But for most people, paying taxes is part of the reality when it comes to dividends. The good thing is that most dividends paid by typical corporations qualify for a lower tax rate of 15%.

The revised I-T bill incorporates most of the recommendations given by the select committee -- which examined the Income Tax ...

In addition to higher rates for capital gains and dividends, under Mr. Obama's plan the top marginal- income-tax rates would increase to 36% and 39.6% from 33% and 35%, respectively.

Taxes on Dividend Stocks Dividend stocks distribute profits to shareholders in the form of cash payments, which can be classified as either qualified or non-qualified dividends for tax purposes.

She would have $17 of qualified dividend taxed at 23.8% and a $17 long-term loss that would shelter 23.8% of tax on her existing long-term gains. It would be an after-tax and pretax break-even.

But that represents the number of filed taxes; not everyone who filed needed to pay the tax. About 7.8 percent of people that year paid something toward the interest and dividends tax.