Tax & Regulation
What is Qualified vs Non-Qualified Dividends - US?
In the US, 'qualified' dividends from US corporations and many foreign corporations are taxed at the lower long-term capital gains rates (0/15/20%), while 'non-qualified' (ordinary) dividends, from REITs, MLPs, money market funds, and short holding periods, are taxed at ordinary income rates.
Formula
Qualified status requires: (1) paid by US corp or qualified foreign corp, AND (2) you held the stock more than 60 days during the 121-day window around the ex-dividend date.
How to Interpret
Brokerages report this split on Form 1099-DIV (Box 1a = total ordinary, Box 1b = qualified). Owning REITs (O, VNQ) inside a Roth IRA or 401(k) avoids the higher non-qualified tax. Note: Indian dividend taxation is different, dividends are taxed at the investor's slab rate with no qualified/non-qualified distinction.
Typical Ranges
Qualified dividend rates: 0% / 15% / 20% (same as LTCG brackets). Non-qualified: up to 37% ordinary rates.