# Are taxes on dividends marginal based on tax bracket like regular income?

For income, the tax rate is marginal (or "staggered"), meaning that the actual (effective) tax rate is not the same as the tax bracket you fall into. In other words, income "fills up" the lower tax brackets (which have a lower tax rate) before it moves to the higher brackets with higher rates.

This should be easy to answer but Google is not helpful: Do taxes on dividends work the same way? The transition from the 0% bracket to 15% bracket for dividends is \$80,800 for 2021 (MFJ). If I earn \$100 in dividends and my taxable income is \$80,801, what is my tax rate on the dividend?

• The tax rate is marginal (from the Latin margo: edge). To modern Americans, it sounds odd; think instead of "stair-step". Your absolute tax rate is independent of your marginal tax rate (aka what tax bracket you fall into). Aug 12, 2021 at 18:03
• You've earned \$80,801, but what is your AGI (Adjusted Gross Income)? Aug 12, 2021 at 18:07
• @RonJohn Let's assume my AGI is \$80,801. I'll edit the question. Aug 12, 2021 at 18:16