In the ten years following the passage of the Jobs and Growth Tax Relief Reconciliation Act (JGTRRA), the taxation of dividends saw some changes. At the time of this writing, the most recent rates came from the American Taxpayer Relief Act of 2012. These rates are shown in the following table. As always, consult an accountant for any changes in tax rates.
| Ordinary Income Tax Rate | Ordinary Dividend Tax Rate | Qualified Dividend Tax Rate |
|---|---|---|
| 10% | 10% | 0% |
| 15% | 15% | 0% |
| 25% | 25% | 15% |
| 28% | 28% | 15% |
| 33% | 33% | 15% |
| 35% | 35% | 15% |
| 39.5% | 39.5% | 20% |
The Patient Protection and Affordable Care Act, better known as Obamacare, created a new Net Investment Income Tax (NIIT) of 3.8% that became effective in 2013. This tax applies to dividends, capital gains, and other forms of passive investment income if you're married with a modified adjusted gross income of more than $250,000 or single with a modified adjusted gross income of more than $200,000. Unlike the thresholds for ordinary income tax rates and the qualified dividend rates, the NIIT threshold is not inflation-adjusted.
