Investing Resource Center -  

Dividend tax


  Investing basics

  Home > Glossary > Dividend tax

The dividend tax is the tax on corporate dividends.

United States

President George W. Bush proposed in 2003 to eliminate the U.S. dividend tax. Critics argued that doing so would have little effect for the bottom 60% of wage-earners, and greatly reduce taxes for the upper 20%. Supporters pointed out that the bottom 60% of wage-earners already pay little in taxes.

After months of wrangling, the U.S. Congress passed the Jobs and Growth Tax Relief Reconciliation Act of 2003 that included some of the cuts President Bush requested. He signed the bill on May 28, 2003. The law specifies that dividend income will be 50% tax free for 2003 and then 100% tax free for 2004-06. After that, the law is reverted, and standard income tax rates will again apply to dividend income.


In the Netherlands there is a tax of 1.2 % per year on the value of the shares, regardless of the dividend.


© 2004