Californians Pay Most on Dividends, Tax Foundation Says

One-third of income from personal dividends goes toward state and federal taxes in California, the highest rate in the U.S. and the sixth-highest in the industrialized world, according to the Tax Foundation.

The combined state and federal top marginal tax rate on personal dividend income in California is 33 percent, the Washington-based foundation said yesterday in a report. California is followed in order by Hawaii at 31.6 percent, New York at 31.5 percent and Oregon at 31 percent, according to the nonpartisan foundation, compared with a national average of 28.6 percent.

California, like most states, taxes dividends the same as other income. Governor Jerry Brown in 2012 championed a ballot measure to increase taxes on earnings of more than $250,000 for seven years and to boost sales taxes for four years. California taxes incomes of more than $1 million at 13.3 percent, the highest rate in the U.S.

Seven states -- Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming -- levy no income tax and therefore don’t tax dividends, according to the foundation. The top rate in those states is 25 percent.

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