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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.


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.


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.