Capital gains and dividends earned within mutual funds are taxed at the same rate as ordinary income.

Name: Capital gains and dividends earned within mutual funds are taxed at the same rate as ordinary income.
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Capital gains and dividends earned within mutual funds can be taxed at different rates depending on the type of investment income and the investor's tax bracket. Long-term capital gains and qualified dividends often benefit from lower tax rates than ordinary income.

Capital Gains and Dividends Earned Within Mutual Funds Are Taxed