Dividends come in two different types for tax purposes — ordinary and qualified. Qualified dividends are taxed at a lower rate than ordinary dividends. Ordinary dividends are taxed at the higher regular state and federal income tax rates. Qualified dividends are taxed at 0%, 15%, or 20%, depending on your tax bracket. This difference between qualified and ordinary dividends can mean big savings at tax time. Qualified dividends must meet special requirements set by the IRS.