side-business — evidence pack

Model: side-business — v1.0.1 (as-implemented)

Engine: calcSideBusiness(inputs: SideBusinessInputs) in src/lib/engine.ts. After-tax value of side/freelance income, the extra wealth it builds over a horizon, and a rough FIRE-acceleration estimate.

> Unit warning: all rates are annual decimals (0.153 = 15.3% SE > tax). Income and expense inputs are monthly USD.

Inputs

Name	Type	Unit	Domain
sideIncomeMonthly	number	USD/mo gross	200–20,000
selfEmploymentTaxRate	number	decimal	0.10–0.20
incomeTaxRate	number	decimal	0.10–0.37
businessExpensesMonthly	number	USD/mo	0–5,000
currentSavings	number	USD	0–1,000,000
currentMonthlySavings	number	USD/mo	200–10,000
annualReturn	number	decimal/yr	0.02–0.12 (no UI slider; default 0.07)
yearsHorizon	integer	years	5–40
currentAge	integer	years	18–70 (no UI slider; default 35)

> Removed in v1.0.1 (breaking): currentSalary and retirementAge > no longer exist. Both were dead inputs (currentSalary was never > even destructured; retirementAge was destructured but never used), > and neither had a UI slider. Callers must stop sending them — the API > rejects unknown fields.

Keep annualReturn > 0 in vectors: annualReturn = 0 makes monthlyReturn = 0 and the annuity factor divides 0/0 → NaN.

Computation

Let r = annualReturn, r_m = r/12, n = yearsHorizon.

1. grossSideIncome = sideIncomeMonthly − businessExpensesMonthly (USD/mo; despite the name this is net of expenses — see issues). May be negative.
2. taxRate = selfEmploymentTaxRate + incomeTaxRate (plain sum of decimals, up to 0.57 in-domain).
3. netSideIncome = grossSideIncome × (1 − taxRate) (USD/mo; negative when expenses exceed income).
4. additionalMonthlySavings = max(0, netSideIncome) — 100% of net side income is assumed saved (hardwired).
5. Closed-form horizon wealth (monthly-annuity convention): wealthAtHorizonWithout = currentSavings × (1 + r)^n + currentMonthlySavings × ((1 + r_m)^(12n) − 1) / r_m; wealthAtHorizonWith is the same with currentMonthlySavings + additionalMonthlySavings as the deposit. additionalWealth = wealthAtHorizonWith − wealthAtHorizonWithout.
6. FIRE acceleration: set targetWealth = wealthAtHorizonWithout. Then iterate bal = currentSavings, yearsWithSide = 0; while (bal < targetWealth && yearsWithSide < 100) { bal = bal × (1 + r) + (currentMonthlySavings + additionalMonthlySavings) × 12; yearsWithSide++ }. Note this loop uses annual compounding of the yearly deposit (monthly × 12 added after growth, no intra-year return) while the target came from the monthly-annuity closed form — deliberately mismatched conventions; see issues. fireAccelerationYears = max(0, yearsHorizon − yearsWithSide).
7. yearlyData, index y = 0..yearsHorizon: both balances start at currentSavings; each iteration records first ({year: currentAge + y, without: withoutBal, with: withBal}) then updates bal = bal × (1 + r) + deposit × 12 (deposits as in step 6; without uses currentMonthlySavings alone). No rounding anywhere in this model; no wall-clock dependence (year is age-based).

Output keys

grossSideIncome, netSideIncome, additionalMonthlySavings, fireAccelerationYears, wealthAtHorizonWithout, wealthAtHorizonWith, additionalWealth, yearlyData (fields {year, without, with} — note with is a reserved-looking but legal JSON/JS key). taxRate, monthlyReturn, and targetWealth are intermediates, not outputs.

Assumptions & exclusions (part of the contract)

• SE tax is applied to the full net-of-expenses amount: no 92.35% SE-base factor, no employer-half deduction, no QBI — the flat SE + income sum is the contract.
• The entire after-tax side income is invested (0% lifestyle inflation).
• Headline wealth outputs use monthly annuity compounding; the chart and the FIRE loop use annual deposit compounding. The chart's final point is therefore below wealthAtHorizonWith(out) for the same inputs.

Known model issues (v1.0.1)

• grossSideIncome is misnamed — it is income *minus expenses* (i.e. pre-tax net), not gross.
• Mixed compounding conventions (step 6): because the annual-deposit loop grows slower than the monthly-annuity target, yearsWithSide is biased high and fireAccelerationYears clamps to 0 for small side incomes even though wealth strictly increased. The max(0, …) hides the inconsistency.
• Loop cap: yearsWithSide stops at 100; with the clamp the output is then 0 (there is no explicit "never" sentinel).
• annualReturn = 0 → NaN in the annuity factors (out-of-domain).
• Negative netSideIncome is reported as-is but contributes nothing to savings (floored at step 4) — the model never charges the loss.

Changelog

• 1.0.1 (2026-08-13, product-approved): BREAKING — removed dead inputs currentSalary and retirementAge (accepted, never used; no UI sliders). No numeric output changes.
• 1.0.0: initial as-implemented spec.

Verification

Vectors: oracle/vectors/side-business.json (seeded fuzz + boundary cases). Tolerance: relative 1e-9 / absolute 1e-6 per numeric field; yearlyData element-wise.

Suggested curated cases:

// expenses exceed income: negative gross/net, additionalMonthlySavings = 0,
// fireAccelerationYears = 0 (loop still runs against the closed-form target)
{ "sideIncomeMonthly": 200, "selfEmploymentTaxRate": 0.153,
  "incomeTaxRate": 0.22, "businessExpensesMonthly": 5000, "currentSavings": 50000,
  "currentMonthlySavings": 1500, "annualReturn": 0.07, "yearsHorizon": 20,
  "currentAge": 35 }

// max combined tax (0.57) at max side income, long horizon — compounding-convention gap largest
{ "sideIncomeMonthly": 20000, "selfEmploymentTaxRate": 0.20,
  "incomeTaxRate": 0.37, "businessExpensesMonthly": 0, "currentSavings": 0,
  "currentMonthlySavings": 200, "annualReturn": 0.12, "yearsHorizon": 40,
  "currentAge": 18 }

// exact break-even: income = expenses → grossSideIncome and netSideIncome
// exactly 0, additionalMonthlySavings 0, both paths identical
{ "sideIncomeMonthly": 1000, "selfEmploymentTaxRate": 0.153,
  "incomeTaxRate": 0.22, "businessExpensesMonthly": 1000, "currentSavings": 50000,
  "currentMonthlySavings": 1500, "annualReturn": 0.07, "yearsHorizon": 20,
  "currentAge": 35 }