How are dividends taxed? Ordinary and qualified dividend tax rates
Fact Checked: Bronwyn Petry
Updated: January 14, 2025
There’s nothing more exciting than receiving a check in the mail, but when it comes to dividends, it’s imperative that you remember that this isn’t free money. As tax time approaches, many investors are asking one question: how are dividends taxed?
A dividend is a shareholder’s share of company earnings. It may be paid in the form of cash or stocks, but all dividends are subject to tax. This is where it can get a little confusing, however. The amount of that tax varies based on several factors, such as the type of dividends you receive and how much money you make each year.
Knowing how the IRS taxes dividends can simplify the filing process and help ensure you file your taxes correctly.
How are dividends taxed?
Dividends are earnings investors receive off their investments. They’re based on company earnings so they can fluctuate, and they’re typically paid out monthly or annually.
When an investor receives dividends, tax must be paid on those earnings because it’s considered income. Dividends must be reported to the Internal Revenue Service (IRS) via form 1099-DIV1.
How much an investor pays for taxes depends on whether dividends are qualified or non-qualified. The difference between the two types of dividends can be as much as 20% in some cases. There are seven tax brackets for non-qualified dividends, while qualified dividends only have three.
Here, we explore the differences between 2023 and 2024 dividend tax rates for both qualified and non-qualified dividends.
Qualified dividend tax rate
Qualified dividends are generally preferred over non-qualified dividends because they receive the capital gains tax rate. This varies between three levels, which include 0%, 15% and 20%, and are based on income and filing status. But to take advantage of these lower rates, your dividends must first qualify.
A qualified dividend must meet the following requirements:
- The dividend must be from a U.S. or eligible international corporation
- The corporation must be publicly traded on a major exchange, such as the Nasdaq
- The investment was held for the minimum holding period
- The asset was not hedged
Some dividends are not valid, such as those from a tax-exempt organization or an employee stock ownership plan. Real estate investment trusts (REITs) and master limited partnerships (MLPs) also do not qualify. Other restrictions may apply, and guidelines are subject to change, so you should consult IRS Publication 5502 for further detail.
What is a qualified dividend?
A qualified dividend meets certain requirements to receive lower taxes from the IRS in the form of the capital gains tax rate, ranging from 0% to 20% of one’s income.
Ordinary dividend tax rate
Non-qualified dividends do not meet the criteria for qualified dividends, so they are taxed at a different, higher rate than their counterpart.
Non-qualified dividends are taxed the same as regular income. They carry the regular federal income tax rate3, which changes from year to year. This starts at 10% but has seven total brackets that can grow as high as 37% based on your income.
What is an ordinary dividend?
An ordinary dividend, also known as a non-qualified dividend, is not eligible for special IRS exemptions so it is instead taxed the same as regular income.
Dividend tax rates 2024
There are two main differences to dividend tax:
- Qualified dividends, which are taxed at the capital gains rate at 0%, 15% or 20%, depending on income and tax filing status.
- Non-qualified dividends, which are taxed at the federal income tax rate and range from 10% to 37% based on income and tax filing status.
As an example, if married couple John and Meredith are filing together and collectively made $150,000, they would pay 15% tax on their qualified dividends. If they filed separately, they would still have to pay 15% on their taxes.
So, how are dividends taxed for single filers? Let’s say Sally is a single filer who makes $75,000 per year. In this case, she would pay 15% for her dividend taxes.
These are the 2024 rates for qualified dividends to be filed in 2025.
2024 qualified dividends
Tax rate | Single |
Head of household
|
Married filing joint | Married filing separate |
---|---|---|---|---|
0% | Up to $47,025 | Up to $63,000 | Up to $94,054 | Up to $47,025 |
15% | $47,026 - $518,900 | $63,001 - $551,350 | $94,055 - $583,750 | $47,026 - $291,850 |
20% | $518,901+ | $551,351+ | $583,751+ | $291,851+ |
So what if there are non-qualified dividends instead of dividends?
Going back to our previous examples, John and Meredith would now pay 22% tax on their dividends. If they filed separately, they would pay 24% each on their dividends. Sally, with her $75,000 income, would pay 22% tax as a single filer.
These are the 2024 tax rates for non-qualified dividends to be filed in 2025.
2024 non-qualified dividends
Tax rate | Single | Head of household | Married filing joint | Married filing separate |
---|---|---|---|---|
10% | Up to $11,600 | Up to $16,550 | Up to $23,200 | Up to $11,600 |
12% | $11,601 - $47,150 | $16,551 to $63,100 | $23,201 - $94,300 | $11,601 - $47,150 |
22% | $47,151 - 100,525 | $63,101 - $100,500 | $94,301 - 201,050 | $47,151 - 100,525 |
24% | $100,526 - $191,950 | $100,501 - $191,950 | $201,051 - $383,900 | $100,526 - $191,950 |
32% | $191,951 - $243,725 | $191,951 - $243,700 | $383,901 - $487,450 | $191,951 - $243,725 |
35% | $243,726- $609,350 | $243,701 - $609,350 | $487,451 - $731,200 | $243,726- $609,350 |
37% | $609,351+ | $609,351+ | $731,201+ | $609,351+ |
Dividend tax rates 2023
While it is good to plan for 2024 rates with your 2025 filing, you still need to calculate your 2024 filing for your 2023 dividends. As you see below, 2023 rates differ slightly from 2024.
For the sake of consistency, we will keep with our examples above. If John and Meredith were to file together and their income was $150,000, they would pay 15% in taxes on their qualified dividends. Sally, our single filer, has the same tax rate. She had an income of $75,000, so she would also pay 15% taxes on our qualified dividends.
These are the 2023 rates for qualified dividends to be filed in 2024.
2023 qualified dividends
Tax rate | Single | Head of household | Married filing joint | Married filing separate |
---|---|---|---|---|
0% | Up to $44,625 | Up to $59,750 | Up to $89,250 | Up to $44,625 |
15% | $44,626 - $492,300 | $59,751 - $523,050 | $89,251 - $553,850 | $44,626 - $276,900 |
20% | $492,301+ | $523,051+ | $553,851+ | $276,901+ |
Non-qualified dividends for 2023 are also taxed differently from 2024.
With their income of $150,000, John and Meredith would pay 22% on their non-qualified dividends. Sally, with her $75,000 income, would also have to pay 22%, a hefty difference from her qualified dividends.
These are the non-qualified dividend tax rates for 2023 to be filed in 2024.
2023 non-qualified dividends
Tax rate | Single | Head of household | Married filing joint | Married filing separate |
---|---|---|---|---|
10% | Up to $11,000 | Up to $15,700 | Up to $22,000 | Up to $11,000 |
12% | $11,001 - $44,725 | $15,701 - $59,850 | $22,001 - $89,450 | $11,001 - $44,725 |
22% | $44,726 - $95,375 | $59,851 - $95,350 | $89,451 - $190,750 | $44,726 - $95,375 |
24% | $95,376 - $182,100 | $95,351 - $182,100 | $190,751 - $364,200 | $95,376 - $182,100 |
32% | $182,101 - $231,250 | $182,101 - $231,250 | $364,201 - $462,500 | $182,101 - $231,250 |
35% | $231,251 - $578,125 | $231,251 - $578,100 | $462,501 - $693,750 | $231,251 - $578,125 |
37% | $578,126+ | $578,101+ | $693,751+ | $578,126+ |
How much tax will I pay on my dividend income?
How tax you pay on dividend income all depends on your income, filing status and the type of dividend you receive. Here is an example using 2024 tax rates (to be filed in 2025).
Marcus is a single filer who makes $80,000 a year.
- On his qualified dividends, he will pay the 15% tax rate. On $5,000 of qualified dividends, that would be $750 in taxes
- On his non-qualified dividends, he will pay 12%. This is $600 in taxes
Jacob and Erin are married. They are filing jointly and together make $350,000.
- If they have qualified dividends, they will pay the 15% tax rate. On $20,000 in dividends, this is $3,000
- If they have non-qualified dividends, they will pay the 24% tax rate. This amounts to $4,800 in dividend taxes
The chart below shows the difference in tax rate for each filer.
Filer | Filing status | Income | Qualified dividend tax rate | Non-qualified dividend tax rate |
---|---|---|---|---|
Marcus | Single filer | $80,000 | 15% | 12% |
Jacob and Erin | Married joint Filer | $350,000 | 15% | 24% |
Are dividends taxed twice?
Both qualified and non-qualified dividends may be taxed twice if you are a high-earner who qualifies for the Net Investment Income Tax3. This tax adds an extra 3.8% tax and is assessed on investors with modified adjusted gross incomes of over $200,000 for single filers and $250,000 for married joint filers.
FAQs

Lena Muhtadi Borrelli brings over 20 years of experience in the finance industry. She began her career at Morgan Stanley before transitioning over to media. As a finance writer, she has served as an authority for several respected outlets, including Forbes, TIME, Newsweek, Bankrate, Investopedia, Insurance.com, and InvestorPlace. No matter what she is writing, Lena has a unique ability to simplify complex topics, making finance more approachable and relatable to the average reader. When she is not writing or scanning the news for the latest headlines, she is happiest spending time in the Florida sunshine with her husband and two pups.
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