The federal dividend tax break will be phased out by 2019 and will instead be available to investors in all types of fixed income investments that invest in stocks and bonds.
The change comes amid rising concerns about corporate tax avoidance and tax evasion.
The Trump administration has proposed a $3.4 trillion tax cut, but some of that tax cut has not gone toward corporate tax cuts.
The White House has also proposed a tax cut for businesses that invest more than $500,000 in stock options, but this tax break would be phased in starting Jan. 1.
President Trump said in his Jan. 31 address to Congress that his administration is “working hard to make our country more attractive to investors” and is looking at the possibility of rolling out a tax credit for dividend investors.
The Federal Reserve announced last month that it is going to begin using the dividend-tax credit to reduce corporate taxes, and the U.S. Treasury is proposing to increase the credit to $100,000 a year.
The Fed’s announcement came a day after the Treasury released its 2017 dividend tax benefit.
The dividend tax deduction is available to most taxpayers with taxable income up to $200,000, but it is not available to individuals who make less than $50,000.
It is available only to those who invest in at least two stocks each and have at least $50 million in total taxable income.