Long-term capital gains income is taxed at a lower rate than ordinary income, such as interest and short-term capital gains. Long-term capital gains rates are taxed less than earned income—in some cases as much as 20 percent less (35 percent versus 15 percent for federal taxes). Try to earn as much capital gains income as possible each year (versus ordinary income). A long-term capital gain is a gain on an investment asset that you hold for more than one year before selling. 

All income is also not taxed equally.  Stock dividends are taxed at a preferential tax rate compared to bond interest. Whereas bond and savings interest is taxed at your ordinary tax rate, stock dividends are taxed at a 15% or 0% preferential rate, depending on your marginal tax rate.

Here are some key suggestions: 

• Look toward long-term capital gains. These are not taxed until the asset is sold.
• Maintain a long-term–buy-and-hold strategy on mutual funds and stocks to defer taxes until the assets are actually sold.
• Stay in for the long haul. Manage your portfolio on a tax-efficient basis—it's not what you make, but what you keep after taxes and inflation that makes you wealthy.
• If your risk tolerance allows, increase your allocation to stocks, stock mutual funds, stock index funds, and ETFs as stock dividends are taxed at a lower tax rate.