FAQs  >  Topic: Taxes

What qualifies a dividend for the beneficial tax treatment of 0-15%?

Under the Jobs and Growth Tax Relief Reconciliation Act (JGTRRA) of 2003, the long-term capital gains tax rate for individuals has been reduced for any net capital gains realized on or after May 6, 2003. The tax rate on many dividends paid to individuals has also been reduced, effective January 1, 2003. However, some dividends will not qualify for the reduced tax rate. It is up to the investor and his/her tax advisor to determine which dividends qualify for the reduced rate.

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 following the declaration of a dividend on which the buyer of a stock is not entitled to receive the next dividend payment. When counting the number of days you held the stock, include the day you sold the stock, but not the day you acquired it.