Tax Concepts Wiki

Progressive rate tiers applied to taxable income.

The tax rate on your next dollar of income.

Your average tax rate across all income.

Income remaining after deductions, subject to tax.

Gross income minus above-the-line deductions.

AGI with certain deductions added back, used for eligibility tests.

Determines your bracket thresholds and standard deduction.

Tax impact of filing jointly vs. two singles.

2017 law that lowered rates and doubled the standard deduction.

Fixed deduction amount based on filing status.

Schedule A deductions that replace the standard deduction.

Deductions taken before AGI, regardless of itemizing.

State and local tax deduction, capped at $40,000 for 2025.

Deduction for interest on up to $750K of mortgage debt.

Tax deduction for donations to qualifying organizations.

Up to $2,500 above-the-line deduction.

Deductible medical costs exceeding 7.5% of AGI.

Social Security and Medicare taxes on wages.

6.2% on wages up to the annual wage base.

1.45% on all wages, plus 0.9% surtax on high earners.

FICA equivalent for self-employed individuals (15.3%).

Gains on assets held over one year, taxed at preferential rates.

Gains on assets held one year or less, taxed as ordinary income.

How long you held an asset — determines LTCG vs. STCG.

3.8% surtax on investment income for high earners.

Original purchase price used to calculate gain or loss.

Losses offset gains; up to $3,000/yr against ordinary income.

Selling investments at a loss to offset gains.

Disallows loss if you repurchase same security within 30 days.

Dividends taxed at LTCG rates instead of ordinary rates.

Inherited assets reset cost basis to date-of-death value.

Interest is federal tax-exempt; may also be state/local exempt.

State tax-exempt, federally taxable.

Treasury Inflation-Protected Securities — state tax-exempt.

State tax-exempt, tax-deferred until redemption.

The taxable yield needed to match a tax-exempt bond after taxes.

Employer-sponsored retirement plans with tax-deferred growth.

Tax-deductible contributions with tax-deferred growth.

After-tax contributions with tax-free growth and withdrawals.

Triple tax-advantaged: deductible, tax-free growth, tax-free withdrawals.

Pre-tax now vs. tax-free later — depends on future tax rate.

Moving pre-tax retirement assets into a Roth account.

Mandatory annual withdrawals from pre-tax retirement accounts.

Tax-free growth for education expenses; state deductions may apply.

Borrow against brokerage holdings; interest may be deductible.

60/40 tax treatment — 60% LTCG, 40% STCG regardless of holding period.

Synthetic loan using options at near-Treasury rates.

Deductible against net investment income; requires itemizing.

Borrow against home equity; interest deductible if used for home improvement.

Borrow against appreciated assets to avoid capital gains; basis steps up at death.

Varies by state: progressive, flat, or none.

States with no personal income tax on wages.

City or county income taxes in addition to state tax.