What is the tax rate for dividends?

In California, dividends are taxed at the same rate as the taxpayer’s ordinary income tax rate. This means that if you are in the highest tax bracket, your dividends will also be taxed at that rate. However, it should be noted that the state does provide a special tax rate for certain qualified dividends. This special rate is lower than the ordinary income tax rate and is generally around 5% to 9%. In addition, some long-term capital gains may be eligible for a special tax rate. This rate is generally around 0% to 13.3%, and it varies depending on the taxpayer’s income level. However, it is important to note that the state of California does not offer any special rate for short-term capital gains or any other type of investment income. Lastly, there are a few special cases where a taxpayer can qualify for a lower tax rate on their dividends. These include qualified dividends from municipal bonds, qualified dividends received from real estate investment trusts (REITs), and qualified dividends from certain small business investment companies. Overall, the tax rate for dividends in California depends on the type of dividends, the taxpayer’s income level, and any special cases that apply. It is important that taxpayers review their specific financial situation in order to determine which tax rate applies to them.

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