Center for Federal Tax Policy

Individual Capital Gains and Dividends Taxes

The taxation of dividends and capital gains is one of the most controversial issues in public finance. Relatively high effective tax rates on capital income, particularly that emanating from the corporate sector, have the potential to discourage investment and impede economic growth. Corporations must pay corporate income taxes on profits before they distribute dividends to shareholders, and shareholders pay an additional, individual-level tax on those amounts. Imposing two layers of taxation on corporate income can result in a total tax rate on capital income from corporations that is substantially higher than the rate on other types of income. In recent years, policymakers have become concerned about the economic damage caused by relatively high effective tax rates on capital income, and in 2003 the tax rate on capital gains and dividend income was lowered to 15 percent.


Featured Research

An Overview of Capital Gains Taxes

April 16, 2019

Tax Policy and Entrepreneurship: A Framework for Analysis

April 3, 2019

Opportunity Zones: What We Know and What We Don’t

January 8, 2019

2019 Tax Brackets

November 28, 2018

Economic and Budgetary Impact of Indexing Capital Gains to Inflation

September 4, 2018

The Complicated Taxation of America’s Retirement Accounts

May 22, 2018


Related Articles

An Overview of Capital Gains Taxes

April 16, 2019

Tax Policy and Entrepreneurship: A Framework for Analysis

April 3, 2019

Is Increasing the Capital Gains Tax Rate the Right Way to Generate Revenue?

March 14, 2019

The Trade-offs of Repealing Step-Up in Basis

March 13, 2019

Unclear if Warren’s Wealth Tax Proposal is Constitutional

January 25, 2019

Opportunity Zones: What We Know and What We Don’t

January 8, 2019

2019 Tax Brackets

November 28, 2018

Treasury Department Proposes New Regulations for Opportunity Zones

October 22, 2018

Sources of Personal Income 2016 Update

September 11, 2018

Economic and Budgetary Impact of Indexing Capital Gains to Inflation

September 4, 2018

Capital Gains Taxes Should Be Indexed to Inflation

July 23, 2018

Second Round of Tax Reform Might Address Retirement Accounts

June 14, 2018

The Complicated Taxation of America’s Retirement Accounts

May 22, 2018

New IRS Data Shows Most IRA Contributions Were Made by Middle-Class Taxpayers

April 26, 2018

Senate Finance Retirement Savings Bill Falls Short of Offering Comprehensive Solutions

March 14, 2018

States Explore Taxing Carried Interest

March 6, 2018

New Study Shows United States Taxes Capital Income at Above-Average Rates

February 28, 2018

Sources of Personal Income 2015 Update

February 27, 2018

Important Differences Between the House and Senate Tax Reform Bills Heading into Conference

December 2, 2017

Key Changes in Senate Tax Reform Bill Heading into the Vote-a-Rama

December 1, 2017