How to use the dividend tax calculator
US dividend tax estimates the federal, net investment income and state tax on the dividends you receive in a year. Foreign withholding shows what you keep from a dividend paid by a company abroad.
- Filing status and other taxable income. Other taxable income is your income after the standard or itemized deduction, not counting the dividends. Last year’s Form 1040 is a good starting point.
- Qualified and ordinary dividends. Form 1099-DIV lists total ordinary dividends in box 1a and the qualified part in box 1b. Enter box 1b as qualified and the difference as ordinary.
- Net investment income tax. The calculator can estimate your modified adjusted gross income (MAGI) by adding the standard deduction back to your taxable income plus dividends, or you can enter MAGI yourself. Choose “Leave out” to ignore it.
- State tax rate. Most states tax dividends as ordinary income. Enter your top state rate, or 0 if your state has no income tax.
The chart and table show the same dividends taxed as all qualified, as entered, and all ordinary.
How dividend tax is calculated
Ordinary dividends are added to your other income and taxed at the bracket rates. Qualified dividends are stacked on top of all ordinary income, and the capital gains thresholds decide which part falls in the 0%, 15% and 20% bands:
Tax on qualified dividends = the part of the qualified dividends in each band × 0%, 15% or 20%
NIIT = 3.8% × the smaller of (All dividends, MAGI − Threshold)
State tax = All dividends × State rateBands and brackets are the official 2026 figures. The NIIT threshold is $200,000 for single filers and $250,000 for married couples filing jointly; it is set by law and not adjusted for inflation.
A worked example
A single filer has $70,000 of taxable income from a salary, plus $8,000 of qualified dividends and $2,000 of ordinary dividends.
The ordinary dividends sit in the 22% bracket, so they cost $440.00 in federal tax. The qualified dividends are stacked on top and all fall in the 15% band: $1,200.00. MAGI is about $96,100, well under the $200,000 threshold, so there is no NIIT.
A 5% state tax adds $500.00. In total the dividends cost $2,140.00, an effective rate of 21.4%, and you keep $7,860.00.
Qualified versus ordinary: why it matters
For the example filer, the label on each dividend changes the bill noticeably:
| Treatment of the same dividends | Total tax | Effective rate | You keep |
|---|---|---|---|
| All qualified | $2,000.00 | 20.0% | $8,000.00 |
| As entered | $2,140.00 | 21.4% | $7,860.00 |
| None qualified | $2,700.00 | 27.0% | $7,300.00 |
Your income level matters even more. With the same $8,000 qualified and $2,000 ordinary dividends and no state tax:
| Other taxable income (single) | Federal tax on the dividends | Effective rate |
|---|---|---|
| $30,000 | $240.00 | 2.4% |
| $40,000 | $322.50 | 3.2% |
| $70,000 | $1,640.00 | 16.4% |
At $30,000, all the qualified dividends fit under the $49,450 threshold and are taxed at 0%; only the ordinary dividends cost anything. At $40,000, part of the qualified dividends crosses the threshold and is taxed at 15%.
The 60-day holding period rule
A dividend is qualified only if you held the shares for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. Some preferred stock dividends need a longer holding: more than 90 days in a 181-day period. Days on which your position was hedged, for example with a put option, do not count.
Dividends from a short-term trade are taxed as ordinary income, one reason dividend capture rarely pays; the ex-dividend calculator shows the numbers.
Some dividends are non-qualified whatever your holding period. REIT dividends are mostly non-qualified, because REITs pay no corporate tax on the income they distribute. The same applies to money market fund dividends, most bond fund payouts and dividends from foreign companies that fail the qualifying tests.
The net investment income tax
The NIIT adds 3.8% on investment income once MAGI exceeds $200,000 for single filers and heads of household, or $250,000 for married couples filing jointly. It is charged on the smaller of your investment income and the amount by which MAGI exceeds the threshold, so crossing the line by a little costs only a little.
A single filer with $230,000 of other taxable income, $20,000 of qualified dividends and $5,000 of ordinary dividends has an estimated MAGI of $271,100. The NIIT of $950.00 comes on top of $4,600.00 of federal income tax, for $5,550.00 in total.
Foreign dividends and withholding tax
When a foreign company pays a dividend, its home country usually withholds tax before the money reaches you. The rate depends on the country and on its tax treaty with the US; your broker statement shows the amount actually withheld. Enter the gross dividend and the rate in the Foreign withholding tool.
On a $1,000 dividend with 15% withheld, $850.00 reaches your account. In a taxable US account you still report the full $1,000, but the foreign tax credit lets you subtract the $150.00 already paid from your US tax. At a 15% US rate, the credit covers the whole US tax, so you keep $850.00, exactly as you would on a US dividend.
The credit is capped at the US tax on the same income. If 30% is withheld instead, only $150.00 can be credited and the remaining $150.00 is lost unless the foreign country lets you reclaim it. In an IRA or 401(k) there is no US tax to offset, so the credit is worth nothing and the full $150.00 is a permanent cost.
What this calculator does not include
- Section 199A deduction on ordinary REIT dividends, which can reduce their effective rate.
- Alternative minimum tax and phase-outs of deductions or credits tied to income.
- Local income taxes and states that tax dividends at special rates.
- Capital gain distributions from funds, taxed at long-term rates regardless of how long you held the fund.
- Exact foreign tax credit limits, which are computed on Form 1116 across all your foreign income.
Treat the result as a planning estimate; your tax return applies every rule to your full income.