Dividend tax in the U.S. for 2026 is determined by whether dividends are "qualified" (taxed at lower long-term capital gains rates of 0%, 15%, or 20%) or "nonqualified" (taxed as ordinary income, up to 37%). The rate depends on your filing status, total taxable income, and holding period, with 0% tax applied to lower-income brackets.
Dividend Tax Breakdown (2025-2026 Trends)
Qualified Dividends: Qualified dividends are taxed at preferential long-term capital gains rates of 0%, 15%, or 20%, depending on taxable income.
- 0% Rate: For 2025, taxable income up to $48,350 (single) or $96,700 (married filing jointly).
- 15% Rate: Income up to $533,400 (single) or $600,050 (married filing jointly).
- 20% Rate: Income exceeding those amounts.
Nonqualified (Ordinary) Dividends: These are taxed at your standard federal income tax bracket rates (ranging from 10% to 37%). The following table lists 2026 federal tax bracket.
Rate Single Married filing jointly
10% $0–$12,400 $0–$24,800
12% $12,400–$50,400 $24,800–$100,800
22% $50,400–$105,700 $100,800–$211,400
24% $105,700–$201,775 $211,400–$403,550
32% $201,775–$256,225 $403,550–$512,450
35% $256,225–$640,600 $512,450–$768,700
37% $640,600+ $768,700+
Net Investment Income Tax (NIIT): High-income earners (e.g., modified adjusted gross income over $200,000 single/$250,000 married) may pay an additional 3.8% tax on top of their regular rate.
How it works: Brokerages report dividends on Form 1099-DIV, distinguishing between ordinary (Box 1a) and qualified (Box 1b).
State Taxes: States typically tax all dividends as ordinary income, regardless of their federal qualified status.
Retirement Accounts: Dividends in IRAs or 401(k)s are generally tax-deferred or tax-free (Roth).
Key Considerations
Holding Period: To be qualified, the stock must be held for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date.
Non-Residents: Non-resident aliens are generally subject to a 30% withholding tax on dividends, though this may be reduced by tax treaties.