Business Glossary

applied to the amount of dividends received that are exempt from tax.
Individual: for the 2003 tax year, the tax rate applied to dividends was 15%.
Corporation:a company can exclude 80% of the dividends received from other domestic corporations. Assuming a maximum corporate tax rate of 34%, the maximum rate on dividends is 6.8% (20% ¥ 34%).

pre- tax reform act of 1986 provision allowing for subtraction from dividends qualifying as taxable income under Internal Revenue Service rules-$100 for individuals and $200 for married couples filing jointly. The 1986 Tax Act eliminated this exclusion effective for the 1987 tax year.

Domestic corporations may exclude from taxable income 70% of dividends received from other domestic corporations.

the concept that income earned by corporations is taxed at the corporate level, so corporate dividends should not be taxed again at the stockholder level.