Tax

What are qualified dividends?

A qualified dividend is a dividend that gets the same low federal rates as long-term capital gains — 0, 15 or 20 % — instead of being taxed like wages. Two conditions: the company must be a US corporation or a qualifying foreign one (most companies listed on a US exchange are), and you must have held the stock for more than 60 days in the 121-day window that starts 60 days before the ex-dividend date. Dividends that do not qualify are "ordinary" and taxed at 10–37 %. Your broker sorts them for you on Form 1099-DIV.

Tax is national. This page describes the federal rules in the United States for tax year 2026. Most states add their own income tax on top, so there is never one single US rate. If you live and pay tax in another country, the rules are different — see the flags below.

The money goes from the company straight to your account.

How it works

Paid in full, taxed later. A $100 dividend arrives as $100. The tax comes with your return.
The 60-day rule. Buy a stock two days before it goes ex-dividend and sell it a week later, and the dividend is ordinary. Hold it for a couple of months around the date and it qualifies.
Which rate? Qualified dividends sit in the same 0/15/20 % bands as long-term gains — for 2026, 0 % up to $49,450 of taxable income for a single filer.
Not everything qualifies. REIT dividends, most money-market and bond-fund distributions, and dividends on shares you have lent out are ordinary. An ETF passes through whatever its holdings paid.
Foreign shares. The company's home country often withholds 15 % first; the US then taxes the dividend, and you can usually claim a foreign tax credit.
Your state usually taxes all dividends as ordinary income, qualified or not.

The worked example

You hold shares all year and receive $800 in dividends, all qualified. As a single filer with $60,000 of taxable income: 15 % = $120 federal tax. If the same $800 were ordinary dividends in the 22 % bracket: $176. In an IRA: $0 now.

Figures for 2026 from irs.gov (Rev. Proc. 2025-32 and IR-2025-111), checked September 2026. Your state may tax the same income again. Kiggo does not calculate your tax — your broker reports to you on Form 1099, and the IRS, your state and a tax professional decide.

Kiggo says: A qualified dividend is cash from the company that the IRS taxes gently — because you actually owned the stock, not just borrowed the payout.

The typical beginner's mistake

"Dividend capturing": buying a stock just before the ex-dividend date and selling right after. The price usually drops by the dividend, and the dividend is taxed at the higher ordinary rate because the 60-day test fails.

How you see it in Kiggo

Kiggo shows the dividend yield of a stock and, for ETFs, whether they pay out or accumulate. Whether a dividend is qualified depends on your holding period — Kiggo shows the gross figure the company reports and does not calculate your tax.

Frequently asked questions

What is the holding period for a qualified dividend?

More than 60 days during the 121-day period that begins 60 days before the ex-dividend date. For certain preferred stock it is more than 90 days in a 181-day window.

How do I know which of my dividends are qualified?

Your broker reports total ordinary dividends in box 1a and the qualified part in box 1b of Form 1099-DIV, usually in February.

Are ETF dividends qualified?

Partly. An ETF passes through the character of what it received: dividends from US stocks it held long enough are qualified; bond interest and REIT income are not. The 1099-DIV shows the split.

Kiggo explains — Kiggo does not advise. We never tell you what to buy or sell, and key figures can only be compared between companies in the same industry. The decision is yours. Last updated 2026-09-22.

Written by Claus Frisch, founder of Kiggo. Not an adviser, not a bank — Kiggo explains, you decide.