Income Tax Fundamentals and Calculations

Free CFP Exam lesson in Tax Planning. 24 min read, ~3,535 words.

Federal tax is three stacked systems: ordinary brackets, LTCG/qualified-dividend brackets, and NIIT. Each carries its own thresholds. LTCG fills brackets AFTER ordinary income, so the rate depends on total taxable income, not the gain amount. NIIT 3.8% hits the LESSER of net investment income or (MAGI minus $200,000 single /...