Dividend Tax Calculator

Estimate federal, state, and NIIT taxes on your dividend income. All 50 states supported.

Dividend Income
$4,250
Qualified Dividends
$750
Ordinary Dividends
Federal Tax Information
Your qualified dividends will be taxed at 15%. Ordinary dividends at 22%.
State Tax
%
Auto-calculated
Foreign Dividends (Optional)
Total Estimated Tax
$1,125
After-Tax Income
$3,875
22.5%
Effective Tax Rate
$850
Federal Tax
$275
State Tax

Tax Breakdown

Federal Tax on Qualified Dividends $637.50
Federal Tax on Ordinary Dividends $165.00
State Income Tax $342.50
Total Tax Liability $1,145.00

Need to calculate your dividend income first?

Use our Dividend Calculator to estimate income from DRIP, individual stocks, or your portfolio.

Dividend Calculator

Qualified vs Ordinary Dividends

Qualified Dividends

Tax Rate: 0%, 15%, or 20% (preferential)

Requirements:

  • From US corporation or qualified foreign corp
  • Held stock 60+ days in 121-day window
  • Not from tax-exempt organizations

Examples: Most US stocks, ETFs (SPY, VOO, SCHD)

Ordinary Dividends

Tax Rate: 10% - 37% (your income bracket)

Common Sources:

  • REITs (Real Estate Investment Trusts)
  • Money market funds
  • Some foreign dividends
  • Stocks held less than 60 days

Examples: O, AGNC, money market dividends

NIIT: Net Investment Income Tax

The Net Investment Income Tax (NIIT) is an additional 3.8% tax on investment income, including dividends, for high earners. It applies on top of regular federal taxes.

Filing Status NIIT Threshold (MAGI)
Single $200,000
Married Filing Jointly $250,000
Married Filing Separately $125,000
Head of Household $200,000

NIIT applies to the lesser of: (1) net investment income or (2) the amount by which MAGI exceeds the threshold. These thresholds are not indexed for inflation.

States With No Dividend Tax

These states have no state income tax on dividend income:

0% Alaska
0% Florida
0% Nevada
0% South Dakota
0% Tennessee
0% Texas
0% Washington
0% Wyoming
0% New Hampshire*

*New Hampshire previously taxed dividends at 5% but phased this out. Washington has a 7% capital gains tax that may apply in limited cases.

Understanding Your 1099-DIV

Box Description Tax Treatment
1a Total ordinary dividends (includes qualified) Report on Schedule B
1b Qualified dividends (subset of 1a) Taxed at 0/15/20%
2a Total capital gain distributions Long-term capital gains rate
3 Nondividend distributions (return of capital) Reduces cost basis
7 Foreign tax paid Claim as credit or deduction

Tax-Efficient Dividend Strategies

Use Tax-Advantaged Accounts

Hold high-dividend stocks in Roth IRA (tax-free) or Traditional IRA/401(k) (tax-deferred). This shields dividends from annual taxation.

Meet Holding Requirements

Hold dividend stocks 60+ days to qualify for lower tax rates. Selling too quickly converts qualified dividends to ordinary income.

Tax-Loss Harvesting

Sell losing positions to offset dividend income with capital losses. Up to $3,000 in net losses can offset ordinary income annually.

Consider Municipal Bonds

Municipal bond interest is federally tax-exempt and often state tax-exempt. Can be more efficient than dividends for high-bracket investors.

Frequently Asked Questions

Dividends are taxed at either qualified or ordinary rates. Qualified dividends (from US corporations, held 60+ days) are taxed at preferential rates of 0%, 15%, or 20% depending on your income. Ordinary dividends are taxed at your regular income tax rate (10%-37%). Most dividends from US stocks and ETFs are qualified. You may also owe state taxes and NIIT if you're a high earner.

Qualified dividend tax rates are 0% for lower incomes, 15% for middle incomes, and 20% for high incomes. The exact thresholds depend on your filing status and adjust annually for inflation. For single filers, the 0% rate typically applies up to around $47,000 in taxable income, 15% up to around $518,000, and 20% above that.

NIIT (Net Investment Income Tax) is an additional 3.8% tax on investment income including dividends. It applies when your modified adjusted gross income exceeds $200,000 (single), $250,000 (married filing jointly), or $125,000 (married filing separately). NIIT is added on top of regular dividend taxes, so a high earner could pay up to 23.8% federal tax on qualified dividends (20% + 3.8%).

Nine states have no state income tax on dividends: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire (which phased out its dividend tax). Living in these states can significantly reduce your overall dividend tax burden, saving potentially thousands per year for high-dividend portfolios.

If you paid foreign taxes on international dividends (shown in Box 7 of your 1099-DIV), you can claim a Foreign Tax Credit on Form 1116 to avoid double taxation. The credit is limited to the US tax that would apply to that foreign income. For small amounts (under $300 single / $600 married), you may claim the credit directly on Form 1040 without filing Form 1116.

Qualified dividends meet IRS requirements (US corporation or qualified foreign corporation, held 60+ days) and receive preferential tax rates (0%, 15%, or 20%). Ordinary dividends don't meet these requirements and are taxed as regular income (up to 37%). REITs, money market funds, and some foreign dividends are typically ordinary.

Key 1099-DIV boxes: Box 1a shows total ordinary dividends, Box 1b shows the qualified portion (taxed at lower rates), Box 2a shows capital gain distributions, Box 7 shows foreign tax paid (for foreign tax credit). Note: Box 1b is a subset of Box 1a, not in addition to it.

Qualified dividends and long-term capital gains are taxed at the same preferential rates (0%, 15%, 20%). Ordinary dividends are taxed at higher ordinary income rates, similar to short-term capital gains. The key difference: dividends are taxed when received, while capital gains are taxed only when you sell.

Strategies to reduce dividend taxes: 1) Hold dividend stocks in tax-advantaged accounts (IRA, 401k, Roth), 2) Hold 60+ days to qualify for lower rates, 3) Consider municipal bond funds (federally tax-exempt), 4) Tax-loss harvest to offset gains, 5) Live in a no-income-tax state, 6) Keep income below NIIT thresholds if possible.

No, dividends in a Roth IRA grow completely tax-free, and qualified withdrawals are also tax-free. In a Traditional IRA or 401(k), dividends grow tax-deferred but withdrawals are taxed as ordinary income. This makes Roth accounts particularly attractive for high-dividend investments.
Disclaimer: This calculator provides estimates for educational and informational purposes only. Tax laws are complex and change frequently. The calculations shown are approximations based on general tax rules and may not reflect your specific situation. State tax rates shown are simplified estimates. SharePreds assumes no liability for the accuracy of these calculations or any financial decisions made based on them. Always consult a qualified tax professional or CPA for personalized tax advice.

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