Dividend Tax Rates & Tax-Efficient Strategies

Overview

Dividend income is taxed differently depending on whether it's qualified or ordinary, and the account type you hold it in. Optimise your tax situation with proper planning. Browse our tax guides for country-specific rates, and use the tax tools to estimate your dividend tax liability. For shelter strategies involving REITs, see REITs Explained and consider an alternative IRA to defer ordinary-income dividends.

Key Takeaways

• Qualified dividends (held 60+ days) are taxed at 0%, 15%, or 20% depending on income.
• Ordinary (non-qualified) dividends are taxed at your regular income tax rate.
• REITs and MLPs typically pay ordinary dividends — hold them in tax-advantaged accounts.
• Foreign dividends may be subject to withholding tax (recoverable via tax credit).

Practical Tips

• Hold high-yield REITs and bond funds in IRAs/401(k)s to defer or eliminate tax.
• Hold qualified dividend payers in taxable accounts to benefit from the lower rate.
• Claim the Foreign Tax Credit on international dividend-paying ETFs — don't let it go to waste.