What's the difference between qualified and ordinary dividends?

Qualified dividends are taxed at the lower long-term capital-gains rates — 0%, 15% or 20% depending on your taxable income. Ordinary (non-qualified) dividends are taxed at your regular marginal rate, 10% to 37%. To be qualified, the payer must generally be a US or qualified foreign corporation and you must have held the stock more than 60 days around the ex-dividend date.

How are qualified dividends taxed at 0%?

Qualified dividends stack on top of your other taxable income. For 2026 the 0% rate applies while your total taxable income stays under $49,450 (single) or $98,900 (married filing jointly); the 15% rate applies up to $545,500 / $613,700; above that it's 20%. So a retiree with modest other income can receive qualified dividends federally tax-free.

What is the 3.8% Net Investment Income Tax?

The NIIT adds 3.8% on investment income — including both qualified and ordinary dividends — once your modified adjusted gross income passes $200,000 (single) or $250,000 (married filing jointly). It's charged on the lesser of your investment income or the amount your MAGI exceeds the threshold, so the top effective rate on dividends can reach 23.8% (qualified) or 40.8% (ordinary).

United States · 2026

US Dividend Tax Calculator

The same dividend can be taxed at 0% or 37% — it depends on whether it's qualified and on your income. See the tax both ways, including the 3.8% NIIT, and what "qualified" saves you.

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Qualified saves you

Qualified vs ordinary — why it matters so much

Dividends come in two flavors for tax. Qualified dividends get the preferential long-term capital-gains rates of 0%, 15% or 20%. Ordinary (non-qualified) dividends are taxed as regular income at your marginal rate, which runs from 10% up to 37%. For a high earner the gap is enormous — a $10,000 dividend can cost $1,500 if qualified or $3,700 if ordinary. The difference often comes down to a holding-period rule: you generally must own the stock for more than 60 days around the ex-dividend date.

How the 0/15/20 rate is decided

Qualified dividends stack on top of your other taxable income. Your wages and other income fill the brackets first; the dividends then occupy whatever space is left. For 2026, while your total taxable income stays under $49,450 (single) or $98,900 (married jointly) the rate is 0%; up to $545,500 / $613,700 it's 15%; above that, 20%. So the same dividend can straddle two rates.

The 3.8% surtax on top

Separately, the Net Investment Income Tax adds 3.8% on dividends (qualified or not) once your modified AGI passes $200,000 (single) or $250,000 (married jointly). Because those thresholds aren't indexed for inflation, more households hit them every year. At the very top, that lifts qualified dividends to an effective 23.8% and ordinary dividends to 40.8%.

Frequently asked questions

Are REIT dividends qualified?

Usually not. Most REIT and MLP distributions are ordinary dividends taxed at your marginal rate — though REIT dividends may qualify for the separate 20% Section 199A deduction. Money-market and most bond "dividends" are also ordinary. Your 1099-DIV splits the total (box 1a) from the qualified portion (box 1b).

Do dividends in my 401(k) or IRA get taxed?

Not as they're received. Inside a traditional 401(k) or IRA, dividends grow tax-deferred and are taxed as ordinary income only when you withdraw — the qualified-dividend advantage is lost there. In a Roth, qualifying withdrawals are tax-free. This calculator covers dividends in a regular taxable brokerage account.

Does this include state tax?

No — it's federal only. Most states tax dividends as ordinary income with no qualified-dividend break, so your all-in rate can be several points higher depending on where you live. A few states (such as Florida and Texas) have no income tax at all.

Educational estimate — not tax advice. US federal 2026 tax year (IRS Rev. Proc. 2025-32). Qualified dividends use the long-term capital-gains breakpoints: 0% up to $49,450 single / $49,450 MFS / $66,200 HoH / $98,900 MFJ; 15% up to $545,500 / $306,850 / $579,600 / $613,700; 20% above — stacked on top of your other taxable income. Ordinary dividends use the seven 2026 ordinary brackets (10–37%). The Net Investment Income Tax adds 3.8% on the lesser of your dividends or the amount your MAGI exceeds $200,000 (single/HoH), $250,000 (MFJ) or $125,000 (MFS); MAGI is approximated here as your other income plus dividends. It works in taxable income you supply (after the standard or itemized deduction) and excludes state and local tax, the AMT, the QBI/Section 199A deduction, the holding-period test for qualified status, and interactions with other phase-outs. Confirm with the IRS or a tax professional.