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Investor? Get Ready For Big Dividend Tax Hike

new york stock exchange
(Photo by Mario Tama/Getty Images)

If you’re an investor–even if you’re not Bill Gates–get ready for a big whack coming.

The top tax rate for the highest earners when it comes to investment dividends is set to go from 15 percent at the end of this year to 43.9 in 2013!   The dividend tax rate itself will be just over 39 percent, the rest comes from a 3.8 percent tax that goes towards Obamacare.  Obamacare? what does that have to do with investment dividends?  That’s for another story.

    Numerous companies, including Apple,  offer what are called dividend stocks or investments.   Dividends are a portion of company’s earnings that are returned to shareholders.  They are taxed as regular income, but the rates, as seen above, are much higher, and will be nearly tripled in 2013.   The dilemma for even moderate investors, is many companies this year are starting to offer dividend investments.  Numerous new offerings are coming out each month, and investors have a lot to choose from.  But  with the tax rate due to shoot up what will this do to not only these new offerings, but the dividend market in general?
   The folks at Smart Money have been watching this closely, as higher dividend taxes could take away some of the attractiveness of such stocks, and since the market is always looking ahead for trends,  the fears that these skyrocketing rates will actually go into effect could cause current stock values to drop even more.

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