Qualified vs ordinary dividends
Qualified dividends are taxed at the same 0%, 15% or 20% rates as long-term capital gains. To qualify, the dividend must come from a U.S. company (or a qualified foreign one) and you must hold the shares more than 60 days during the 121-day period around the ex-dividend date.
Ordinary dividends β most REIT distributions, money-market and bond-fund income, and dividends on shares held briefly β are taxed as regular income at 10% to 37%. Your Form 1099-DIV shows total dividends in box 1a and the qualified part in box 1b.
Living off dividends with low tax
A married couple with no other income can receive about $131,100 of qualified dividends in 2026 ($98,900 0% bracket + $32,200 standard deduction) and pay $0 federal income tax.
FAQ
How much tax do I pay on dividends in 2026?
Qualified dividends are taxed at 0%, 15% or 20% based on taxable income; ordinary dividends are taxed at your income tax bracket. High earners may also owe the 3.8% net investment income tax.
Are dividends taxed if I reinvest them?
Yes. Reinvested dividends are taxable in the year paid, unless they are inside an IRA, 401(k) or other tax-advantaged account.
What is the 0% dividend tax bracket for 2026?
Qualified dividends are taxed at 0% while taxable income stays at or below $49,450 (single), $98,900 (married filing jointly) or $66,200 (head of household).