Final answer:
Dividends that are qualified are taxed the same as short-term capital gains, which is equal to the investor's marginal tax rate.
Step-by-step explanation:
Dividends that are qualified are taxed the same as short-term capital gains, which is equal to the investor's marginal tax rate.
To understand this statement, we need to first define qualified dividends and short-term capital gains. Qualified dividends are dividends paid by certain corporations that meet specific criteria set by the IRS. Short-term capital gains are the profits made from selling assets, such as stocks, that have been held for one year or less.
When dividends are qualified, they are subject to the same tax rates as short-term capital gains, which means they are taxed at the investor's marginal tax rate. The marginal tax rate is the highest tax rate applied to an individual's income. Therefore, if an investor's marginal tax rate is 35%, qualified dividends and short-term capital gains will both be taxed at 35%.