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24/7 Help. For premium support please call: 800-290-4726 more ways to reach us. ... 2024 Dividend Tax Rates. The qualified dividend tax rate for tax year 2024– filing in 2025– is either 0%, ...
Ordinary Dividends vs. Qualified Dividends: The Background Before 2003, all dividends were ordinary dividends and recipients paid taxes on them at their usual individual marginal rate.
Under the proposal, the top long-term capital gains and qualified dividends tax rate would increase to 39.6% from 23.8% and would apply to those earning over $1 million.
The rates on qualified dividends range from 0 to 23.8%. The category of qualified dividend (as opposed to an ordinary dividend) was created in the Jobs and Growth Tax Relief Reconciliation Act of 2003 – previously, there was no distinction and all dividends were either untaxed or taxed together at the same rate. [1]
However, with a qualified dividend tax rate of 23.8% (compared to a top ordinary interest marginal tax rate of 40.8%), $1 of dividend income taxed at this rate provides the same after-tax income as approximately $1.30 in interest income. [18]
The qualified dividend tax rate was set to expire December 31, 2008; however, the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) extended the lower tax rate through 2010 and further cut the tax rate on qualified dividends to 0% for individuals in the 10% and 15% income tax brackets.
In 2024, federal income tax rates remain at 10%, 12%, 22%, 24%, 32%, 35%, and 37%. While these rates stay the same for 2025, the income thresholds for each bracket will adjust for inflation.
Since January 1, 2018, the nominal federal corporate tax rate in the United States of America is a flat 21% following the passage of the Tax Cuts and Jobs Act of 2017. State and local taxes and rules vary by jurisdiction, though many are based on federal concepts and definitions.