Qualified and Ordinary Dividends
Form 1099-DIV splits dividends into two boxes: total ordinary dividends (box 1a) and the qualified part (box 1b). Enter the qualified amount and the rest separately.
- Qualified dividends come from US companies or qualified foreign companies, on shares you held more than 60 days in the 121-day window that starts 60 days before the ex-dividend date. They use the lower capital gains rates.
- Ordinary (nonqualified) dividends include most money market and REIT distributions and dividends on shares held too briefly. They are taxed like wages.
2026 Qualified Dividend Tax Rates
The rate depends on your total taxable income, with dividends stacked on top. Rev. Proc. 2025-32 sets these 2026 limits:
| Filing status | 0% up to | 15% up to | 20% above |
|---|---|---|---|
| Single | $49,450 | $545,500 | $545,500 |
| Married filing jointly | $98,900 | $613,700 | $613,700 |
| Head of household | $66,200 | $579,600 | $579,600 |
Taxable income is after the standard deduction. A single filer with $45,000 of ordinary taxable income and $10,000 of qualified dividends has $4,450 taxed at 0% and $5,550 at 15%, because the dividends cross the $49,450 line.
Worked Example: Dividends After Tax
Single, $65,000 of wages, $5,000 qualified and $1,000 ordinary dividends, Texas:
- Taxable income: $65,000 + $6,000 − $16,100 = $54,900.
- The ordinary part, $49,900, already sits above the $49,450 zero-rate limit, so all $5,000 of qualified dividends pay 15%: $750.
- The $1,000 of ordinary dividends falls in the 12% bracket: $120.
- Extra federal tax: $870. No NIIT, no state tax.
- Dividends after tax: $5,130, a 14.5% tax rate on the dividends.
Had all $6,000 been ordinary, the extra tax would be $1,170 instead.
Dividends After Tax by Income Level
The table runs $10,000 of qualified dividends through different levels of other income, single, no state tax:
| Other income | Federal tax and NIIT on the dividends | Dividends after tax | Rate on the dividends |
|---|---|---|---|
| $30,000 | $0 | $10,000 | 0.0% |
| $50,000 | $0 | $10,000 | 0.0% |
| $65,000 | $1,417.50 | $8,582.50 | 14.2% |
| $150,000 | $1,500 | $8,500 | 15.0% |
| $250,000 | $1,880 | $8,120 | 18.8% |
| $600,000 | $2,380 | $7,620 | 23.8% |
Low incomes can receive qualified dividends tax-free: with $40,000 of other income, $5,000 of qualified dividends costs $0 in federal tax. A retired married couple with $25,000 of other income and $30,000 of qualified dividends pays $0.
The 3.8% Net Investment Income Tax
The NIIT adds 3.8% on the smaller of your net investment income or the amount your modified AGI exceeds the threshold: $200,000 single or head of household, $250,000 married filing jointly. These limits are not indexed for inflation.
A single filer with $190,000 of wages and $20,000 of qualified dividends has MAGI $10,000 over the line, so NIIT is $380. The dividends then net $16,620.
State Tax on Dividends
Most states with an income tax tax dividends as ordinary income, with no lower rate for qualified dividends. In Illinois at 4.95%, the example above loses $297 more and keeps $4,833.
The calculator offers the states with no wage tax, the three flat-rate states on the list, and "Other state" for your own rate. New Hampshire's tax on interest and dividends ended after 2024, so it sits with the no-tax states.
Foreign Dividends and Withholding at Source
Dividends from foreign shares often arrive with tax already withheld by the company's home country. The 1099-DIV shows it as foreign tax paid.
- Enter the gross dividend, before foreign withholding, as US tax applies to the gross amount.
- The foreign tax can usually be claimed as a foreign tax credit (Form 1116, or directly on the return for small amounts), which lowers the US tax.
- Treaty rates differ by country and share type, so the calculator does not model them.
Quarterly and Monthly Dividends After Tax
Many US companies pay four times a year. With the example above, each quarterly payment of $1,500 is worth $1,282.50 after tax, or $427.50 a month on average.
Dividends have no withholding by default, so tax is paid through estimated payments or extra wage withholding. The Federal Income Tax Calculator shows the full return.
Assumptions and Sources
- Federal tax shown is the increase caused by the dividends, with standard deduction only and no credits.
- Other income is treated as ordinary income; capital gains are not included.
- NIIT uses dividends as the only investment income.
- State tax is a flat rate on all dividends. Foreign tax credits are left out.
For withdrawals from a traditional IRA, see the IRA Withdrawal Gross to Net Calculator. The Tax Bracket Calculator explains the regular brackets used for ordinary dividends.
Sources: IRS Rev. Proc. 2025-32 section 4.03; IRS Publication 550; IRS Topic 559. Rates for 2026.
Frequently Asked Questions
How are qualified dividends taxed in 2026?
At 0%, 15% or 20%. A single filer pays 0% while taxable income stays at or below $49,450 and 20% above $545,500.
Are ordinary dividends taxed like wages?
Yes, at the regular income tax brackets, but without Social Security or Medicare tax.
When does the 3.8% tax apply to dividends?
When modified AGI passes $200,000 single or $250,000 joint, on the smaller of investment income or the excess.
Can dividends be tax-free?
Qualified dividends are federally tax-free while total taxable income stays within the 0% band, $98,900 for a married couple filing jointly.
Is tax withheld from dividends?
Not normally. Backup withholding applies only in special cases, so most investors pay through estimated tax.
How do foreign dividends work?
Report the gross amount and claim a foreign tax credit for the tax withheld abroad, within the IRS limits.