Dividends

Dividends were exempt from personal income tax until 1936. (See previous post for the reason why.) From 1936 through 1939 they were fully taxable. Then from 1940 through 1953 they were exempt again. From 1954 through 1984 they were mostly taxable, with small exempt amounts--$50 till 1964, going eventually up to $1500 for a married couple if the dividends were from utilities. They were fully taxable from 1985 through 2002. Since then they have been taxed at a top rate of 15%, but for people in the two lowest tax brackets, dividends are not taxed at all. They are scheduled to become fully taxable in 2013 unless Congress decides otherwise before then.