Yes, they are included in your AGI, but then the actual tax calculated uses special tax calculation forms that break out the Capital Gains and Qualified Dividends to be treated separately from the rest of your income.
That this is being done is not obvious on the face of the form 1040.
There are several different tax calculations forms that might be used....but Most likely, it was the Qualified Dividends and Capital Gains Tax Worksheet.
IF you check your line 15 taxable income, vs the IRS tax tables, you should see that the tax in line 16 is lower than what is on the tax tables...that is because the sub-portion of line 15 that came from your Cap Gains and Qual dividends were taxed at lower rates (starting at zero).
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
