What is the tax rate on qualified dividends?

The tax rate on qualified dividends is determined by the taxpayer's income level and falls within the ranges of 0%, 15%, or 20%. This structure ensures that individuals with lower income may not owe any tax on their qualified dividends, while those with higher income are subject to the higher rates. The graduated tax rates incentivize long-term investment by providing favorable treatment for dividends derived from qualified sources, aligning with the government’s goal to encourage investment and savings among taxpayers.

Other tax rate options listed do not accurately reflect the current tax guidelines for qualified dividends. The ranges presented in the other choices do not correspond to the established policies defined by the Internal Revenue Service (IRS), making them incorrect alternatives. In summary, the correct option encompasses the varying rates based on income thresholds, illustrating how taxation on qualified dividends is designed to benefit a range of taxpayers while promoting investment.