Dividend Exclusion

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DEFINITION of 'Dividend Exclusion'

A rule that allows corporations to subtract dividends received from income for tax purposes. Dividend exclusion is permitted for domestic corporations in the United States and allows for the exclusion of a percentage of dividend income received from other domestic corporations under income tax provisions.

INVESTOPEDIA EXPLAINS 'Dividend Exclusion'

Prior to the Tax Reform Act of 1986, individuals were also permitted to exclude a certain amount of dividends received from their taxable income. However, effective the following tax year (1987), this allowance was no longer permitted and individuals have since been taxed accordingly for dividend income received.

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  1. How can the price of a stock change on the ex-dividend date?

    An investor looking for a dividend-paying stock has two important dates to consider when investing in a company. The first ... Read Full Answer >>
  2. How is the ex-dividend date for a dividend on a stock determined?

    The ex-dividend date is actually determined by the appropriate stock exchange, not by the company paying the dividend. The ... Read Full Answer >>
  3. What are the drawbacks of a small investor buying blue-chip stocks?

    Blue-chip stocks are generally safer for investors. However, their drawbacks for small investors include moderate growth ... Read Full Answer >>
  4. What is the average annual dividend yield of companies in the automotive sector?

    As of May 2015, using trailing 12-month data, the annual dividend yields of industries in the automotive sector are 1.01% ... Read Full Answer >>
  5. What is the difference between Book Value Of Equity Per Share (BVPS) and book value ...

    There is no difference between book value of equity per share (BVPS) and book value over equity. The equation for a company's ... Read Full Answer >>
  6. How can I find out the ex-dividend date for a stock's dividend?

    Existing shareholders of a company's stock receive notification, typically by mail, when the company declares a dividend ... Read Full Answer >>
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