Editing Dividend tax (section)

==History==
{{Expand section|date=June 2008}}
In the beginning of income tax history, dividends paid to shareholders were exempt from taxation, as such tax was considered a form of double taxation on money earned by companies and subject to corporate tax. 

Currently, in most jurisdictions, dividends from corporations are treated as a type of income and taxed accordingly at the individual level. Many jurisdictions have adopted special treatment of dividends, imposing a separate rate on dividends to wage income or capital gains.

Here is a brief history of dividend taxation:

* 17th century: The first dividend taxes were imposed in the 17th century in the Netherlands and England.
* 19th century: Dividend taxes became more common in the 19th century, as more countries adopted income taxes.
* United States: Dividend taxes were first imposed in the United States in 1913, with the passage of the 16th Amendment to the U.S. Constitution.
* 1936–1939: During the Great Depression, dividends were taxed at an individual's income tax rate.
* 1954: The Tax Reform Act of 1954 created a separate rate for dividends, which was lower than the individual income tax rate.
* 1981: The Economic Recovery Tax Act of 1981 further reduced the tax rate on dividends.
* 2003: The Jobs and Growth Tax Relief Reconciliation Act of 2003 reduced the tax rate on dividends to 15% for most investors.
* 2013: The American Taxpayer Relief Act of 2012 (ATRA) increased the tax rate on dividends to 20% for taxpayers in the top income tax bracket.

In the United States, the [[Revenue Act of 1913]], authorized via the [[Sixteenth Amendment to the United States Constitution|16th Amendment]], created a federal personal income tax of 1% with additional surtaxes of 1–5%,<ref>{{Cite book |last=Joint Committee on Internal Revenue Taxation |first=Staff of |url=https://www.jct.gov/getattachment/0b8cb6a1-44b3-4cbe-99a8-4cdaabbff2d3/jcs-6-61-4129.pdf |title=History of Exemption of Dividend Income under the Individual Income Tax 1913-1961 |date=July 25, 1961 |publisher=U.S. Government Printing Office |location=Washington D.C. |pages=1–2 |language=en}}</ref> and exempted dividends from the general income tax but not the surtaxes which applied above the $20,000 level. This was to avoid the double taxation of income as there was a 1% corporate tax as well. After 1936, dividends were again subject to the ordinary income tax, but from 1954–1983 there were various exemptions and credits, taxing dividends at a lower rate. Following this, there was an eighteen-year period (1985-2003) in which dividends were fully taxed at an individual's income tax bracket. During this period, the top tax bracket ranged between 28% and 50%.<ref>{{Cite web |title=Dividend.com |url=https://www.dividend.com/taxes/a-brief-history-of-dividend-tax-rates/Dividend.com |access-date=2023-06-04 |website=Dividend.com}}</ref> However, in 2003 former president [[George W. Bush]] enacted the [[Jobs and Growth Tax Relief Reconciliation Act of 2003]], which changed tax rates significantly. These [[Jobs and Growth Tax Relief Reconciliation Act of 2003|2003 tax cuts]] created a new category of [[qualified dividend]] that was taxed at the lower [[Capital gains tax in the United States|long-term capital gains rate]] instead of the ordinary income rate.<ref>{{Cite web|url=https://www.everycrsreport.com/reports/R43418.html#_Toc382291689|title=The Taxation of Dividends: Background and Overview|last=[[Congressional Research Service]]|date=2014-03-10|website=Every CRS Report|language=en|url-status=live|archive-url=https://web.archive.org/web/20180609124811/https://www.everycrsreport.com/reports/R43418.html#_Toc382291689|archive-date=2018-06-09|access-date=2019-09-09}}</ref>

The current{{when?|date=January 2025}} tax rate on dividends in the United States is 20% for taxpayers in the top income tax bracket, and 15% for taxpayers in the lower income tax brackets. There are also special rules for qualified dividends, which are dividends that are paid by companies that have met certain requirements. Qualified dividends are taxed at a lower rate of 0%, 15%, or 20%, depending on the taxpayer's income.{{cn|date=January 2025}}

The history of dividend taxation outside the US is just as varied as it is in the US. Here is a brief overview of dividend taxation in some major countries:

* United Kingdom: In the financial year beginning 6 April 2024, dividends in the UK are taxed at a rate of 8.75% for basic rate taxpayers, 33.75% for higher rate taxpayers, and 39.35% for additional rate taxpayers. There is also a dividend allowance of £500 per year, which means that dividends up to £500 are tax-free. The rates have increased and the allowance reduced since 2022.<ref>{{cite web |url=https://www.gov.uk/tax-on-dividends |title=Tax on dividends |website=GOV.UK |publisher=[[Government Digital Service]] |access-date=19 January 2025}}</ref>
* Canada: Dividends in Canada are taxed at a rate of 50% for non-residents, and 15% for residents. There is also a dividend tax credit that can be used to reduce the amount of tax that is owed on dividends.{{cn|date=January 2025}}
* Australia: Dividends in Australia are taxed at a rate of 30% for non-residents, and 15% for residents. There is also a dividend imputation system that allows shareholders to claim a credit for the taxes that the company has already paid on its profits.
* Japan: Dividends in Japan are taxed at a rate of 20% for non-residents, and 15% for residents. There is also a dividend exemption system that allows shareholders to exempt dividends from tax if they meet certain conditions.{{cn|date=January 2025}}
* Germany: Dividends in Germany are taxed at a rate of 25% for non-residents, and 26.375% for residents. There is also a dividend tax credit that can be used to reduce the amount of tax that is owed on dividends.{{cn|date=January 2025}}

===Collection===
{{main|Withholding tax}}
In many jurisdictions, companies are subject to [[withholding tax|withhold obligations]] of a prescribed rate, paying this to the national revenue authorities and paying to shareholders only the balance of the dividend.