How to use this calculator
- Filing status: the status you file your federal return under.
- Other income: your taxable income without the dividends. If you only know your gross income, switch the toggle and the calculator subtracts the standard deduction for you.
- Qualified dividends: box 1b of your Form 1099-DIV.
- Ordinary dividends: box 1a minus box 1b. Box 1a already includes the qualified part.
- State tax rate: optional. It is applied as a flat rate to all of your dividends.
The formula
Dividends are taxed in two different ways, and the order matters.
Ordinary taxable income = Other taxable income + Ordinary dividends
Tax on ordinary dividends = Bracket tax(with them) − Bracket tax(without them)
Qualified dividends sit on top of ordinary taxable income.
Each dollar is taxed at 0%, 15% or 20%, depending on where it lands.
NIIT = 3.8% × smaller of (Total dividends, MAGI − Threshold)
State tax = Total dividends × State rate
Ordinary dividends are simply added to your wages and other income and taxed at your regular bracket rates, from 10% to 37%.
Qualified dividends are “stacked” on top of everything else. Picture your ordinary taxable income as a column; the qualified dividends go on top of it. The part of the stack below the 0% line is tax-free, the part between the 0% and 15% lines is taxed at 15%, and anything above the 15% line is taxed at 20%. Because they sit on top, more other income pushes your qualified dividends into a higher band, even though their rates never touch your wages.
Qualified dividend rates for 2026
| Filing status | 0% up to | 15% up to | 20% |
|---|---|---|---|
| Single | $49,450 | $545,500 | Above that |
| Married filing jointly | $98,900 | $613,700 | Above that |
| Married filing separately | $49,450 | $306,850 | Above that |
| Head of household | $66,200 | $579,600 | Above that |
Amounts are total taxable income, including the dividends. Source: IRS Rev. Proc. 2025-32.
Worked example
The starting numbers: a single filer with $60,000 of taxable income, $1,000 of ordinary dividends, $5,000 of qualified dividends and a 5% state rate.
- Ordinary dividends join the other income: $60,000 + $1,000 = $61,000. All of the added $1,000 falls in the 22% bracket ($50,400 to $105,700), so the tax is $220.00.
- The $5,000 of qualified dividends stacks from $61,000 to $66,000. The 0% line is $49,450, already passed, so all of it is taxed at 15%: $750.00.
- Net investment income tax: income plus dividends is about $66,000, below the $200,000 threshold, so it is $0.00.
- State: 5% × $6,000 = $300.00.
Total: $970.00 federal + $300.00 state = $1,270.00, an effective rate of 21.17% on the dividends. You keep $4,730.00.
What makes a dividend qualified
Most dividends from US companies, and from many foreign companies traded in the US or based in treaty countries, can be qualified. There is also a holding rule: you must have owned the shares for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. Buy shortly before the ex-date and sell soon after, and the dividend is taxed as ordinary income instead.
Some payouts are ordinary no matter how long you hold. Most REIT dividends are ordinary, as are distributions from money market funds and interest-like payments from some funds. Qualified REIT dividends may be eligible for the Section 199A deduction, which can lower their effective rate; this calculator doesn’t apply it.
The 3.8% net investment income tax
Above a certain income, dividends also carry a 3.8% net investment income tax (NIIT). The thresholds are $200,000 for single and head of household filers, $250,000 for married filing jointly and $125,000 for married filing separately, and they are fixed by law, not adjusted for inflation.
The real test uses your modified adjusted gross income (MAGI), which this calculator doesn’t know exactly. It approximates MAGI as the income you entered plus your dividends. With the gross-income toggle that is close to the real figure. If you entered taxable income, the estimate is lower than your true MAGI by your deductions, so near the threshold the NIIT shown may be too low.
State taxes
States tax dividends very differently. Several have no income tax at all, many tax dividends at the same rate as wages, and a few treat them differently. Enter the rate that applies to you, or 0. The calculator applies it to all dividends, qualified or not.
Tip: the same dividends can be taxed at 0% or 15% depending on your other income. If you are near the 0% line, it can be worth looking at which account holds your dividend payers. The After-Tax Dividend Calculator compares account types quickly.
This is an estimate for dividends only, not tax advice. For your actual return, use tax software or ask a tax professional. To see how taxes affect reinvested dividends over many years, try the DRIP Calculator.