You are correct, but I can explain what they're trying to do.
They don't need to ask for your income because they ask for your tax bracket instead. The default value assumes 25% marginal tax rate.
The amount you save is really calculated as:
Interest Paid * Marginal Tax Rate
So if you pay $10k in interest this year and you're in the 25% bracket, you save $2500 on your tax bill. That is why the calculator doesn't ask for your income.
However, this isn't perfectly accurate, because if you are on the edge of a tax bracket then your deduction will actually change your marginal tax rate. This is a little more complicated scenario. Let's say you are a single filer making $85k per year and are paying $10k in interest. You'd put 28% tax bracket into the calculator, and it would tell you that you are saving:
S = $10000 * .28 = $2800
But actually this isn't right, because you're only paying 28% on income beyond $83600 (the lower limit of the 28% bracket) and you're paying %25 on income between $34500 and $83600). The accurate calculation has to take this into account:
S = ($85000 - $83600) * .28 + ($10000 - ($85000 - $83600)) * .25
S = $1400 * .28 + $8600 * .25
S = $392 + $2150
S = $2542
So you may actually save less if you are near the edge of a tax bracket than what that calculator is estimating.
In my mind, it would make a lot more sense for them to ask for your income, for two reasons:
- It leads to a more accurate calculation.
- Most people know their income, but may not know their marginal tax rate.