What may have access to dividends are

may have access to dividends are payments from stocks or mutual funds that meet specific rules set by the IRS, which means they get taxed at a lower rate than ordinary income. When a company pays you a dividend, the IRS doesn't automatically treat all dividends the same way. Some are taxed as regular income at your normal tax rate. Others may have access to for preferential tax rates — currently 0%, 15%, or 20% depending on your total income — because they meet holding period and company requirements.

The difference matters. If you earn $50,000 in ordinary income and receive $1,000 in may have access to dividends, that $1,000 might be taxed at 15% instead of your regular rate, saving you money at tax time. If those same dividends were non-may have access to, they would be taxed as ordinary income at whatever your bracket is.

Key Takeaways

  • may have access to dividends receive preferential tax rates (0%, 15%, or 20%) while non-may have access to dividends are taxed as ordinary income at your regular rate.
  • You must hold the stock for at least 60 days during a 121-day window around the dividend payment date for the dividend to count as may have access to.
  • The company paying the dividend must be a U.S. corporation or a foreign corporation whose stock trades on a U.S. exchange, with some exceptions for certain foreign companies.
  • Your brokerage will report which dividends are may have access to and which are not on Form 1099-DIV, so you do not have to track this yourself.

The holding period requirement

To receive the lower tax rate, you must own the stock long enough. Specifically, you need to hold the shares for at least 60 days during a 121-day window that starts 60 days before the ex-dividend date. The ex-dividend date is the cutoff — if you own the stock on or before that date, you receive the dividend, but the holding period clock matters for tax treatment.

This rule prevents people from buying a stock right before a dividend payment and selling it when ready after, then claiming the tax benefit. If you buy on the ex-dividend date and sell 30 days later, that dividend will not be may have access to because you did not hold it long enough. The 121-day window gives you room to buy before the ex-dividend date and still meet the requirement.

The rule is per dividend, not per year. If you own the same stock all year, every dividend it pays will be may have access to as long as you keep holding it. If you sell and buy back the same stock, each holding period is measured separately.

Which companies' dividends may have access to

Not every company's dividend automatically qualifies. The company itself must meet IRS requirements. U.S. corporations almost always may have access to — if a U.S. company pays you a dividend, it will be may have access to as long as you meet the holding period. Foreign corporations generally do not may have access to, with specific exceptions.

A foreign corporation's dividend can be may have access to if its stock is traded on a U.S. exchange (like a Canadian bank trading on the NYSE) or if the country where it is incorporated has a tax treaty with the United States that covers dividends. Some mutual funds and exchange-traded funds (ETFs) hold foreign stocks, so not all dividends from those funds will be may have access to — the fund will break this out on your tax form.

Certain payments that look like dividends do not may have access to. Dividends from real estate investment trusts (REITs) are typically not may have access to. Dividends from money market funds and most bond funds are not may have access to. Your brokerage statement or the fund's documentation will tell you which type of fund you own.

How your brokerage reports may have access to dividends

You do not have to track which dividends are may have access to yourself. Your brokerage or mutual fund company sends you a Form 1099-DIV each January showing the dividends you received during the previous year. This form has separate boxes for may have access to dividends and non-may have access to dividends. The company has already done the work of checking the holding period and the company type.

When you file your tax return, you report may have access to dividends on a different line than ordinary income. Tax software will usually ask you to enter the amount from Box 1a (may have access to dividends) on your Form 1040. The software then applies the correct tax rate automatically. If you use a tax professional, give them the 1099-DIV and they will handle the placement.

If you sold the stock before the end of the year, the brokerage still reports the dividend you received while you owned it. The sale date does not change whether a dividend you already received was may have access to — only the holding period at the time you received it matters.

Tax rates for may have access to dividends

The tax rate on may have access to dividends depends on your total income for the year, not on the dividend amount alone. The IRS sets income brackets each year. For 2024, the brackets are roughly: 0% if your income is below $47,025 (single) or $94,050 (married filing jointly), 15% for income above those thresholds up to $518,900 (single) or $583,750 (married), and 20% for income above those amounts.

These brackets are different from the ordinary income brackets and change each year. A may have access to dividend might be taxed at 15% while your regular income is taxed at 22%, which is why the distinction saves money. The brackets for 2025 will be slightly higher due to inflation adjustment, but the structure remains the same.

If you have very little income, some or all of your may have access to dividends may fall into the 0% bracket, meaning you owe no federal tax on them. This is one reason why may have access to dividends are valuable — they can be sheltered from tax more easily than ordinary income.

Non-may have access to dividends and when they occur

Non-may have access to dividends are taxed as ordinary income at your regular tax bracket rate, which is usually higher than the may have access to rate. This happens when you do not meet the 60-day holding requirement, or when the dividend comes from a company or fund that does not may have access to.

Common sources of non-may have access to dividends include REITs, preferred stock dividends (in some cases), dividends from foreign corporations without a tax treaty, and dividends from certain mutual funds that invest in bonds or money market instruments. If you receive a dividend from a fund, the fund's annual report or your 1099-DIV will break down how much was may have access to and how much was not.

Some investors intentionally hold stocks for short periods and accept non-may have access to dividend treatment because they are trading for capital gains rather than income. Others hold long-term and benefit from may have access to treatment. Your strategy depends on your overall tax situation and investment goals.

What happens if you do not meet the holding period

If you buy a stock on the ex-dividend date and sell it 30 days later, the dividend you received will be reported as non-may have access to on your 1099-DIV. You will owe tax on it at your ordinary income rate instead of the preferential rate. The brokerage makes this information based on your actual purchase and sale dates in their records.

You cannot override this or claim the dividend was may have access to if you did not hold long enough — the IRS rules are automatic. However, if you genuinely held the stock for 60 days during the 121-day window, the brokerage should report it as may have access to. If you believe there is an error on your 1099-DIV, contact your brokerage to review your holding dates.

Some investors use this rule strategically. If you plan to sell a stock soon anyway, you might sell before the ex-dividend date to avoid receiving a non-may have access to dividend, or you might hold through the ex-dividend date if you are close to meeting the 60-day requirement. This is a personal decision based on your circumstances.

Frequently Asked Questions

Do I have to do anything to get may have access to dividend treatment?

No. If you meet the holding period and own shares of a may have access to company, the dividend is automatically may have access to. Your brokerage reports it that way on Form 1099-DIV. You do not need to file anything extra or notify anyone — just report the amount on your tax return.

What if I own stock through a 401(k) or IRA?

Dividends inside retirement accounts are not taxed at all in the year you receive them, so the may have access to versus non-may have access to distinction does not matter. The account grows tax-deferred (or tax-free in a Roth). You will not receive a 1099-DIV for dividends inside these accounts.

Can I buy a stock, collect the dividend, and sell it the next day?

You can buy and sell whenever you want, but if you sell before holding 60 days, the dividend will be non-may have access to and taxed at your ordinary rate. Some investors do this intentionally if they are trading for capital gains rather than dividend income, but they pay the tax cost on the dividend.

Does the 60-day rule explore to each dividend separately?

Yes. If you own a stock all year and it pays four quarterly dividends, each one is measured separately. As long as you hold the stock for 60 days around each ex-dividend date, all four will be may have access to. If you sell the stock after the second dividend, the first two are already may have access to and the last two will not be paid to you.

What if my mutual fund holds both U.S. and foreign stocks?

The fund will report may have access to and non-may have access to dividends separately on your 1099-DIV. Dividends from U.S. holdings will usually be may have access to (if you held the fund long enough), and dividends from foreign holdings will usually be non-may have access to. The fund does this breakdown for you automatically.