Tax Percentage on US Dividends
Published on May 30, 2025
by Jeff Patterson
Reviewed by
Jeff Patterson is an American living in Scotland and joined the team at Expat Tax Online after experiencing the complexities of living abroad with a family.
Table of Contents
How much tax do I pay on US dividends in 2025?
A US expat generally pays between 0% and 20% on qualified dividends, depending on your income and filing status. Non-qualified dividends, on the other hand, are taxed at your regular income tax rate, which can be as high as 37%.
What are the dividend tax rates for the 2025 tax year?
In 2025 (for returns filed in 2026), dividend income is taxed at different rates depending on whether the dividends are qualified or non-qualified. These terms sound technical, but here’s what you need to know:
- Qualified dividends are taxed at lower rates: 0%, 15%, or 20%.
- Non-qualified (or ordinary) dividends are taxed like regular income, using the same rates as wages or self-employment income (between 10% and 37%).
Here’s a basic breakdown for qualified dividend tax rates:
- 0% if your income is under about US$48,350 (single) or US$96,700 (married filing jointly).
- 15% for income between US$48,350 and US$517,200 (single) or up to US$622,050 (joint).
- 20% if your income is above those top amounts.
As a US expat, you still need to report all your income—including dividends from US companies—on your US tax return, no matter where you live.
Comparison of qualified dividend tax rates for 2024 vs. 2025
|
Filing Status |
2024: 0% Rate Up To |
2024: 15% Rate Starts At |
2024: 20% Rate Starts At |
2025: 0% Rate Up To |
2025: 15% Rate Starts At |
2025: 20% Rate Starts At |
|
Single |
US$44,625 |
US$44,626 |
US$492,301 |
US$48,350 |
US$48,351 |
US$517,201 |
|
Married Filing Jointly |
US$89,250 |
US$89,251 |
US$553,851 |
US$96,700 |
US$96,701 |
US$622,051 |
|
Head of Household |
US$59,750 |
US$59,751 |
US$523,051 |
US$64,750 |
US$64,751 |
US$551,351 |
Note: These thresholds apply only to qualified dividends. Ordinary (non-qualified) dividends are taxed at regular income tax rates, which can range from 10% to 37% depending on income and filing status.
Comparison of non-qualified dividend (ordinary income) tax brackets for 2024 vs. 2025
Single Filers
|
Tax Rate |
2024 Taxable Income |
2025 Taxable Income |
|
10% |
Up to US$11,600 |
Up to US$11,925 |
|
12% |
US$11,601 – US$47,150 |
US$11,926 – US$48,475 |
|
22% |
US$47,151 – US$100,525 |
US$48,476 – US$103,350 |
|
24% |
US$100,526 – US$191,950 |
US$103,351 – US$197,300 |
|
32% |
US$191,951 – US$243,725 |
US$197,301 – US$250,525 |
|
35% |
US$243,726 – US$609,350 |
US$250,526 – US$626,350 |
|
37% |
Over US$609,350 |
Over US$626,350 |
Married Filing Jointly
|
Tax Rate |
2024 Taxable Income |
2025 Taxable Income |
|
10% |
Up to US$23,200 |
Up to US$23,850 |
|
12% |
US$23,201 – US$94,300 |
US$23,851 – US$96,950 |
|
22% |
US$94,301 – US$201,050 |
US$96,951 – US$206,700 |
|
24% |
US$201,051 – US$383,900 |
US$206,701 – US$394,600 |
|
32% |
US$383,901 – US$487,450 |
US$394,601 – US$501,050 |
|
35% |
US$487,451 – US$731,200 |
US$501,051 – US$751,600 |
|
37% |
Over US$731,200 |
Over US$751,600 |
Head of Household
|
Tax Rate |
2024 Taxable Income |
2025 Taxable Income |
|
10% |
Up to US$16,550 |
Up to US$17,000 |
|
12% |
US$16,551 – US$63,100 |
US$17,001 – US$64,850 |
|
22% |
US$63,101 – US$100,500 |
US$64,851 – US$103,350 |
|
24% |
US$100,501 – US$191,950 |
US$103,351 – US$197,300 |
|
32% |
US$191,951 – US$243,700 |
US$197,301 – US$250,525 |
|
35% |
US$243,701 – US$609,350 |
US$250,526 – US$626,350 |
|
37% |
Over US$609,350 |
Over US$626,350 |
Why use the IRS Streamlined Tax Amnesty Program?
It’s for American citizens that didn’t know they had to file U.S. tax returns each year, and have therefore fallen behind. Some more than 30 years! With the IRS Streamlined Procedure, say goodbye to overdue tax returns, late fees, and penalties.
Connect with over 10,000+ expats today!
Embarking on an international journey shouldn’t mean navigating the complex world of US taxation alone. If you’re living and working abroad, our friendly, supportive Expat Tax Online Help Facebook group is here to assist. We’ve designed a community that serves as a comprehensive guide and resource platform tailored for US expats.
How are dividends taxed in general?
Dividends are money paid out to you when you own stock in a company. For example, if you own shares in a US company or a mutual fund, you might receive regular dividend payments.
There are two types of dividends:
- Qualified dividends usually come from US companies or certain foreign companies, and are taxed at lower rates.
- Ordinary (non-qualified) dividends come from things like real estate investment trusts (REITs), certain mutual funds, or some foreign companies. These are taxed at higher, regular income tax rates.
If you reinvest your dividends through a dividend reinvestment plan (DRIP) or earn dividends through ETFs or mutual funds, those also need to be reported. For US expats, these might be reported as foreign income depending on the account type and investment platform.
Which tax forms are required for dividend income?
These are some of the forms you’ll likely deal with:
- Form 1040 – This is your main tax form where you report your total income, including dividends.
- Schedule B (part of Form 1040) – You’ll use this if you have more than US$1,500 in ordinary dividends or interest, or if you have a foreign bank or brokerage account.
- Form 1099-DIV – If a US company or broker paid you dividends, they should send you this form listing exactly how much you earned.
- Form 1116 (optional) – If foreign taxes were withheld on any dividend income, you may be able to claim a foreign tax credit here.
If your dividends came from a foreign company and you didn’t receive a Form 1099-DIV, you still have to report the income. You may need to work with an international tax advisor to ensure you’re doing it properly—especially if you’re also trying to use tax treaties or the Foreign Tax Credit.
How do I report dividend income on my tax return?
The most common form you’ll receive is Form 1099-DIV, which lists how much you earned in dividends and what kind they are. US companies and brokerages usually send this to you if you’ve earned US$10 or more in dividends during the year.
Here’s what to do with that information:
- Ordinary dividends (the most common type) are shown in Box 1a of Form 1099-DIV. You report these on line 3b of Form 1040.
- Qualified dividends (which are taxed at lower rates) appear in Box 1b of Form 1099-DIV. You report them on line 3a of Form 1040.
If you earned more than US$1,500 in dividends or have dividend income from foreign accounts, you also need to complete Schedule B, which breaks down the details further. This might apply to you if you invest through a foreign broker or have American depositary receipts (ADRs) for foreign companies.
Other forms that may come into play include:
- Schedule K-1 – If you’re involved in partnerships or certain funds (like a real estate investment trust (REIT) or regulated investment company (RIC)), you may receive this form instead of a 1099-DIV.
- DRIPs (Dividend Reinvestment Plans) – If you automatically reinvest your dividends instead of taking cash payouts, these still count as income and must be reported.
Even if you didn’t receive a Form 1099-DIV (which can happen with some foreign investments), you are still responsible for reporting the income on your US return.
What makes a dividend qualified for lower tax rates?
Qualified dividends are taxed at lower rates than ordinary dividends. But to qualify for those rates, the dividends must meet certain IRS rules. This is important because it can mean paying 0%, 15%, or 20% in tax instead of your full ordinary income rate (which could be up to 37%).
Here’s what determines if a dividend is qualified:
- It must be paid by a US company or a qualified foreign corporation. Some American depositary receipts (ADRs) from foreign companies can also qualify.
- You must meet the holding period requirement, which usually means you held the stock for at least 61 days during a 121-day period around the ex-dividend date (the date that determines who gets the dividend).
- It can’t be from certain investment types like REITs or mutual funds that pass through nonqualified income.
If the dividend doesn’t meet these rules, it’s considered nonqualified and is taxed as regular income.
What is the difference between qualified and nonqualified dividends?
The main difference between these two comes down to how they’re taxed:
|
Type of Dividend |
How It’s Taxed |
Common Sources |
|
Qualified |
Taxed at 0%, 15%, or 20% |
US companies, qualified foreign corporations, ADRs |
|
Nonqualified |
Taxed at regular income tax rates |
REITs, some mutual funds, short-term holdings, DRIPs |
How can I reduce the taxes I pay on dividends?
- Use tax-advantaged retirement accounts – If you’re contributing to an IRA or other US-recognized retirement plan, any dividends inside those accounts may grow tax-deferred.
- Pay attention to the ex-dividend date – Holding your investments long enough to meet the 61-day minimum can help your dividends qualify for lower tax rates.
- Time your investments – Strategic buying or selling based on dividend schedules and withholding tax (WHT) rules can help reduce taxable income.
- Claim the Foreign Tax Credit – If taxes were withheld by a foreign parent corporation, you might be able to claim the foreign tax credit using Form 1116.
- Use tax software or a professional– Filing as a US expat can be tricky, especially when dealing with dividend income and tax treaties. Using proper tools or speaking with a tax advisor can ensure you take full advantage of all available tax breaks.
Spread the word. Please share… 👉
