How dividends are taxed in Canada and the US
Gross-up and credits, eligible vs non-eligible, US withholding by account, qualified dividends and the 3.8% NIIT. Every rate is dated and sourced; rules checked October 31, 2026.
For Canadian residents
Federal and provincial dividend tax credits, account choice for US dividends and benefits interactions.
How the Canadian dividend tax credit works
How the Canadian dividend tax credit works: the 38% and 15% gross-ups, federal credit rates, provincial credits, and a worked $1,000 Ontario example.
Canadian dividend taxEligible vs non-eligible dividends: what’s the difference?
Eligible vs non-eligible dividends: how the CRA defines each, how to spot them on a T5 slip, and how the tax differs at two Ontario income levels in 2026.
Cross-border dividendsUS dividends in a TFSA: why 15% is withheld
US dividends paid into a TFSA generally lose 15% to US withholding tax that can’t be recovered. Learn why, what it costs, and how RRSPs differ.
Cross-border dividendsUS dividends in an RRSP or RRIF: no US withholding
US dividends paid to an RRSP or RRIF are generally exempt from US withholding under Article XXI(2) of the Canada–US treaty. Here’s how it works and its limits.
Cross-border dividendsThe foreign tax credit on US dividends, for Canadians
In a non-registered account, US dividends are reported in full in Canadian dollars, taxed like interest, and the US tax withheld is claimed on Form T2209.
Canadian dividend taxHow dividends affect the OAS clawback
Grossed-up Canadian dividends count in net income for the OAS recovery tax. See the 2025 and 2026 thresholds and a worked dividend vs gain vs interest example.
Dividend reinvestmentDRIPs and adjusted cost base: how reinvested dividends are taxed
Reinvested DRIP dividends are taxable in the year paid and raise your adjusted cost base. See a worked average-cost table and the US rules too.
Cross-border dividendsThe Canada–US tax treaty and dividends
The Canada–US tax treaty generally cuts dividend withholding to 15%, or 5% for 10% corporate owners, and exempts retirement plans. See how it works both ways.
For US taxpayers
Qualified vs ordinary dividends, the 2026 bands, holding periods and NIIT.
US qualified dividends: 2026 tax rates and brackets
Qualified dividends are taxed at 0%, 15% or 20% in the US, depending on taxable income. See the 2026 breakpoints for every filing status and how stacking works.
US dividend taxThe qualified dividend holding period, with a calendar example
To be a qualified dividend, common stock must be held more than 60 days in the 121-day window around the ex-dividend date. See how to count the days.
US dividend taxThe 3.8% net investment income tax on dividends
The 3.8% net investment income tax applies to dividends when MAGI exceeds $200,000 single or $250,000 joint. See the lesser-of rule in a 2026 example.
Cross-border dividendsThe Canada–US tax treaty and dividends
The Canada–US tax treaty generally cuts dividend withholding to 15%, or 5% for 10% corporate owners, and exempts retirement plans. See how it works both ways.
Dividend reinvestmentDRIPs and adjusted cost base: how reinvested dividends are taxed
Reinvested DRIP dividends are taxable in the year paid and raise your adjusted cost base. See a worked average-cost table and the US rules too.
| Dividend type | Gross-up | Federal credit (% of grossed-up amount) |
|---|---|---|
| Eligible | 38% | 15.0198% |
| Non-eligible (other than eligible) | 15% | 9.0301% |
| Foreign (e.g. US) | None | None (foreign tax credit for withholding instead) |
Education, not advice. This site does not recommend, rate or rank any security and does not know your full situation. Check tax details with the CRA or IRS, or a qualified professional. Read the disclaimer.
Primary sources
- CRA — Line 12000 and 12010: Taxable amount of dividends
- CRA — Line 40425: Federal dividend tax credit
- CRA — 5000-D1 Federal Worksheet (2025): gross-up and dividend tax credit rates
- CRA — 2025 provincial and territorial worksheets (5001-D to 5014-D): dividend tax credit rates
- Canada–United States Tax Convention, consolidated text (Department of Finance Canada)
- IRS — Publication 550, Investment Income and Expenses
- IRS — Revenue Procedure 2025-32 (2026 inflation adjustments, section 4.03)
- IRS — Net investment income tax
Rules checked October 31, 2026. Tax rules and rates change; confirm current details on the official pages above.