EON Investment · Tools
US Dividend Tax Calculator for Non-US Investors
Compare dividend payouts, capital gains taxes and long-term after-tax returns.
Shared assumptions
Dividend payout ratio is the percentage of company earnings paid as dividends. Dividend yield = payout ratio ÷ P/E. For example, 30% payout at P/E 15 gives a 2% dividend yield; with a 10% assumed total return, price growth is 8%. Net dividends are fully reinvested once a year.
Total return is an assumption, not a forecast. Retained company earnings do not automatically translate into price growth. Use P/E and payout based on the same earnings period.
Tax rates are editable assumptions, not current rates for any country.
Scenario A
Applied once to the profit above your initial investment plus reinvested net dividends, at the end of the investment horizon.
Scenario B
Applied once to the profit above your initial investment plus reinvested net dividends, at the end of the investment horizon.
Dividend yield exceeds total return: this implies a falling share price. The calculator supports this scenario.
Capital after a hypothetical sale at each year-end
Each point assumes one sale at that year-end. Capital gains tax is not deducted annually during the actual holding period.
Investment and tax breakdown
Total invested = initial investment + the net dividends used to buy additional shares. It is the purchase cost used to calculate taxable profit, not extra money contributed from your pocket. Reinvested dividends are cumulative purchase amounts, not their current market value.
Year-by-year money flows
Read each row from left to right: opening portfolio value + price gain + gross dividend − dividend tax = year-end portfolio value. The net dividend is reinvested; it already includes the dividend tax deduction. Price gain is the increase in the value of your holdings, not the price of one share. All amounts are in USD.
Year-end value = opening value + price gain + net dividend reinvested.
How the calculation works
Dividend payout ratio is the percentage of company earnings paid as dividends. Dividend yield = payout ratio ÷ P/E. For example, 30% payout at P/E 15 gives a 2% dividend yield; with a 10% assumed total return, price growth is 8%. Net dividends are fully reinvested once a year.
Dividend yield = Dividend payout ratio ÷ P/E
Price growth = Assumed total return − Dividend yield
Annual return after dividend tax = Assumed total return − Dividend yield × Dividend tax rate
The model holds P/E, payout ratio and assumed total return constant throughout the investment horizon. Changing payout reallocates the assumed return between dividends and price growth. It does not predict how retained earnings affect company growth or valuation. Use earnings and dividends from the same period when selecting P/E and payout. If dividend yield exceeds total return, the implied price growth is negative.
Each year’s dividend is calculated on the opening portfolio value. Tax is deducted when the dividend is paid; the entire net dividend is reinvested at year-end after that year’s price change. Newly bought shares participate from the following year. Fractional shares are allowed. There are no extra contributions or interim sales.
End-of-year value = Opening value × (1 + Price growth) + Net dividend
Total invested (initial investment + reinvested net dividends) = Initial investment + Cumulative reinvested net dividends
Capital gains tax on sale = max(0, Sale value − Total invested (initial investment + reinvested net dividends)) × Capital gains tax rate
Final capital = Sale value − Capital gains tax on final sale
Capital gains tax is charged only once, on sale at the end of the chosen investment horizon. Reinvested net dividends increase total invested, so that purchase cost is not taxed again as a capital gain. The chart shows separate hypothetical sales at each year-end, not repeated annual sales. Annualized after-tax return (CAGR) is calculated from final after-sale capital relative to the initial investment. Tax impact includes taxes paid and the investment growth lost on those taxes; it is not just the cash tax bill.
The outcome depends on both dividend tax and final-sale capital gains tax. A lower payout ratio reduces annual dividend taxes, but can increase the profit taxed on final sale.
Your tax assumptions
Dividend tax and capital gains tax are separate editable inputs in each scenario. The default 20% and 30% dividend taxes are comparison assumptions, not current tax rates for a country. Both scenarios start with a 30% payout ratio and a shared P/E of 15, implying a 2% dividend yield. Scenario A starts with a 20% capital gains tax assumption; Scenario B starts with 0%. Enter the effective rates applicable to your situation; the calculator does not identify your tax jurisdiction or update tax law.
Capital gains tax is applied once to positive gains on final sale, above your initial investment plus reinvested net dividends. The model uses one effective rate for all gains and does not classify reinvestment lots by holding period. Tax credits, separate additional taxes, tax-advantaged accounts and loss deductions are not calculated. This is an educational illustration, not a determination of tax liability.
Further reading: dividends and total invested:
IRS Topic 409 ·
IRS Publication 550 ·
IRS: Reinvested dividends & total invested