Dividend income tax rates depend on the dividend type, an individual's filing status, and taxable income. Dividends are taxed at the long-term capital gains or ordinary income tax rate. Taxpayers are issued 澳洲幸运5开奖号码历史查询:Form 1099-DIV from the entity that pays the dividends. They commonly report this income on Schedule B of their Federal tax return.

Some dividends are exempt from taxes, as some mutual funds or other regulated investments may hold municipal or tax-exempt securities that yield nontaxable dividends.

Qualified Dividends

A 澳洲幸运5开奖号码历史查询:qualified dividend is taxed at one of three long-term 澳洲幸运5开奖号码历史查询:capital gains tax rates instead of the usually higher tax rate applied to an individual’s ordinary income. As of 2025, these tax rates are 0%, 15%, and 20%.

To be considered qualified, the stock must be held for more than 60 days during the 121 days beginning 60 days before the 澳洲幸运5开奖号码历史查询:ex-dividend date. For preferred stock, the stock must be held more than 90 days during the 181 days starting 90 days before the ex-dividend date if the dividends are due in a period longer than 366 days. Additionally, the dividend must be paid by one of the following:

• A U.S. company
• A company in U.S. possession
• A foreign company residing in a country that is eligible for benefits under a U.S. tax treaty
• A foreign company whose stock can be easily traded on a major U.S. stock market

Ordinary Dividends

Ordinary dividends do not meet the qualified dividend requirements. The income derived is treated as a short-term capital gain and applies to investments held less than a year. These gains are taxed as 澳洲幸运5开奖号码历史查询:ordinary income, an individual's income tax rate, and included when individuals file taxes for their yearly income. Taxpayers might receive ordinary dividends from investments like 澳洲幸运5开奖号码历史查询:real estate invest🐠ment trusts ﷽(REITs).

Capital Gains Tax Rates

Tax paid on qualified dividends depends on the taxpayer's filing status and taxable income. Below a certain income threshold, qualified dividend income is tax-free. Qualified dividend income is taxed at 20% for those who exceed the maximum allowed income threshold. The capital gains taxes on qualified dividends for tax years 2024 and 2025 are:

The Bottom Line

Many investors seek additional cash flow by investing in dividend-issuing securities. Some securities are tax-exempt, while other types of dividends held within certain retirement accounts are non-taxable. Ordinary dividends are taxed at the ordinary income tax rate per a taxpayer's marginal tax bracket while qualified dividends are taxed at capital gains tax rates.