Nontaxable Dividends


DEFINITION of 'Nontaxable Dividends'

Dividends from a mutual fund or some other regulated investment company that are not taxed. Taxes are not paid out because the fund invests in municipal and other tax exempt investments.

BREAKING DOWN 'Nontaxable Dividends'

The mutual fund must invest over 50% of its capital into tax exempt investments for the dividends to be classified as nontaxable.

  1. Dividend

    A distribution of a portion of a company's earnings, decided ...
  2. Gross Dividends

    Similar in concept to gross income, gross dividends are the sum ...
  3. Ordinary Dividends

    A share of a company's profits passed on to the shareholders ...
  4. Capital Loss

    The loss incurred when a capital asset (investment or real estate) ...
  5. Municipal Bond

    A debt security issued by a state, municipality or county to ...
  6. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
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  1. Can mutual funds only hold stocks?

    There are some types of mutual funds, called stock funds or equity funds, which hold only stocks. However, there are a number ... Read Full Answer >>
  2. How do mutual funds compound interest?

    The magic of compound interest can be summed up as the concept of interest making interest. On the other hand, simple interest ... Read Full Answer >>
  3. Do mutual funds pay interest?

    Some mutual funds pay interest, though it depends on the types of assets held in the funds' portfolios. Specifically, bond ... Read Full Answer >>
  4. Do dividends affect working capital?

    Regardless of whether cash dividends are paid or accrued, a company's working capital is reduced. When cash dividends are ... Read Full Answer >>
  5. Why have mutual funds become so popular?

    Mutual funds have become an incredibly popular option for a wide variety of investors. This is primarily due to the automatic ... Read Full Answer >>
  6. Do mutual funds pay dividends?

    Depending on the specific assets in its portfolio, a mutual fund may generate income for shareholders in the form of capital ... Read Full Answer >>

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