IRS Topic 404 calls ordinary dividends the most common type of corporate distribution. They are shown in box 1a of Form 1099-DIV. The part that meets the qualified-dividend rules is repeated in box 1b; whatever is in 1a but not 1b is taxed like wages at your marginal tax rate, from 10% to 37%.
Which dividends stay ordinary?
- Dividends on stock held too briefly to meet the qualified dividend holding period.
- Dividends from tax-exempt organizations and farmers' cooperatives.
- Payments in lieu of dividends (for example on shares lent for a short sale).
Payouts from money market funds are also reported as dividends, while "dividends" on credit union and savings and loan deposits are reported as interest (IRS Publication 550).
Example
A single filer has $70,000 of other taxable income in 2026, which sits in the 22% bracket ($50,400 to $105,700). An extra $2,000 of ordinary dividends adds $2,000 × 22% = $440 of federal income tax. If the same $2,000 were qualified, it would be taxed at 15%: $300.
Reporting thresholds
Payers send Form 1099-DIV for $10 or more, and Schedule B is required once taxable ordinary dividends exceed $1,500 (IRS Topic 404). Smaller amounts are still taxable.
See how are dividends taxed for the 2026 rate tables, and the dividend calculator to project dividend income.