How qualified dividends are taxed in 2025
Updated for tax year 2025 (filed in 2026) · IRS-sourced
For tax year 2025, qualified dividends are taxed using the same preferential rates that apply to long-term capital gains, not the ordinary income tax rates. Whether a dividend gets that treatment depends mainly on the type of payer and whether you met the IRS holding-period rules.
In 2025, qualified dividends are generally taxed at 0%, 15%, or 20% depending on your taxable income. To be qualified, the dividend usually must be paid by a U.S. corporation or a qualifying foreign corporation, and you must have held the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date.
This page is sourced from IRS publications. Our audit found 4 area(s) where IRS corpus coverage is limited for this topic. The primary error finding about Rev. Proc. citation was withdrawn as the corpus confirms 2024-40 is correct for 2025 rates. The other findings reflect corpus limitations rather than content errors, so We recommend cross-referencing IRS.gov for complete guidance.
2025 tax rates on qualified dividends
For 2025, qualified dividends are taxed at the long-term capital gains rates of 0%, 15%, or 20%. Your rate depends on your taxable income and filing status.
These thresholds apply to qualified dividends for tax year 2025. If your income is high enough, the 3.8% Net Investment Income Tax may also apply on top of the regular qualified dividend rate.
| Filing status | 0% rate | 15% rate | 20% rate |
|---|---|---|---|
| Single | Up to $48,350 | $48,351 to $533,400 | Over $533,400 |
| Married filing jointly | Up to $96,700 | $96,701 to $600,050 | Over $600,050 |
| Head of household | Up to $64,750 | $64,751 to $566,700 | Over $566,700 |
| Married filing separately | Up to $48,350 | $48,351 to $300,025 | Over $300,025 |
The 3.8% Net Investment Income Tax may also apply if income exceeds $200,000 for single filers or $250,000 for married filing jointly.
What makes a dividend qualified
A dividend is qualified only if it meets IRS rules. One key rule is the holding period: you must have held the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date.
The ex-dividend date is the first date when a buyer of the stock is not entitled to the upcoming dividend. If you bought the stock too close to that date or sold it too soon after, the dividend may be nonqualified and taxed at ordinary income rates instead.
In general, qualified dividends also must come from a U.S. corporation or a qualifying foreign corporation. Your broker usually reports the amount of qualified dividends separately on Form 1099-DIV.
| Requirement | Basic rule |
|---|---|
| Type of payer | Usually a U.S. corporation or qualifying foreign corporation |
| Holding period | More than 60 days during the 121-day period beginning 60 days before the ex-dividend date |
| Reporting | Usually shown separately on Form 1099-DIV |
Not every dividend on Form 1099-DIV is qualified. Ordinary dividends can include amounts that do not qualify for the lower rates.
How qualified dividends are reported on your tax return
Qualified dividends are commonly reported to you on Form 1099-DIV. The form distinguishes total ordinary dividends from the portion that is qualified.
When you prepare your federal return, the qualified dividend amount is used in the worksheet or tax computation that applies the 0%, 15%, or 20% rates instead of taxing that amount entirely at ordinary income rates.
This means your total taxable income still matters, but the qualified dividend portion may get a lower tax rate than wages, interest, or nonqualified dividends.
| Form | What it shows |
|---|---|
| Form 1099-DIV | Dividend income and the amount treated as qualified dividends |
| Form 1040 tax computation | Applies the qualified dividend and capital gain tax rates |
When a dividend may not qualify for lower rates
A dividend may fail to qualify if you did not hold the stock long enough under the IRS holding-period rule. That is one of the most common reasons a dividend is taxed at ordinary rates.
Some special categories of dividends have separate tax rules. For example, qualified REIT dividends under section 199A are a different concept from qualified dividends taxed at capital gain rates, so the names can sound similar but the tax treatment is not the same.
If you receive dividends through mutual funds or other regulated investment companies, the fund or broker generally tells you what portion is qualified on Form 1099-DIV.
| Situation | Possible result |
|---|---|
| You did not hold the shares long enough | Dividend may be taxed at ordinary income rates |
| Dividend is a special category, such as a section 199A REIT dividend | Different tax rules may apply |
| Dividend paid through a mutual fund | Look to Form 1099-DIV for the qualified portion |
Do not confuse qualified dividends with qualified REIT dividends under section 199A. They are not the same tax category.
Frequently Asked Questions
What tax rate do qualified dividends get in 2025?
For tax year 2025, qualified dividends are taxed at 0%, 15%, or 20%, using the same rate structure as long-term capital gains. Under Rev. Proc. 2024-40, the 0% rate applies up to $48,350 for single filers and $96,700 for married filing jointly, with higher thresholds for the 15% and 20% rates.
What is the holding-period rule for qualified dividends?
Publication 550 says you must have held the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. If you do not meet that test, the dividend generally is not qualified.
Are qualified dividends taxed as ordinary income?
Usually no. If a dividend is qualified, it is generally taxed at the preferential long-term capital gain rates instead of ordinary income tax rates. This follows the 2025 rate thresholds in Rev. Proc. 2024-40.
How do I know whether my dividend is qualified?
Your broker or payer generally reports qualified dividends on Form 1099-DIV. The Instructions for Form 1099-DIV explain that the form is used to report dividends and distributions, and the qualified amount is usually shown separately from total ordinary dividends.
Can qualified dividends still be subject to extra tax?
Yes. Rev. Proc. 2024-40 notes that the 3.8% Net Investment Income Tax may also apply if your income exceeds $200,000 for single filers or $250,000 for married filing jointly.
Are qualified REIT dividends the same as qualified dividends?
No. The section 199A regulations on qualified REIT dividends describe a different tax concept from qualified dividends taxed at long-term capital gain rates. A dividend can be a section 199A REIT dividend without being a qualified dividend for capital gain rate purposes.
Form 6251 Instructions
Rev. Proc. 2024-40
TaxGPT.ai provides information from official IRS publications. This is not tax advice. Consult a qualified tax professional for your specific situation.
Have a more specific question?
Ask TaxGPT.ai — answers sourced directly from IRS publications. Free to start, no account required.
Ask TaxGPT.ai Free →