The Fisher equation used here is 1 + real = (1 + nominal) / (1 + inflation). Real return is that result minus 1. A rough subtraction of inflation from the nominal rate is close when both rates are small, and it is not the figure this page uses.
A 7% nominal return with 3% inflation is a real return of 3.88%, because 1.07 / 1.03 − 1 = 0.0388. Subtracting 3 from 7 would have said 4%, which is a bit high.
Taxes are not removed. The nominal return and the inflation rate are both numbers you enter, not forecasts.