How much tax will I pay on my dividends?

How the math works

Qualified dividends are taxed at the long-term capital gains rates: 0%, 15% or 20%, depending on where your total taxable income lands. For 2026 the 0% rate covers taxable income up to $49,450 if you're single, $98,900 if you're married filing jointly and $66,200 for head of household. The dividends sit on top of your other income, so the more you earn, the less of them fits under that line.

Dividends that aren't qualified are taxed just like wages, at your regular bracket, which can go as high as 37%.

On top of both, if your income is over $200,000 single or $250,000 married filing jointly, the 3.8% net investment income tax applies to some or all of your dividends.

When a dividend qualifies

The company has to be a U.S. company or a qualifying foreign one, and you have to have held the stock more than 60 days during the 121-day window that starts 60 days before the ex-dividend date. The ex-dividend date is the first day a new buyer doesn't get the upcoming dividend. When you count, the day you bought doesn't count and the day you sold does. Preferred stock has a longer version of the rule: more than 90 days in a 181-day window, for dividends that cover more than a year.

Box 1b of your 1099-DIV usually gets this right, but not always: in the IRS's own example, box 1b shows a dividend that isn't qualified because the shares weren't held long enough. The holding period is on you, which matters if you buy and sell around dividend dates.

What isn't qualified

REIT dividends mostly aren't qualified, which is why I hold a lot of my REITs in IRAs. The upside is that the regular part of a REIT dividend can get the 20% qualified business income deduction (Section 199A). The 2025 tax law made that deduction permanent, so it still applies in 2026. It isn't in this estimate.

Money market funds and bond funds pay what they call dividends, but most of that money comes from interest the fund earned, so it mostly isn't qualified. Check box 1b rather than assuming.

What this leaves out

State income tax, foreign tax credits for taxes withheld by other countries, the Section 199A deduction on REIT dividends, itemized deductions, credits, the alternative minimum tax, married filing separately, and capital gain distributions from funds (box 2a), which are taxed like long-term gains. Days when you'd hedged the stock, like with a put option, don't count toward the holding period, and this doesn't check for that. Rates are from the IRS's 2026 inflation adjustments (Revenue Procedure 2025-32).

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