Dividend Tax Calculator

Estimate federal taxes on your qualified and ordinary dividend income.

Calculate Dividend Taxes

Your tax filing status
Wages, salary, and other income before dividends
Most U.S. stock dividends
REITs, short-term holdings
Your state income tax rate (0% for TX, FL, etc.)
Total Dividend Tax$0
After-Tax Income$0
Effective Tax Rate0%
Tax Bracket0%

Tax Breakdown

Qualified Dividends Long-term capital gains rates
$5,000 @ 15% $750
Ordinary Dividends Taxed as regular income
$1,000 @ 22% $220
State Tax All dividends at state rate
$6,000 @ 5% $300
Total Tax Due
$1,270

2024 Qualified Dividend Tax Rates

Tax Rate Single Married Filing Jointly Head of Household
0% Up to $47,025 Up to $94,050 Up to $63,000
15% $47,026 - $518,900 $94,051 - $583,750 $63,001 - $551,350
20% Over $518,900 Over $583,750 Over $551,350

High earners may owe an additional 3.8% Net Investment Income Tax (NIIT).

Phin Smith
CREATED BY Phin Smith UPDATED
Based on 3 sources
Reviewed by Expert
724 people found this helpful

Table of Contents

How Dividend Taxation Works

The IRS taxes dividends differently depending on whether they're "qualified" or "ordinary." Understanding this distinction can significantly impact your after-tax returns.

  1. Qualified dividends receive preferential tax rates (0%, 15%, or 20%) similar to long-term capital gains.
  2. Ordinary dividends are taxed at your regular income tax bracket, which can be as high as 37%.
  3. State taxes apply to all dividends at your state's income tax rate.
  4. NIIT - An additional 3.8% tax may apply if your income exceeds certain thresholds.

Qualified vs. Ordinary Dividends

Qualified Dividends

Lower tax rates (0-20%)

  • Most U.S. company dividends
  • Must hold stock 60+ days
  • Certain foreign company dividends
  • Reported in Box 1b of 1099-DIV

Ordinary Dividends

Taxed as regular income (up to 37%)

  • REIT dividends
  • Short-term holdings (<60 days)
  • Money market dividends
  • Reported in Box 1a of 1099-DIV

Frequently Asked Questions

How do I know if my dividends are qualified?

Your broker's 1099-DIV form shows qualified dividends in Box 1b. To qualify, you must hold the stock for more than 60 days during the 121-day period around the ex-dividend date.

Are REIT dividends always taxed as ordinary income?

Mostly yes. REIT dividends are generally not qualified and taxed at ordinary rates. However, you may get a 20% deduction under the qualified business income (QBI) rules, effectively reducing the tax burden.

Can I avoid dividend taxes entirely?

In tax-advantaged accounts (Traditional IRA, Roth IRA, 401k), dividends grow tax-free or tax-deferred. In taxable accounts, if your total income keeps you in the 0% capital gains bracket, qualified dividends can be tax-free.

What is the Net Investment Income Tax (NIIT)?

NIIT is a 3.8% additional tax on investment income (including dividends) for individuals with MAGI over $200,000 (single) or $250,000 (married). It applies on top of regular dividend taxes.

Sources

  1. IRS - Topic No. 404: Dividends

    Official IRS guidance on dividend taxation and reporting.

  2. IRS Publication 550 - Investment Income

    Comprehensive IRS publication on investment income taxation.

  3. IRS - Net Investment Income Tax

    Information on the 3.8% NIIT for high-income taxpayers.