Tax rate on dividends may be raised next year

July 25, 2012

Discover whether the rumors about increased dividend taxes are true.

A: President Obama has proposed raising the tax rate on dividends to 39.6%. In addition, certain deductions and exemptions are scheduled to be phased out, so if you itemize and have 2013 adjusted gross income above about $175,000, you will lose some deductions. Note also that the Affordable Care Act includes a 3.8% surtax on investment income (see Q&A at left).