the short answer is that $88K of dividend and qualified capital gain income isn't taxed but it pushes your other income into a higher tax bracket and makes some of the capital gin taxable
$80,800 less $68,000 ordinary income = $12,800 gets taxed at 0
$156K less $88K capital gains is the net ordinary income of $68K which gets tax at the standadrard rates
$88K of capital gains less the $12,800 not tax or $75,200 gets taxed at 15%
$12,800 taxed at 0
$68K at about $7.8K
$75,200 of taxable capital gains at 15% or about $11.3K
$12,800 + $68,000 +$75,200 = $156,000 in taxable income
now if you only had $88K of capital gains your tax would be zero
this is meant to illustrate that other income affects the taxes you pay on capital gains
with no capital gains the tax on $156K would be about $26K
