Brace for a Historic Battle Over U.S. Tax Law

From the income tax to the estate tax, from the alternative minimum tax to levies on capital gains and dividends—plus much more—nearly every area of individual taxes is in limbo. Come January, for example, the top federal rate on dividends could be as low as 15% or, if nothing is done, as high as 40%.

Dividends: The current top rate on qualified dividends (generally, those held longer than 60 days) is 15%. It expires at the end of this year. Unless Congress acts, the top nominal rate on these dividends will revert to the top rate on ordinary income of 39.6%. A temporary extension of current law would leave the 15% top rate in place. Mr. Obama's budget calls for a top tax rate of 20% on dividends, rather than 39.6%. This issue will probably be decided along with income-tax rates. Owners of C-corporations who normally distribute dividends after the new year may want to accelerate them into 2010, and those who don't typically pay a dividend may want to consider it.

Source: Wall Street Journal

Related Articles:

• Who is Ben Grossbaum and Why Should We Listen to Him?
• 9 Stocks With a Sustainable Dividend
• Increasing Dividend Yield Part VI: Time
• Underfunded Pension Plans: The Next Shoe To Drop?
• 21 Suggestions for Success