4 ms·

"Qualified dividends" are taxed the same as capital gains. To be qualified mostly depends on a minimum holding time, 60 days for common stock. https://en.m.wik

• RC_ITR 3y ago
  You pay tax on the cash now, you choose when to pay tax on the share price increase. Money has time value.
  • spokesbeing 3y ago
    Of course but that's not what the parent comment is asking clarification on. Dividends are, generally, not taxed at income tax rate if you are buy and hold. They are taxed at CG rate. A bigger downside of dividends is that you can't offset qualified dividends income with capital losses (except up to the $3000 annual limit). And compounding is different because you pay tax only at the end rather than every year. But those are different issues. While I'm at there's the additional wrinkle that being able to actually get a significant LTCG rate difference by deferring the income really depends on structure of your future income and when in your lifetime you will sell.