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Frequently Asked Questions

How do you calculate taxes on dividends?

To calculate your tax liability, multiply your ordinary dividends by your tax rate. For example, if you have $2,500 in dividend income and you're in the 25 percent bracket, you'll owe $625 in federal tax on them.

What is dividend distribution tax and when is it applicable?

It is a tax levied on dividends that a company pays to its shareholders out of its profits. How is it applied? The Dividend Distribution Tax, or DDT, is taxable at source, and is deducted at the time of the company distributing dividends. The dividend is the part of profits that the company shares with its shareholders.

What is the applicable tax rate for dividends?

The dividend tax rate you will pay on ordinary dividends is 22%. Qualified dividends, on the other hand, are taxed at the capital gains rates, which are lower. Similarly, for the 2020 tax year, the capital gains rate, is the same as 2018 but the brackets changed slightly due to inflation. The dividend tax rates for tax year 2020 are as follows.


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