IMF TaxFit Model Methodology and User Guidebook

Julia Cots-Capell, Aieshwarya Davis and Duncan MacDonald

No 2025/008, IMF Technical Notes and Manuals from International Monetary Fund

Abstract: The TaxFit microsimulation model calculates the taxes payable and benefits receivable by hypothetical households across an expanding list of countries. It simulates personal income taxes and social security contributions for all adults in a household, as well as family benefits, social assistance, in-work benefits, and caregiver support. Users define household characteristics—such as gross income levels and family composition—to facilitate cross-country comparisons of tax burdens and benefit generosity. When microdata is available, it can be uploaded to generate diagnostic indicators that better reflect the population, assess the distributional effects of tax and benefit reforms, and estimate fiscal costs. This technical manual provides a detailed overview of the TaxFit model, explains its underlying assumptions, and offers guidance on using the Stata-based model and its associated online tool.

Keywords: tax; social protection; simulation; work incentives; employment; informal work; effective tax rates; IMF TaxFit model methodology; user guidebook; IMF Library; function argument; employment earnings; Income; Wages; Social security contributions; Maternity and childcare benefit spending; Asia and Pacific; Europe; Africa (search for similar items in EconPapers)
Pages: 56
Date: 2025-05-05
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