NEW YORK (AP) -- Electronic trading platform MarketAxess's board has approved a special dividend of $1.30 per share, a move many companies are taking ahead of potential tax increases in 2013.
If the White House and Republican congressional leaders can't strike a deal on taxes and spending cuts, tax rates on dividend income will rise. That's prompted many companies to review their policies on payouts for shareholders, setting special one-time payments in December or moving up payments originally slated for 2013 to this year.
MarketAxess Holdings Inc. said Wednesday that the special dividend will be paid on Dec. 27 to shareholders of record on Dec. 14. Based on the company's shares outstanding, the total payout will be about $50 million.
Since 2003, investors have paid a maximum 15 percent on dividend income. But that historically low rate will expire in January unless there's a budget deal. 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.
Shares of MarketAxess climbed $1.03, or 3.4 percent, to $31.65 in midday trading. The stock has traded between $26.14 and $37.95 over the past year.