Articles for Financial Advisors

Dividend Taxes

Dividend Taxes

For 2013, taxpayers with > $400,000 ($450k joint return) will pay a 20% tax on qualified dividends and long-term capital gains (15% in 2012). Those whose tax bracket is 10-15% will still pay 0% for qualified dividends and capital gains.


Starting in 2013, individuals with taxable income > $200,000 ($250k joint return) will also pay a 3.8% tax on net investment returns (dividends, interest, capital gains, and certain annuities). This means a taxpayer whose taxable income is < $400,000 (but > $200K) will pay 18.8% (15 + 3.8) on capital gains and qualified dividends; an individual with taxable income > $400,000 will pay 23.8% (20 + 3.8).


Historical Dividends

Roughly 80% of S&P 500 companies pay dividends. Over the past 100 years, dividends have accounted for ~ ½ of the market’s total return; the other ½ has come from capital appreciation.

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