{"id":11126,"date":"2025-01-20T11:59:09","date_gmt":"2025-01-20T19:59:09","guid":{"rendered":"https:\/\/www.irs.com\/?p=11126"},"modified":"2025-03-18T16:31:57","modified_gmt":"2025-03-18T23:31:57","slug":"what-are-dividends-now-taxed-at","status":"publish","type":"post","link":"https:\/\/www.irs.com\/es\/what-are-dividends-now-taxed-at\/","title":{"rendered":"What Are Dividends Now Taxed At? A Comprehensive Guide for 2025"},"content":{"rendered":"<div style=\"width: 640px;\" class=\"wp-video\"><video class=\"wp-video-shortcode\" id=\"video-11126-1\" width=\"640\" height=\"360\" preload=\"metadata\" controls=\"controls\"><source type=\"video\/mp4\" src=\"https:\/\/www.irs.com\/wp-content\/uploads\/2025\/03\/Understanding_Dividend_Taxation.mp4?_=1\" \/><a href=\"https:\/\/www.irs.com\/wp-content\/uploads\/2025\/03\/Understanding_Dividend_Taxation.mp4\">https:\/\/www.irs.com\/wp-content\/uploads\/2025\/03\/Understanding_Dividend_Taxation.mp4<\/a><\/video><\/div>\n<p>&nbsp;<\/p>\n<p>As we\u2019ve explained before, dividends are a form of income distribution given to a corporation\u2019s shareholders, and are a popular choice for investors seeking passive income. So, are dividends taxed? What are dividends now taxed at?<\/p>\n<p>If you pay attention to finance at all, you might have noticed how trying to build 30-years worth of successful investments into a portfolio in a couple of months seems like the most popular pastime for amateur investors. More power to them.<\/p>\n<p>However, as with most sources of income, dividends are subject to taxation. Understanding what dividends are now taxed at in any given year is essential for optimizing your financial strategy and making smart, informed decisions instead of relying on your gut.<\/p>\n<p>After all, there are different types of dividends with different rates applying to each depending on your total income and filing status. In this article, we will explore the tax implications for dividends in 2024 and 2025 so that tax season doesn\u2019t catch you unprepared. Read on and take notes!<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-large wp-image-11730 aligncenter\" src=\"https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/pexels-tima-miroshnichenko-7567434-1024x683.jpg\" alt=\"what-are-dividends-now-taxed-at\" width=\"640\" height=\"427\" srcset=\"https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/pexels-tima-miroshnichenko-7567434-1024x683.jpg 1024w, https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/pexels-tima-miroshnichenko-7567434-300x200.jpg 300w, https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/pexels-tima-miroshnichenko-7567434-768x512.jpg 768w, https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/pexels-tima-miroshnichenko-7567434-1536x1024.jpg 1536w, https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/pexels-tima-miroshnichenko-7567434-2048x1365.jpg 2048w, https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/pexels-tima-miroshnichenko-7567434-18x12.jpg 18w, https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/pexels-tima-miroshnichenko-7567434-640x426.jpg 640w\" sizes=\"auto, (max-width: 640px) 100vw, 640px\" \/><\/p>\n<h2>A Quick Refresher On Dividend Taxation<\/h2>\n<p>Let\u2019s quickly go over the basics of dividends and how they\u2019re taxed so the tax rates will show you become clearer. As you might remember, the IRS considers dividends a form of taxable income. Generally speaking, <a href=\"https:\/\/www.irs.gov\/taxtopics\/tc404\" target=\"_blank\" rel=\"noopener\">dividends are taxed when they are distributed to shareholders<\/a>, but the specifics of these taxes levied on dividends depend on which type of dividend the shareholder gets:<\/p>\n<ul>\n<li aria-level=\"1\"><b>Dividendos cualificados<\/b>: Taxed at lower, capital gains rates. They are seen as the preferred type of dividend for obvious reasons.<\/li>\n<li aria-level=\"1\"><b>Non-Qualified Dividends<\/b>: Taxed at ordinary income tax rates. These include Dividends from foreign companies, dividends from employee stock options, dividends on bank deposits, and many more.<\/li>\n<\/ul>\n<p>There are also some exceptions to dividend taxation, and while we\u2019ll dive into them further in this article, let\u2019s look at what these exempt dividends are:<\/p>\n<ol>\n<li aria-level=\"1\"><b>Tax-Advantaged Accounts<\/b>: Dividends earned in Roth IRAs, traditional IRAs, and 401(k)s are not immediately taxable. For Roth IRAs, dividends may be entirely tax-free.<\/li>\n<li aria-level=\"1\"><b>Specific Dividend Types<\/b>: Certain municipal bond dividends are exempt from federal taxes.<\/li>\n<li aria-level=\"1\"><b>Income Thresholds<\/b>: Low-income taxpayers may qualify for the 0% tax rate on qualified dividends.<\/li>\n<\/ol>\n<h2>Qualified Dividend Tax Rates for 2025<\/h2>\n<p>Now that we have some of the theory down, let\u2019s take a look at <a href=\"https:\/\/www.irs.com\/es\/qualified-versus-non-qualified-dividends\/\">what qualified dividends are<\/a> and how they will be taxed for the 2025 tax year.<\/p>\n<h3>What Are Qualified Dividends?<\/h3>\n<p>Qualified dividends must meet specific IRS requirements to be considered as such, and they include:<\/p>\n<ul>\n<li aria-level=\"1\">Being paid by a U.S. corporation or qualified foreign corporation (regular, non-qualified foreign corporations will pay out non-qualified dividends instead).<\/li>\n<li aria-level=\"1\">Meeting the holding period requirement (you must own the stock for at least 61 days during a 121-day period).<\/li>\n<\/ul>\n<h3>Tax Rates For Qualified Dividends<\/h3>\n<p>The tax rates for qualified dividends align with the long-term capital gains tax rates. Below are the rates for 2025:<\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Estatus de declaraci\u00f3n<\/b><\/td>\n<td><b>0% Rate (Up to)<\/b><\/td>\n<td><b>15% Rate (Up to)<\/b><\/td>\n<td><b>20% Rate (Above)<\/b><\/td>\n<\/tr>\n<tr>\n<td>Soltero\/a<\/td>\n<td>$44,625<\/td>\n<td>$492,300<\/td>\n<td>$492,300<\/td>\n<\/tr>\n<tr>\n<td>Casado\/a que declara conjuntamente<\/td>\n<td>$89,250<\/td>\n<td>$553,850<\/td>\n<td>$553,850<\/td>\n<\/tr>\n<tr>\n<td>Cabeza del hogar<\/td>\n<td>$59,750<\/td>\n<td>$523,050<\/td>\n<td>$523,050<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><img loading=\"lazy\" decoding=\"async\" class=\"size-large wp-image-11729 aligncenter\" src=\"https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/pexels-rdne-7491011-1024x683.jpg\" alt=\"what-are-dividends-now-taxed-at\" width=\"640\" height=\"427\" srcset=\"https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/pexels-rdne-7491011-1024x683.jpg 1024w, https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/pexels-rdne-7491011-300x200.jpg 300w, https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/pexels-rdne-7491011-768x512.jpg 768w, https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/pexels-rdne-7491011-1536x1024.jpg 1536w, https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/pexels-rdne-7491011-2048x1365.jpg 2048w, https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/pexels-rdne-7491011-18x12.jpg 18w, https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/pexels-rdne-7491011-640x426.jpg 640w\" sizes=\"auto, (max-width: 640px) 100vw, 640px\" \/><\/h2>\n<h2>Non-Qualified Dividend Tax Rates for 2024 and 2025<\/h2>\n<p>As with qualified dividends, let\u2019s take a quick moments to check back on what non-qualified dividends are, and why they are taxed differently from qualified dividends.<\/p>\n<h3>What Are Non-Qualified Dividends?<\/h3>\n<p><a href=\"https:\/\/www.fool.com\/terms\/n\/nonqualified-dividends\/\" target=\"_blank\" rel=\"noopener nofollow\">Non-qualified dividends<\/a> (AKA ordinary dividends) are those that do not meet the IRS criteria for qualified dividends. Common examples include dividends from REITs (Real Estate Investment Trusts), some \u201cspecial one time only\u201d dividends, and certain mutual funds. Because of this, they are taxed at the same rate as an individual&#8217;s regular income instead, which can range from 10% to 37%.<\/p>\n<h3>Tax Rates For Non-Qualified Dividends<\/h3>\n<p>Non-qualified dividends are taxed at ordinary income tax rates, which for 2025 are as follows:<\/p>\n<table>\n<tbody>\n<tr>\n<td>Tax Bracket (Single)<\/td>\n<td>Tasa de impuestos<\/td>\n<\/tr>\n<tr>\n<td>Up to $11,000<\/td>\n<td>10%<\/td>\n<\/tr>\n<tr>\n<td>$11,001\u2013$44,725<\/td>\n<td>12%<\/td>\n<\/tr>\n<tr>\n<td>$44,726\u2013$95,375<\/td>\n<td>22%<\/td>\n<\/tr>\n<tr>\n<td>$95,376\u2013$182,100<\/td>\n<td>24%<\/td>\n<\/tr>\n<tr>\n<td>$182,101\u2013$231,250<\/td>\n<td>32%<\/td>\n<\/tr>\n<tr>\n<td>$231,251\u2013$578,125<\/td>\n<td>35%<\/td>\n<\/tr>\n<tr>\n<td>M\u00e1s de $578,125<\/td>\n<td>37%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h3><b>Tax-Free Dividends<\/b><\/h3>\n<p>As we mentioned in a previous section, some dividends are not subject to federal income taxes. But, why are they non-taxable compared to qualified and non-qualified dividends? The main reason is that these dividends come from a mutual fund (or some other type of investment company that is not taxed either) because the funds themselves are invested in tax-exempt securities (with the most common example being municipal bonds).<\/p>\n<p>The fact that municipal bonds offer both dividends and interest that is tax free (if you live in the same state that issued the bond in the first place), and that it has a medium length maturity, makes them a popular option for people who are concerned with maintaining wealth rather than grow it quickly.<\/p>\n<h2>How To Report Dividends On Your Tax Return<\/h2>\n<p>Accurately reporting dividends is crucial to avoid IRS penalties. Like we mentioned at the beginning, it\u2019s important to familiarize yourself when it comes to the IRS forms you\u2019ll need to report dividend income, but we\u2019ll address each of them specifically further down in this article. For now, let\u2019s focus on how to report dividends on your tax return.<\/p>\n<p>Here\u2019s how to do it:<\/p>\n<ol>\n<li aria-level=\"1\"><b>Form 1099-DIV<\/b>: You\u2019ll receive this form from your financial institution, detailing the dividends you earned.<\/li>\n<li aria-level=\"1\"><b>Horario B<\/b>: If your total dividend income exceeds $1,500, you must complete Schedule B on top of your regular Form 1099-DIV.<\/li>\n<li aria-level=\"1\"><b>Formulario 1040<\/b>: Include your dividend income in the income section of Form 1040.<\/li>\n<li aria-level=\"1\"><b>Deadlines<\/b>: Brokerages and companies that report dividends are required to do so using Form 1099-DIV by February 1st of every year. As a singular taxpayer, just make sure that your tax return is filed by the standard IRS deadline of April 15th (or October 15th if you ask for an extension).<\/li>\n<\/ol>\n<p>Now, let\u2019s go over the actual documents you\u2019ll be using.<\/p>\n<h4>Form 1099-DIV<\/h4>\n<p><a href=\"https:\/\/www.irs.com\/es\/formulario-1099-r-para-la-jubilacion\/\">Form 1099-DIV (Dividends and Distributions)<\/a> is an official IRS form that will be issued to you by your bank or other financial institution so that you can report your dividends (and other distributions paid to you as an investor) on your tax return. These forms are issued on January 31 for the previous tax\u00a0 year.<\/p>\n<p>Some of the information included in the Form includes the payer of the dividends and the recipient for them, as well as the type and amount of those dividends, and any taxes withheld from them. It\u2019s important that all that information makes its way into your tax return or you could incur penalties for underreporting your dividends, so store it somewhere safe once you get it!<\/p>\n<p>The boxes in Form 1099-DIV you should always keep an eye on include:<\/p>\n<ul>\n<li aria-level=\"1\">Box 1a: Total ordinary dividends.<\/li>\n<li aria-level=\"1\">Box 1b: Qualified dividends.<\/li>\n<\/ul>\n<h4>Horario B<\/h4>\n<p>You can think of this as a complementary document of Form 1099-DIV, and you\u2019re only required to complete it if your total dividends and interest income exceed $1,500. Schedule B provides a detailed breakdown of your income sources so that you can accurately report them on your tax return, so this is another one you should keep an eye out for.<\/p>\n<h4>Formulario 1040<\/h4>\n<p><a href=\"https:\/\/turbotax.intuit.com\/tax-tips\/irs-tax-return\/what-is-an-irs-1040-form\/L4aOys6cI\" target=\"_blank\" rel=\"noopener nofollow\">Formulario 1040<\/a> is just your good old U.S. Individual Income Tax Return, so you should already be pretty familiar with it. All dividends, interest and other distributions you earned during the tax year should be reported under the income section of Form 1040.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-large wp-image-11732\" src=\"https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/Screenshot-2025-03-07-at-14-52-34-PNG-Image-1408-\u00d7-768-pixels-1024x559.png\" alt=\"what-are-dividends-now-taxed-at\" width=\"640\" height=\"349\" srcset=\"https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/Screenshot-2025-03-07-at-14-52-34-PNG-Image-1408-\u00d7-768-pixels-1024x559.png 1024w, https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/Screenshot-2025-03-07-at-14-52-34-PNG-Image-1408-\u00d7-768-pixels-300x164.png 300w, https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/Screenshot-2025-03-07-at-14-52-34-PNG-Image-1408-\u00d7-768-pixels-768x419.png 768w, https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/Screenshot-2025-03-07-at-14-52-34-PNG-Image-1408-\u00d7-768-pixels-1536x838.png 1536w, https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/Screenshot-2025-03-07-at-14-52-34-PNG-Image-1408-\u00d7-768-pixels-18x10.png 18w, https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/Screenshot-2025-03-07-at-14-52-34-PNG-Image-1408-\u00d7-768-pixels.png 1760w\" sizes=\"auto, (max-width: 640px) 100vw, 640px\" \/><\/p>\n<h2>How To Avoid Dividend Taxes With A Retirement Account<\/h2>\n<p>We\u2019ve already mentioned how using dividends to contribute towards your retirement is a good idea, since <a href=\"https:\/\/www.irs.com\/es\/irs-form-8880-savers-credit\/\">retirement accounts<\/a> provide powerful tools to reduce or eliminate taxes on dividends:<\/p>\n<ol>\n<li aria-level=\"1\"><b>Traditional IRAs and 401(k)s<\/b>: Dividends grow tax-deferred, meaning you only pay taxes upon withdrawal.<\/li>\n<li aria-level=\"1\"><b>Cuentas Roth IRA<\/b>: Dividends grow tax-free, provided you meet the withdrawal rules.<\/li>\n<li aria-level=\"1\"><b>Strategic Contributions<\/b>: Maximize contributions to these accounts to shield more income from taxes.<\/li>\n<\/ol>\n<p>Asset allocation is the name of the game when it comes to saving for retirement. It&#8217;s about balancing the advantages and disadvantages of one contribution method over the other. While it is true that you can make tax-free contributions to a Roth IRA (among others), it&#8217;s also true that these can only happen after you&#8217;re 59 years of age. If you&#8217;re even a year younger than that, all your retirement contributions will come from post-tax money.<\/p>\n<p>It&#8217;s important to remember that, even though a diverse and strong portfolio of investments can really set you up for life, dividends and other distributions are not &#8220;free money&#8221;. Some companies don\u2019t even offer the option to pay dividends, opting for \u201ctax managed\u201d payout strategies instead.<\/p>\n<p>All we\u2019re saying is, if the dividends=retirement contributions strategy makes financial sense for you and you\u2019re in a position in life to actually benefit from it, then it\u2019s a good idea to do it! Otherwise, you might want to look elsewhere.<\/p>\n<h2>The Final Word On The Taxation Of Dividends\u2026<\/h2>\n<p>Dividends are an attractive income stream for investors, no doubt about that. But let\u2019s not forget that all these distributions come with varying tax implications depending on their type and your financial situation. Knowing &#8220;what are dividends now taxed at&#8221; equips you to make smarter investment decisions and maximize after-tax returns.<\/p>\n<p>Optimizing your financial strategy year after year requires you to understand every moving piece of it, and dividends by themselves bring a lot to the table, both beneficial and detrimental depending on what angle you\u2019re pursuing.<\/p>\n<p>By understanding the distinctions between qualified and non-qualified dividends, leveraging tax-advantaged accounts, and <i>always<\/i> staying compliant with reporting requirements, you will manage to stay on the IRS\u2019s good side while leaving as little of your earning on the line as possible.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-large wp-image-11731 aligncenter\" src=\"https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/pexels-kindelmedia-7938714-1024x683.jpg\" alt=\"what-are-dividends-now-taxed-at\" width=\"640\" height=\"427\" srcset=\"https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/pexels-kindelmedia-7938714-1024x683.jpg 1024w, https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/pexels-kindelmedia-7938714-300x200.jpg 300w, https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/pexels-kindelmedia-7938714-768x512.jpg 768w, https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/pexels-kindelmedia-7938714-1536x1024.jpg 1536w, https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/pexels-kindelmedia-7938714-2048x1365.jpg 2048w, https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/pexels-kindelmedia-7938714-18x12.jpg 18w, https:\/\/www.irs.com\/wp-content\/uploads\/2025\/01\/pexels-kindelmedia-7938714-640x426.jpg 640w\" sizes=\"auto, (max-width: 640px) 100vw, 640px\" \/><\/p>\n<h2>What Are Dividends Now Taxed At? A Comprehensive Guide for 2025: <b>FAQ<\/b><\/h2>\n<p><b> 1. What\u2019s the difference between qualified and non-qualified dividends?<\/b><\/p>\n<p>In a nutshell, qualified dividends meet specific IRS criteria and are taxed at lower capital gains rates. On the other hand, non-qualified dividends (AKA ordinary dividends) do not meet these criteria, and therefore are taxed at ordinary income rates.<\/p>\n<p><b> 2. How do I know if my dividends are qualified?<\/b><\/p>\n<p>Your very useful Form 1099-DIV, issued by your bank or financial institution, will indicate whether your dividends are qualified or non-qualified. But it\u2019s not just about the dividends being qualified: The issuing company must also meet IRS requirements, <i>y <\/i>you must meet the holding period for the stock (which varies by stock type).<\/p>\n<p><b> 3. Are dividends from mutual funds taxable?<\/b><\/p>\n<p>Yes, dividends from mutual funds are taxable because they are considered regular taxable income. But, they can be qualified or non-qualified depending on the fund\u2019s investments and distribution policies.<\/p>\n<p><b> 4. Can I avoid paying taxes on dividends?<\/b><\/p>\n<p>Avoiding them entirely is not possible if your overall income for the year isn\u2019t low enough. You can, however, minimize the taxes you pay on them by investing through tax-advantaged accounts (like Roth IRAs, 401(k)s, etc.), or by holding tax-exempt investments like municipal bonds.<\/p>\n<p><b> 5. What happens if I don\u2019t report dividend income?<\/b><\/p>\n<p>Same thing that happens if you don\u2019t report your other taxable income. Failing to report dividend income can result in IRS penalties, including fines and interest on unpaid taxes.<\/p>","protected":false},"excerpt":{"rendered":"<p>&nbsp; As we\u2019ve explained before, dividends are a form of income distribution given to a corporation\u2019s shareholders, and are a popular choice for investors seeking passive income. So, are dividends taxed? What are dividends now taxed at? If you pay attention to finance at all, you might have noticed how trying to build 30-years worth [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":11127,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[161,37,19],"tags":[],"class_list":["post-11126","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-tax","category-paying-taxes","category-taxes-and-investments"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.irs.com\/es\/wp-json\/wp\/v2\/posts\/11126","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.irs.com\/es\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.irs.com\/es\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.irs.com\/es\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.irs.com\/es\/wp-json\/wp\/v2\/comments?post=11126"}],"version-history":[{"count":6,"href":"https:\/\/www.irs.com\/es\/wp-json\/wp\/v2\/posts\/11126\/revisions"}],"predecessor-version":[{"id":12416,"href":"https:\/\/www.irs.com\/es\/wp-json\/wp\/v2\/posts\/11126\/revisions\/12416"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.irs.com\/es\/wp-json\/wp\/v2\/media\/11127"}],"wp:attachment":[{"href":"https:\/\/www.irs.com\/es\/wp-json\/wp\/v2\/media?parent=11126"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.irs.com\/es\/wp-json\/wp\/v2\/categories?post=11126"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.irs.com\/es\/wp-json\/wp\/v2\/tags?post=11126"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}