The Impact?

How will the new rates on dividends and capital gains affect investors? Almost certainly, dividend-paying stocks will become more attractive to higher income investors. And investors may put more pressure on publicly traded corporations to pay tax-advantage dividends. Note also that dividends from closely held corporations are eligible for the reduced rates. So, business owners who are stockholder employees of a private C corporation will have to analyze the relative merits of taking dividends versus compensation.

From a capital gains perspective, the lower rates may discourage investors from short-term trading, since the differential between the tax rates on long and short term gains has grown.

See your professional advisor for more information on how you can take advantage of the new dividend and capital gains rates.