Chartered Retirement Planning Counselor (CRPC) Practice Exam 2025 - Free CRPC Practice Questions and Study Guide

Question: 1 / 660

How are qualified dividends taxed for individuals in the 39.6% tax bracket?

At a rate of 0%

At a rate of 15%

At a rate of 20%

Qualified dividends are taxed at preferential rates compared to ordinary income. For individuals in higher income tax brackets, such as the 39.6% bracket, qualified dividends are subject to a maximum tax rate of 20%. This is designed to encourage long-term investment in stocks and other income-producing assets, as the taxation of qualified dividends is lower than the rates applied to ordinary income.

In contrast, ordinary dividends do not receive the same favorable treatment and would be taxed as ordinary income at the individual’s marginal tax rate, which could be significantly higher than the rate applied to qualified dividends. By placing qualified dividends under the 20% tax rate for higher-income individuals, the tax code promotes investment activities among those with more considerable means, while still maintaining a tax structure that raises revenue.

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