Qualified Dividends vs Ordinary Dividends: What To Know

What are qualified dividends vs ordinary dividends? Here's how to determine which is which, and what that means for you.

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At some point in almost every investor's life, they'll be alerted to the fact that they're collecting "qualified dividends." That inevitably prompts the natural question: What are qualified dividends vs ordinary dividends?

Ultimately, the importance of this distinction has to do with how you're taxed on your dividends. And knowing which is which can be one way to help potentially lower your tax bill.

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Qualified dividend tax rates
StatusTaxable incomeTax rate
Single$0 to $47,0250%
Row 1 - Cell 0 $47,026 to $518,90015%
Row 2 - Cell 0 $518,901 or more20%
Married, filing jointly$0 to $94,0540%
Row 4 - Cell 0 $94,055 to $583,75015%
Row 5 - Cell 0 $583,751 or more20%
Head of household$0 to $63,0000%
Row 7 - Cell 0 $63,001 to $551,35015%
Row 8 - Cell 0 $551,351 or more20%
Married, filing separately$0 to $47,0250%
Row 10 - Cell 0 $47,026 to $291,85015%
Row 11 - Cell 0 $291,851 or more20%

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Charles Lewis Sizemore, CFA
Contributing Writer, Kiplinger.com

Charles Lewis Sizemore, CFA is the Chief Investment Officer of Sizemore Capital Management LLC, a registered investment advisor based in Dallas, Texas, where he specializes in dividend-focused portfolios and in building alternative allocations with minimal correlation to the stock market.