Income Tax Fundamentals and Calculations

Free CFP Exam lesson in Tax Planning. 23 min read, ~3,403 words.

Federal tax is not one system. It is three stacked systems: ordinary brackets, LTCG/qualified dividend brackets, and NIIT. Each has its own thresholds. LTCG fills brackets AFTER ordinary income. A taxpayer's LTCG rate depends on total taxable income, not the gain amount. NIIT 3.8% hits the LESSER of net investment...