Fundamental and Current Tax Law

Free CFP Exam lesson in Tax Planning. 15 min read, ~2,255 words.

Six-step chain: Gross income - Adjustments = AGI - Deductions = Taxable income x Rates + AMT/NIIT - Credits = Tax due. Marginal rate taxes the next dollar; effective rate = total tax / total income. In a progressive system they always diverge, effective below marginal. Credits reduce tax dollar-for-dollar...