help with setting tax withholding, paying estimated taxes, or planning for Roth conversions.

My immediate reaction was that calculating taxes isn’t the best use of AI, because it falls under “verifiable facts” and “latest development” categories. The retirement plan contribution limits, tax brackets, the maximum deduction amounts, etc., are all verifiable facts. The IRS sets them every year, and they are what they are. Just go to the IRS website for the latest numbers, or Google. If you ask AI, it had better get the latest numbers online anyway, because AI’s training lags.

On the other hand, tax rules are complicated. After you have all the latest numbers from the IRS, you still need to apply the complex rules — what counts and what doesn’t, and which rates apply to which income. Online tax calculators usually don’t cover the current year until late in the year, and they can be either too simple or too complicated. It would be nice to have AI calculate taxes specifically for the types of income and deductions we have: not too simple with only limited inputs, and not too complicated with everything under the sun.

The Quiz

I thought I would test how well AI calculates taxes. I came up with this quiz question:

Jill, single, age 63, has these incomes in 2026:

• $30,000 from Social Security
• $10,000 from interest and pre-tax IRA withdrawals
• $37,000 from qualified dividends and long-term capital gains
• $1,000 from muni bond interest

Jill contributes $4,400 to her HSA and donates $1,500 in cash to charities. What’s Jill’s federal income tax in 2026?

I designed this question carefully to cover several calculations. Less than 85% of Social Security is taxable. The income consists of ordinary income, tax-exempt income, and investment income taxed at preferential rates. The ordinary income component goes across two tax brackets. So does the investment income. One deduction is above-the-line, and the other is below-the-line.

I added these instructions to encourage AI to get the latest tax numbers from the IRS:

It’s important to calculate it accurately. Please use tax amounts only for 2026 and only from official IRS sources.

Initial Results

I sent the quiz to all four major AI chatbots: ChatGPT, Claude, Gemini, and Grok. I only used the free version in each one, with the free Thinking, Pro, or Expert mode enabled. I compared the answers to the correct result from my calculator in Calculator: How Much of My Social Security Benefits Is Taxable?

My quiz was too hard! All four major AI models failed to give the correct answer. The $1,500 cash donation threw them off. It falls squarely in the “latest development” category. The charity donation deduction for non-itemizers is new. The AI models all have “donations are deductible only when you itemize” imprinted in their training. Claude, Gemini, and Grok all would have given the correct answer if I hadn’t included the cash donation. ChatGPT was off on how much of Social Security is taxable.

When you see AI not giving you a deduction, you can raise a question and ask it to double-check. I followed up with this statement:

I heard that cash donations are deductible for people using the standard deduction, starting in 2026, up to a limit.

I also added this request for ChatGPT:

Another AI model calculated a different amount for how much Social Security is taxable. Please double-check your calculation to see who’s right.

Round 2

All four AI chatbots double-checked and revised their answers.

ChatGPT and Claude got the correct answer. Gemini and Grok mistakenly treated the cash donation deduction as above-the-line and used it to reduce the Social Security taxable amount.

I asked Gemini and Grok to clarify whether the HSA contribution and the charity donation should or shouldn’t be included in calculating the Social Security taxable amount. Gemini didn’t realize its mistake. It said both should be included. Grok refused to go further because I reached the message limit for not having an account.

Here are the full chat transcripts. They make an interesting read.

[No sharable link for Grok because I don’t have an account.]

Impressions

I don’t think we can draw definitive conclusions based on only one test. I call these impressions.

1. Whether AI can calculate taxes correctly depends on the complexity. Three out of the four major AI chatbots would’ve given the correct answer in one go if the question didn’t include the new and tricky charity donation deduction. The explicit request to retrieve the latest information from official IRS sources and turning on the Thinking/Pro/Expert mode probably helped in improving accuracy.

2. AI works better when you make it a conversation. Don’t stop and say it’s useless when you spot some errors in the initial answer. Help the tool help you. Both ChatGPT and Claude reached the correct answer in Round 2 after I asked them to double-check.

3. It takes little effort to send the same question to two or more AI models. You don’t need to know which AI is correct when you get different answers. You can tell one AI that another AI said something different. It’ll re-examine.

4. AI was wrong because human sources were wrong. Gemini and Grok treated the donation deduction as above-the-line because many human sources incorrectly called it above-the-line. If you Googled, you would encounter those incorrect sources too. ChatGPT and Claude used more reliable sources and correctly identified the difference between above-the-line and not requiring itemizing deductions.

5. An online tax calculator is faster and more accurate if you know which one to use. That’s a big “if.” Only saying “Don’t use AI because it’s often wrong” doesn’t say where you will find more reliable sources.

As much as I’d like to see everyone use my tax calculator, let’s face it: 99.99% of people don’t know that I exist. They have little chance of finding the few sources that do it accurately because Google doesn’t rank tax calculators by timeliness or accuracy.

Here’s a small challenge for you:

Pretend you’re not familiar with tax calculations. Find another way to answer the quiz question. Don’t say “I have a spreadsheet,” or “I use the super-duper Case Study Spreadsheet or Excel1040.” 99.99% of people don’t have those. Please tell me in the comments section how you could do it otherwise.

Short of finding the good sources, the results from AI aren’t that bad (see #1).

6. AI’s general approach was correct even when it was wrong in some nuances. All four AI chatbots followed these correct steps:

• Calculate how much of Social Security is taxable
• Calculate AGI
• Calculate taxable income
• Separate ordinary income and preferential investment income, and know how they stack
• Apply different tax brackets

This general approach is “common knowledge of an insider.” You can learn the steps from AI if you’re not familiar with tax calculations. That’s more valuable than just having a final number. When I saw that ChatGPT didn’t include details of some interim steps, I asked it to show its work. ChatGPT explained the details faster and better than I could (read the transcript).

An online tax calculator gives you a number but doesn’t explain the steps. AI is a better tool in teaching you how to fish than giving you a fish.