Shortcut Navigation:

Capital gains and dividends tax relief

Under the Jobs and Growth Tax Relief Reconciliation Act of 2003 and the Tax Increase Prevention and Reconciliation Act of 2005

Tax on long-term capital gains

These two acts set the maximum tax rate on long-term capital gains (gains on the sale of assets held for more than one year) at 15 percent through 2010.

tx-at-il05-01_gif

For individuals in the 10 percent and 15 percent marginal tax brackets, the rate is 5 percent, except for tax years 2008 through 2010, when the rate will be zero.

tx-at-il05-02_gif

Tax on dividends

Taxpayers who receive corporate dividend payments also benefit from these rates. Dividends received from U.S. and qualified foreign corporations are generally taxed at the long-term capital gains rates. Prior to 2003, dividends were taxed as ordinary income. This change is effective for dividends received in 2003 through 2010.

tx-at-il05-03_gif
tx-at-il05-04_gif