How to use this calculator
- Ex-dividend date: from the company’s dividend announcement or your broker’s dividend history.
- Date you bought: the trade date of your purchase, not the settlement date.
- Date you sold: optional. Leave it empty to get the first day you can sell and still qualify.
- Type of shares: leave it on stock, ETF or fund unless you hold preferred stock whose dividends cover more than a year.
The rule
Window start = Ex-date − 60 days
Window = 121 days, from the window start
Qualified if: days held inside the window > 60
Count the day you sell, not the day you buy.
A dividend is “qualified” when it can be taxed at the lower long-term capital gains rates of 0%, 15% or 20% instead of your ordinary income rate. Most dividends from US companies, and many foreign ones, can be qualified, but only if you held the shares long enough around the ex-dividend date. The window starts 60 days before the ex-date and runs for 121 days, so it ends 60 days after the ex-date. You need more than 60 of those days.
Days are calendar days: weekends and holidays count. What has to be a trading day is the trade itself. A buy or sale placed on a weekend or market holiday fills, and counts, on the next day the market is open.
Worked example
The starting numbers: ex-dividend date Tuesday, December 15, 2026, bought on Tuesday, December 1, 2026, planning to sell on Friday, January 15, 2027.
- The window starts 60 days before the ex-date, on Friday, October 16, 2026, and ends 120 days later, on Saturday, February 13, 2027.
- The day you buy doesn’t count, so counting starts on Wednesday, December 2, 2026. December 2 through 31 is 30 days, and January 1 through 15 is 15 more: 45 days.
- 45 is not more than 60, so a sale on Friday, January 15, 2027 makes the dividend not qualified.
- Day 61 is Sunday, January 31, 2027, a Sunday. The first day you can actually sell and keep the lower rate is Monday, February 1, 2027.
Why it matters
On the same dividend, the difference is your ordinary tax rate minus the qualified rate. For someone in the 22% bracket whose qualified rate is 15%, that is 7 cents of every dollar of dividends. On a $1,000 dividend, $70, just from selling a few days too early. The Dividend Tax Calculator shows both rates for your income and filing status.
Days that don’t count
Days when your risk of loss on the shares was reduced don’t count toward the 61. That covers days when you held an option to sell (a put) or were obliged to sell, had an open short sale of the same stock, had sold someone an option to buy it (a call), or held other positions that offset the risk. If you hedge your shares, the calculator’s count may be too high.
Funds, preferred stock and retirement accounts
ETFs and mutual funds. The fund tells you which part of its payout can be treated as qualified, shown in box 1b of Form 1099-DIV. You still have to hold the fund’s shares long enough yourself for that part to be qualified.
Preferred stock. When the dividends cover periods totaling more than 366 days, the rule stretches: more than 90 days during the 181-day period that begins 90 days before the ex-date. Preferred stock paying quarterly uses the 60-day rule.
IRAs and 401(k)s. Dividends inside a retirement account aren’t taxed when they are paid, so the holding period doesn’t change anything there.
Tip: if you buy right before the ex-date to collect a dividend, plan to hold for about two months. Sell within a few weeks and you get the dividend taxed at your full rate, usually after the share price has already dropped by about the dividend amount.
Not sure you get the dividend at all? Check your buy and sell dates with Will I Get the Dividend? first.
Sources
- IRS Publication 550, Investment Income and Expenses: “Qualified Dividends”, holding period.
- 26 U.S.C. §1(h)(11): qualified dividend income.
- 26 U.S.C. §246(c): holding period, day counting and reduced-risk days.