Public conceptDeductions and rates
Capital-gain stacking
The rule that positions preferential dollars above taxable ordinary income when locating their rate bands.
In one sentence
Preferential income stacks on top of taxable ordinary income to find its applicable rates.
Model
taxable ordinary base + preferential dollars → capital-gain bands
Worked example
Ordinary income can consume part or all of the space below the 0% capital-gain ceiling before a long-term gain is added.
What to notice
Follow this mechanism in a related lesson, where the same calculator engine exposes every intermediate value.
Common misconception
The 0% capital-gain threshold is not a separate allowance independent of ordinary income.
See it in motion