The highest federal rate on dividend income for individual taxpayers is 23.8% (20%) for those at the highest marginal tax rate, plus a net investment tax of 3.8% to fund the Affordable Care Act. At the state level, the dividend tax is 13.3% in California. New Hampshire and Tennessee do not tax personal income, but instead impose a tax on dividend income of 5% and 6%, respectively. Californians face the highest marginal tax rate on personal dividends in the United States, at 33 percent, followed by taxpayers in New York (31.5 percent) and Hawaii (31.6 percent).
My data comes from a tabulation from the Tax Foundation, an organization that closely monitors tax collectors. The United States currently has one of the highest tax burdens on personal dividend income in the OECD. The highest combined dividend tax rate (federal and state) in the United States is 33% in California, followed by New York (31.5%) and Hawaii (31.6%). The maximum federal rate on personal dividend income is 23.8 percent (the maximum marginal tax rate of 20 percent plus a net investment tax of 3.8 percent to fund the Affordable Care Act).
With TurboTax Live Full Service Premium, have a specialized expert discover all the tax deductions and file your taxes on investments and self-employment. Eligible dividends are taxed at the long-term capital gains rate, which is generally lower than the normal tax rate. Possession, the corporation is eligible for the benefits of a comprehensive income tax treaty with the United States, or the shares can be easily traded on an established securities market in the United States. While the federal tax rate on dividends isn't usually that bad, about half the rate that would be paid for interest or wages, most states don't reduce dividend exemptions.
It includes information about the payer of the dividends, the recipient of the dividends, the type and amount of the dividends paid, and any federal or state income taxes withheld. Depending on your specific tax situation, qualifying dividends may also be subject to net investment income tax of 3.8%. People in these states who are victims of the Alternative Minimum Tax do not receive any incremental benefits from the deduction. The marginal tax rate is the amount of additional taxes paid for each additional dollar earned as income.
The research takes into account the deductibility of state taxes from federal taxes, local income taxes, the phasing out of itemized deductions, and the special treatment of personal dividend income.