US Dividend Tax Estimator

Qualified vs. Ordinary Dividends: The Tax Difference

Not all dividends are taxed the same in the United States. Depending on the type of security and how long you've held it, your tax rate could vary significantly.

1. Qualified Dividends

Qualified dividends are taxed at the long-term capital gains rates (0%, 15%, or 20%). To qualify, the dividend must be paid by a US corporation or a qualified foreign corporation, and you must meet the holding period requirement.

Holding Period: You must hold the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date.

2. Ordinary (Non-Qualified) Dividends

Ordinary dividends are taxed as ordinary income at your regular federal income tax rate (up to 37%). Dividends from REITs (Real Estate Investment Trusts), MLPs (Master Limited Partnerships), and most employee stock options are typically treated as ordinary dividends.

3. State and Local Taxes

Most states also tax dividend income as ordinary income, though some states (like New Hampshire and Tennessee) specifically tax interest and dividends at different rates. Note that this calculator only estimates federal liability.