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State Taxes on Dividends. Not all states tax ordinary income, and not all tax long-term capital gains either. But if you live in a state that does, you should prepare to pay the appropriate taxes ...
Dividends paid to investors by corporations come in two kinds – ordinary and qualified – and the difference has a large effect on the taxes that will be owed. Ordinary dividends are taxed as ...
Most dividends paid by a corporation are ordinary dividends and do not conform to the criteria for qualified dividends. This means they are taxed at your individual marginal income tax rate.
From 2003 to 2007, qualified dividends were taxed at 15% or 5% depending on the individual's ordinary income tax bracket, and from 2008 to 2012, the tax rate on qualified dividends was reduced to 0% for taxpayers in the 10% and 15% ordinary income tax brackets, and starting in 2013 the rates on qualified dividends are 0%, 15% and 20%. The 20% ...
The Jobs and Growth Tax Relief Reconciliation Act of 2003 reduced the rates to 5% and 15%, and extended the preferential treatment to qualified dividends. The 15% tax rate was extended through 2010 as a result of the Tax Increase Prevention and Reconciliation Act of 2005, then through 2012. The American Taxpayer Relief Act of 2012 made ...
Preferential (lower) tax rates: Capital gains and dividends (0.6% GDP) Tax credits: Earned income tax credit (0.3% GDP) The CBO projected that the top 10 largest tax expenditures would average 6.2% of GDP each year on average over the 2016–2026 period. For scale, federal tax receipts averaged around 18% GDP from 1970 to 2016.
Whatever your income tax bracket, that's the rate you pay on ordinary dividends. One way to remember the major distinction here is that "ordinary dividends" are taxed at ordinary income tax rates.
Ordinary income is taxed within the particular tax bracket listed on the rate schedules or tax tables as a percentage for each dollar within that bracket. However, after the 2003 Tax Cut, qualified dividends and long-term capital gains are taxed at the same rate of 15% (up to 20% after 2012).