Fillipe is in the forty percent marginal tax bracket and has a variety of income sources. Which of the following will he owe the least tax for?
A)$1000 interest income from bonds
B)$1000 dividend income
C)$1000 award from his company
D)$2000 capital gain

Question

Quizplus · Accepted Answer

Dividend income is taxed at a lower rate than interest income, awards from the company, or capital gains for taxpayers in the 40% marginal tax bracket. This is because qualified dividends are subject to a maximum tax rate of 20%, while interest income is taxed as ordinary income at Filipe's marginal tax rate (40%).

Fillipe Is in the Forty Percent Marginal Tax Bracket and Has