Which tax rate applies to dividend income at the higher rate?

The tax rate that applies to dividend income at the higher rate is 32.5%. This aligns with the progressive tax system in many jurisdictions, where dividend income is typically subject to different tax rates depending on the taxpayer's overall income level.

In this case, 32.5% is often used for individuals whose income falls within a specific range, indicating that it is necessary to correctly identify the applicable tax bracket. Dividend income, especially when classified as qualified dividends, can benefit from preferential rates, but those at the higher income levels still face the 32.5% tax rate.

Other rates like 25%, 35%, and 40% either pertain to different income thresholds or types of income, making them less relevant in the context of dividend taxation at the higher income bracket. For instance, 25% might apply to lower thresholds, while 35% and 40% are more typically associated with ordinary income tax rates that exceed the thresholds for dividends specifically. Therefore, recognizing the nuances in tax brackets and the specific application to dividend income is crucial for understanding the correct tax rate.