Dividend Tax

Dividend tax is the tax levied on income received from dividend payments. Shareholders who receive dividends must report them as income, and the amount of tax they pay depends on their tax bracket and whether the dividends are classified as qualified or non-qualified. Qualified dividends are taxed at a lower rate, while non-qualified dividends are taxed at the standard income tax rate. Dividend tax rates vary by country, and some countries have mechanisms in place to avoid double taxation, where both the company and the shareholder are taxed on the same income.

Example

A shareholder receiving $1,000 in dividends may be required to pay a dividend tax based on their income tax bracket and the type of dividend received.