YORK, Pa. (AP) -- The Bon-Ton Stores Inc. is paying its quarterly dividend early in order to take advantage of current low tax rates on dividend income.
The retailer said Tuesday that its dividend of 5 cents is payable Dec. 21 to shareholders of record as of Dec. 14. The payment would have typically occurred in the first quarter of fiscal 2013 but the company moved up its payment in anticipation of likely increases in taxes.
Bon-Ton is one of many companies to move up its quarterly payout or issue a special end-of-year payment to protect investors from potentially having to pay higher taxes on dividend income starting in January.
Since 2003 investors have paid a maximum 15 percent on dividend income. But that historically low rate will expire in January unless Congress and President Barack Obama reach a compromise on taxes and government spending. As it stands, dividends will be taxed as ordinary income in 2013, the same as wages, so rates will go up depending on which income bracket a taxpayer is in. For the highest earners, the dividend rate would jump to 43.4 percent.
Bon-Ton, which has headquarters in York, Penn., and Milwaukee, operates 273 department stores in the Northeast and upper Great Plains.
Shares of the retailer fell 31 cents to $11.28 in midmorning trading. Its shares remain at the upper end of its 52-week trading range of $2.68 to $14.99.