Dividend Taxation: 5 Points to Ponder

Beginning January 1, 2011, the Bush tax cuts are set to expire, meaning that dividend taxation could increase. Currently in the U.S, dividend investors enjoy a maximum of 15% taxation on qualified dividends, but this could increase to 39.6% for those in the highest tax bracket if Congress does not act to keep dividend taxation low. Even for most people in the other tax brackets, dividend taxation could increase, but the effects won’t be as dramatic. There are a variety of outcomes that could occur, ranging from the tax cuts being made to stay, or facing a modest bump up to 20% or so, or staying low for those in the lower tax brackets but soaring up high for those in the highest tax brackets, or going high across the tax bracket board. I am not a political analyst or a tax professional, and unfortunately I cannot seem to locate my crystal ball, so at this time I cannot predict what will occur in regards to dividend tax rates for 2011 and beyond. But there are a variety of options to consider and things to keep in mind.... Read more

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