Dividend Tax

Dividend tax refers to the tax imposed on the income that shareholders receive from a corporation's profits, distributed as dividends. When a corporation earns money and decides to share some of it with its shareholders, those shareholders must pay taxes on the dividends they receive. This tax is typically separate from the corporate taxes the company pays on its overall profits. Dividend tax rates can vary depending on factors like the type of dividend and the shareholder's tax bracket, potentially leading to double taxation—first at the corporate level and then at the individual level for the shareholders.