Qualified Dividends

Full explanation

Qualified dividends receive preferential tax treatment — they're taxed at 0%, 15%, or 20% depending on your taxable income, rather than your ordinary income rate which could be as high as 37%. For 2026 (single): 0% rate on qualified dividends if taxable income is under $50,400, 15% up to $505,000, 20% above that. To qualify, dividends must be paid by a US corporation or qualified foreign corporation, and you must have held the stock for at least 61 days during the 121-day period around the ex-dividend date. Most common stock dividends from US companies qualify. REITs, money market funds, and most ETF distributions typically do not.

Source: IRS Publication 550 — Qualified Dividends