How are qualified dividends taxed?

Qualified dividends are taxed at the same rates as the capital gains tax rate. These rates are lower than ordinary income tax rates. The tax rates for ordinary dividends (typically those that are paid out from most common or preferred stocks) are the same as standard federal income tax rates or 10% to 37% for the 2023 and 2024 tax years.

What is a qualified dividend?

A qualified dividend is an ordinary dividend that meets the criteria to be taxed at capital gains tax rates, which are lower than income tax rates for some taxpayers. Qualified dividends must meet special requirements issued by the IRS.

Are qualified dividends taxed on form 1099-DIV?

Qualified dividends are reported on Form 1099-DIV in line 1b or column 1b. However, not all dividends reported on those lines may have met the holding period requirement. Those non-qualified dividends, as well as other ordinary dividends, may be taxed at your ordinary income tax rate, which can be as high as 37%.