The Iran war is the latest challenge to what has so far been a resilient U.S. economy. The Strait of Hormuz is blocked; as a result, oil is trading above $100 per barrel and gasoline prices are soaring as I write this.

Uncertainty, including geopolitical uncertainty, is a part of investing. While we individual investors cannot control it, there are things we can control. Among those things is our knowledge. Developing a strong-enough understanding of the tax code allows us to identify levers we can potentially pull in our favor.

I walked members through those levers during our recent AAII Tax Seminar. One key concept that I kept coming back to over the course of the seminar was the marginal cost of one extra dollar of income.

To figure out the marginal cost, you need to understand what gets taxed at what rate. This seems simple until you consider how one extra dollar of income impacts deductions, credits, surcharges and Medicare premiums before income tax rates are applied.

Adding to the complexity is how certain types of income are taxed.

Consider long-term capital gains and qualified dividends: They are taxed at 0%, 15% or 20% rates depending on your adjusted income. Those rates are determined by where your capital gains land relative to your ordinary income—a concept known as capital gains stacking.

Say a married couple earns $80,000 of adjusted gross income (AGI) this year and realizes $18,900 of long-term gains and qualified dividends. This $98,900 takes them right to the top of the 0% capital gains income bracket. If they earn just a single dollar more of ordinary income, it will cause $1 of their qualified investment income to be taxed at 15% instead of 0%.

If your head is spinning a bit, jump to my financial planning article in this month’s issue. I explain the concept of capital gains stacking more thoroughly to help you better manage your taxes for the 2026 tax year and beyond. It is one part of your world you can exert control over even as global uncertainty rises.

Wishing you prosperity and good health,