It is a qualified dividend that next year will mean you are taxed at your regular income tax rate, what ever that it. In 2011 my qualified dividends, because of the BUSH TAX CUTS, were only taxed at a max. of 15% which was quite a bit less than my income tax rate. You could have reduced it to 0% or 5% if you had a very low adjusted income tax rate. This all still applies for 2012 dividends because the BUSH TAX CUTS do not end until 12/31/2012. Others dividends you might have heard about that are tax fee now only apply to dividends on options type plays in some ETFs and other funds if it is truly a return of equity because it is something like a COVERED CALL PLAY. That dividend is tax free because it is considered a partial return of equity now but could costs you more later when you sell the fund because it reduces you BASIS which could increase you tax reported gains while you actual payout could be less when the fund is sold. I hope this answers your question.