Dividends are always taxed as ordinary income.

Question

Quizplus · Accepted Answer

Dividends can be taxed at a lower rate than ordinary income, depending on the type of dividend and the tax bracket of the recipient. For example, qualifying dividends are taxed at a lower rate than non-qualifying dividends, and individuals in lower tax brackets may qualify for a 0% tax rate on their dividends. However, some dividends, such as those from a tax-exempt organization or a qualified retirement plan, may be exempt from income tax altogether.

Dividends Are Always Taxed as Ordinary Income