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These days, college is a pricey proposition. The average annual cost of attendance for a student living on campus at a public four-year college is $30,990 (in state) and $50,920 (out of state). The average cost of attending a private, nonprofit university is $65,470 per year.

If you’re worried about how you’ll cover the cost of sending your child to college, know that you’re not alone. Also know that you (and your student) have a number of funding options, including grants, scholarships, work-study, and student loans. Read on for tips on how to pay for college when your savings isn’t enough.

Steps to Take if You Can’t Afford College

Here’s a look at five things you can do to make sending your child to college more affordable.

Complete the FAFSA

The first thing every college-bound student is encouraged to do is fill out the Free Application for Federal Student Aid (FAFSA®). This automatically gives your student access to several types of financial aid, including grants, work-study, and federal student loans.

Even if you don’t think you’ll be eligible for federal student financial aid, it’s still a good idea to complete the FAFSA. Colleges often use the information from the form to determine eligibility for their own student financial aid, including merit aid.

Federal student financial aid can come in several forms:

•   Grants A grant is a form of financial aid that typically does not have to be repaid. Many grants, such as the Pell Grant, are awarded based on financial need. However, some are based on the student’s field of study, such as the Teacher Education Assistance for College and Higher Education (TEACH) Grant.

•   Work-Study Eligibility for Federal Work-Study is determined by information provided on the student’s FAFSA. Not all schools participate in the program, so check with a school’s financial aid office to see if it does. Work-study jobs can be on or off campus, and an emphasis is placed on the student’s course of study when possible.

•   Loans Eligibility for federal student loans is also determined by the FAFSA. There are three basic types of federal student loans: Direct Subsidized Loans, Direct Unsubsidized Loans, and Parent PLUS Loans. Direct Subsidized Loans are for eligible undergraduate students who have financial need. Direct Unsubsidized Loans are for eligible undergraduate, graduate, and professional students, but eligibility is not based on financial need. Parent PLUS Loans are for parents of dependent undergraduate students, and eligibility is not based on need.

💡 Quick Tip: You can fund your education with a competitive-rate, no-fees-required private student loan that covers up to 100% of school-certified costs.

Speak With the Financial Aid Office

Getting comfortable with the school’s financial aid office staff is a good thing. The office staff can be a font of knowledge for parents and students navigating the complex world of student financial aid. Not only can they help you understand what federal student financial aid you might be eligible for, they can also let you know what student aid is available through that particular school.

Financial aid office staff may also be able to point you toward other offices or departments on campus that may have job opportunities for students, or that offer emergency services for current students in the form of food or housing assistance.

Recommended: What Kind of Emergency Funding Is Available for College Students?

Let Your Student Take on a Part-time Job

Asking your child to work part-time while they are in school can help offset expenses. If Federal Work-Study isn’t a part of their financial aid package, they can still look for a job on or off campus to earn some money to put toward books and living expenses. Learning how to manage responsibilities is also an excellent out-of-the-classroom lesson.

Some ideas for jobs that may offer part-time, flexible hours for students include:

•   Babysitter or nanny

•   Coffee shop barista

•   Retail sales

•   Restaurant server or cook

•   Gym/fitness associate

Some part-time jobs might offer perks in addition to pay. Food service jobs might come with a discount on food during a shift, retail sales associates might get a discount on the store’s products, and working in a gym might come with a free gym membership. A visit to the campus career services office is often a good place to start looking for a part-time job.

Encourage a Gap Year

It’s not at all uncommon for a student to take a gap year between high school and college. Some students might not feel ready for college right out of high school. Others might want to have a specific experience, like travel or working in a specific field. Gap years can also allow students to earn money to pay for their future college expenses.

AmeriCorps is a federal program that pairs individuals with organizations that have a need. Volunteers can work in a variety of places and situations, from teaching to disaster relief to environmental stewardship, and more. Some AmeriCorps programs offer stipends, housing, or educational benefits like federal student loan deferment and forbearance, or a monetary award that can be used to pay for certain educational expenses.

Taking a gap year can give both you and your student time to build savings. It can also give your child an opportunity to gain work experience, or explore different professions. Of course, there can be drawbacks to taking a break from academics. It might be difficult to get back into the flow of studying after a year without that type of structure. Taking a year off without any structure or purpose might leave your child without a sense of accomplishment, so it’s generally a good idea to have a plan for how a gap year will be spent.

Consider a Less-Expensive College

Going to an in-state school vs. an out-of-state or private college is one obvious way to cut costs. Here are some other options to consider.

•   Community college Community colleges often charge much less tuition than their four-year counterparts. Choosing a community college close to home can also save on room and board. Your student might be able to start at a community college, then transfer to the college of their choice to complete their bachelor’s degree.

•   Tuition-free colleges There are some colleges that don’t charge tuition at all. Students at no-tuition schools may be required to maintain a certain grade point average, live in a certain region, or participate in a student work program. For example, service academies associated with branches of the U.S. military offer free tuition in exchange for a certain number of years of military enlistment.

•   Professional school Another option might be to bypass a traditional college degree for training in a specific career field instead. Training for non-degreed positions might last anywhere from a few months to a few years, depending on the job. For example, commercial airline pilots aren’t always required to have a bachelor’s degree, but they are required to have a pilot’s license and pass exams specific to the airline they work for. Jobs in the construction industry generally don’t require a bachelor’s degree, either, but might have apprenticeship programs or on-the-job training lasting several years.

Private Student Loans

If those options aren’t enough, you can also look into private student loans. These are available through banks, credit unions, and online lenders. Loan amounts vary but you can typically borrow up the full cost of attendance at your child’s school. Interest rates are set by individual lenders. Generally, students (or their parent cosigners) with excellent credit qualify for the lowest rates.

Just keep in mind that private loans don’t come with the same protections, like income-based repayment and forgiveness programs, that are offered by federal student loans.

💡 Quick Tip: Parents and sponsors with strong credit and income may find more-competitive rates on no-fees-required private parent student loans than federal parent PLUS loans. Federal PLUS loans also come with an origination fee.

The Takeaway

Financial challenges shouldn’t close the door on a college education. By taking proactive steps like completing the FAFSA to access grants and federal loans, communicating with the college’s financial aid office, exploring less-expensive educational paths, and considering options like a part-time job or a gap year for saving, you can significantly reduce the financial burden.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

What if I can’t pay for my kid’s college?

If you can’t pay for your kid’s college, prioritize filling out the Free Application for Federal Student Aid (FAFSA®) to determine eligibility for federal grants, loans, and work-study programs. Encourage your child to apply for numerous scholarships (merit- or need-based), as this “free money” doesn’t need to be repaid.

Other options include attending a community college first to save money on general education courses, working part-time (potentially for an employer with tuition assistance), or choosing an in-state public university which has lower tuition costs. The college’s financial aid office is a key resource for guidance on these options.

What is the highest income to qualify for FAFSA®?

There is no maximum income limit to qualify for FAFSA® (Free Application for Federal Student Aid). The U.S. Department of Education recommends all students apply, regardless of income, because eligibility for federal aid (including grants, work-study, and loans) is determined by a complex formula that considers factors beyond just income, such as family size, assets, and the school’s cost of attendance. Even high-income families may qualify for some types of aid, such as unsubsidized federal loans or institutional merit-based aid.

What do families do when they cannot afford to send their children to college?

Families unable to afford college rely on several strategies. The crucial first step is completing the FAFSA® to access federal grants and loans. Students can also apply for numerous scholarships from private organizations and local community groups, which generally doesn’t need to be repaid. Many attend a community college for two years to save money on core courses before transferring to a four-year institution. Students often work part-time while studying or take a gap year to save money. Attending an in-state public university is another cost-saving measure. The college’s financial aid office can be a key resource for exploring these options and appealing for more aid if needed.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Bank, N.A. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOISL-Q425-015

The average net worth of Americans is about $1.06 million, according to the Federal Reserve’s most recent Survey of Consumer Finances, released in October 2023. Meanwhile, the median net worth of American households is $192,900, according to the same Federal Reserve Survey.

Net worth measures the difference between assets (what you own) and liabilities (what you owe). Understanding the average American net worth by age can be useful for comparing your own progress in building wealth.

What the Average American Net Worth Includes

The Federal Reserve collects data on net worth in the U.S. using the Survey of Consumer Finances. This survey is conducted every three years; the most recent undertaking began in March 2022. Findings are typically published in the year following the year the survey was completed.

To understand wealth and economic well-being in the U.S., the Federal Reserve looks at several specific factors:

•  Income

•  Homeownership status and home value

•  Debt (including mortgage debt, credit card debt, vehicle loan debt, and student debt)

•  Assets (including investment accounts, deposit accounts held at banks, vehicles, and business equity)

The Federal Reserve uses net worth as a gauge to measure increases or decreases in overall wealth levels. The survey also takes into account demographic factors, such as age, race, ethnicity, and level of education.

If you’re interested in calculating your net worth, you’d use similar metrics. For example, you could use an online net worth calculator to enter in your total debts and assets to determine your net worth. When calculating net worth home equity may or may not be included, depending on your preferences. It’s possible to get a positive or negative number, depending on how your liabilities compare to your assets.

You can also use a budget planner app to track net worth as well as your spending, credit scores, and savings. This type of money management tool can deliver a snapshot of your finances to your mobile device.

Recommended: Does Net Worth Include Home Equity?

How the Average American Net Worth Varies By Age

Using the Survey of Consumer Finances as a guide, net worth typically rises over the average American’s lifetime before gradually beginning to decline. Average net worth is lowest for Americans under age 35; between the ages of 35 and 44, the average net worth makes a sizable leap.

There’s another significant bump that happens between the ages of 45 and 54, then the pace at which net worth increases begin to slow. Once Americans turn 75, their average net worth begins to decline.

This pattern makes sense, however, if you consider what the typical person’s working career and retirement might look like. Someone in their 20s likely isn’t making much money yet. They probably don’t own a home and a lot of what they do make might go to repaying student loans, car loans, or credit cards.

In their 30s and 40s, they may move into higher-paying jobs. Their debts may be mostly paid down or paid off so they can afford to buy a home. By the time they reach their mid-40s, they may be in their peak earning years and their home might have appreciated in value since they purchased it.

Net worth growth begins to gradually slow down once they’re in their 50s and 60s. That could be chalked up to moving some of their portfolio into safer investments or beginning to draw down their savings if they’re retired. Once they reach their 70s, they may be spending more of their assets on health care, including long-term care. Or they might have downsized into a home with a lower value.

How the Average American Net Worth Varies Over Time

The Survey of Consumer Finances provides a snapshot of how the average American net worth has changed over time. From 1998 to 2007, for instance, there’s a steady increase in net worth among American households. But between 2007 and 2013, the average American net worth declined. This makes sense, given that the 2008 financial crisis had an impact on millions of American households. Between 2013 and 2019, net worth rebounded sharply, and it continued to rise between 2019 and 2022.

This begs the question of how much net worth might change again if the economy were to experience another downturn. If home values were to drop or a bear market caused stock prices to dip, it stands to reason that Americans’ might see their net worth fall. There is a silver lining, as economies do recover over time and the impacts may be less for younger investors. But a drop in net worth might not be as welcome for someone who’s close to retirement.

How the Average American Net Worth Varies by State

The Survey of Consumer Finances does not track net worth data by state. But the Census Bureau does compile information on household wealth and debt at the state level.

In terms of what influences the average net worth by state, there are a number of factors that come into play. Some of the things that can influence net worth include:

•  Homeownership rates

•  Property values

•  Employment opportunities

•  Average incomes

•  Access to education and job training

According to the most recent data available from the Census Bureau, the median net worth across all states was $191,100 as of 2023. “Median” represents households in the middle of the pack, so to speak, for net worth calculations. Here’s what the median net worth looks like in each state.

*Note: Where a (B) is entered, that means the base was less than 200,000 households or a sample size of less than 50 so the Census Bureau did not record net worth information for those states.

Recommended: What Is The Difference Between Transunion and Equifax?

The Takeaway

As discussed, net worth captures the difference between an individual’s assets and their debts. In the U.S. the average net worth varies by location and age. Tracking net worth is something you may want to do monthly if you’re paying off debt. You can use a money tracker app to figure out how long it will take you to become debt-free based on what you can afford to pay. As your income increases you may be able to pay down debt in larger amounts to increase your net worth faster.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

What is the average net worth by age for California?

The median net worth for Californians is $273,800, according to the Census Bureau. This figure represents the middle ground between California residents of all ages from the highest net worth to the lowest.

What is the average net worth by age for New York?

The median net worth for New Yorkers of all ages is $132,800, according to the Census Bureau. This figure represents the middle ground between New York residents whose net worth is at the highest and lowest end of the spectrum.

What is the average net worth by age for Florida?

The median net worth for Florida residents of all ages is $255,100, according to the Census Bureau. This amount represents the middle ground between Floridians with the highest and lowest net worth.

About the author

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SORL-Q425-060

According to the IRS, most tax refunds are issued in under 21 days. However, some tax returns require more attention, which can lengthen the process and push back your tax refund date.

The deadline for filing 2025 taxes is Wednesday, April 15, 2026. If you request an extension, the deadline is Thursday, October 15, 2026. The deadline to file 2026 taxes is Thursday, April 15, 2027; the deadline to file an extension is Friday, October 15, 2027.

Keep reading to learn more about deadlines for 2025 and 2026 tax returns, and how to track the progress of your tax refund.

Tax Refund Process, Explained

The process begins when you submit your return to the IRS. The IRS then breaks down the process into three steps: return received, refund approved, and refund sent.

If you file electronically, you should receive an email confirming that your return was received within 24 hours. Paper return filers will have to wait longer.

After the IRS processes your return and confirms the information, your refund will be approved and a tax refund date will be issued. This takes about 3 weeks for electronic filers. Taxpayers who file a paper return by mail will wait at least four weeks.

The last step is when your tax refund is sent out. For filers who provide direct deposit information, your refund should appear in your account almost immediately. Taxpayers who do not include their bank information will have to wait for a paper check to arrive by mail.

Factors Impacting How Long a Tax Refund Takes

Several factors can affect the timing of your tax refund — including your financial organization skills and the accuracy of the information you provide. If you don’t receive your tax refund within 21 days, your return is likely being manually reviewed due to a mistake or complication.

The following factors can also affect your 2025 and 2026 tax refund dates.

How Early You File

Filing early is essential if you want to get your tax refund early. Ideally, you should be able to compile all your tax documents by the end of January. Forms such as W-2s, 1099-Rs, 1098-Es, and 1098s will provide the income information you need to file.

Filing early means submitting your tax return before the official deadline of Wednesday, April 15, 2026, for your 2025 tax return, or Thursday, April 15, 2027, for your 2026 tax return. Since many taxpayers file their returns on the official deadline, filing early allows you to beat the rush.

Similarly, if you requested an extension, filing “early” means before the October deadline. The deadline for 2025 returns is Thursday, October 15, 2026 (and Friday, October 15, 2027 for 2026 returns). However, taxpayers can file anytime before October. This way, you’ll avoid the bottleneck that inevitably occurs on the deadline itself.

If You Are Claiming Certain Credits

Claiming certain credits on your tax return can push back your 2024 tax refund date. These include:

•   Earned Income Tax Credit

•   Additional Child Tax Credit

•   Injured Spouse Allocation

•   Child Tax Credit, if you claim the wrong amount

E-filed or Sent By Mail

Whether you do your own taxes by hand, use software to assist you, or hire an accountant or tax preparer, it’s best to opt for electronic filing. E-filed taxes are accepted by the IRS within a day or two, while mailed paper returns can take weeks to arrive.

Existing Government Debt

Some taxpayers owe the federal or state government due to unpaid child support, taxes from years past, or student loan payments. Taxpayers facing these issues will receive a reduced refund or none at all, and any refund can take longer than the standard 21-day timeframe after e-filing.

How to Track the Progress of Your Refund

If you’re like most taxpayers, it won’t take long until you start wondering where their tax refund is. Getting hold of a live IRS representative by phone is possible but challenging during tax season.

Fortunately, the IRS’s Refund Status tool provides updates on your tax refund date just 24 hours after you submit your taxes electronically.

The tool shows taxpayers one of three statuses: return received, refund approved, or refund sent. After the refund is approved, the IRS will give you a tax refund date. If you mailed your return, you’ll have to wait about four weeks for the tool to provide information on your refund.

What to Do Once Your Refund Arrives

How should I spend my tax refund? It’s a perennial question for taxpayers. Top choices include paying down debt, saving for a vacation, and investing. The important thing is to plan ahead so you don’t spend it all on frivolous or impulsive purchases.

One popular option is to treat your refund like regular income. You can budget the majority of the money for “needs” by setting up an emergency fund or paying down your mortgage. The rest can be set aside for “wants,” such as a year’s worth of dining out.

An online budget planner can help you decide the appropriate percentages for needs and wants. Likewise, a debt pay off planner can show you how much sooner you’ll be debt-free after depositing some or all of your refund.

What Happens If You Can’t File Income Taxes by the Deadline

Each year, taxpayers unable to file their return on time (usually mid-April) can ask the IRS for an extension. The IRS’s Free File tool allows you to electronically submit a request to change your filing deadline to October.

Be aware that taxpayers who want an extension must make an educated guess about the taxes they owe and pay the IRS that amount.

How to File Form 4868 for a Tax Return Extension

Another way to file for an extension is to complete form 4868. You can submit the form electronically or by mail.

The Takeaway

While you cannot predict your exact tax refund date, filing electronically early in the tax season can help you get your refund faster. The IRS sends out most refunds within 21 days of receiving the return. The deadline for filing 2025 taxes is Wednesday, April 15, 2026. If you request an extension, the deadline for filing a 2025 tax return is Thursday, October 15, 2026.

The deadline for filing 2026 taxes is Thursday, April 15, 2027, or if you need an extension, Friday, October 15, 2027.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

When should I expect my 2026 tax refund?

Typically, you can expect to receive your refund within 21 days of filing your return. However, mistakes and special tax credits can slow down the process.

What days does the IRS deposit refunds in 2026?

The IRS deposits refunds Monday through Friday, except for holidays.

How long does it take the IRS to approve a refund in 2026?

Most refunds are issued in 21 days or less from when the IRS accepts your return. However, if there are issues with the return, it may take longer.

About the author

Ashley Kilroy

Ashley Kilroy is a seasoned personal finance writer with 15 years of experience simplifying complex concepts for individuals seeking financial security. Her expertise has shined through in well-known publications like Rolling Stone, Forbes, SmartAsset, and Money Talks News. Read full bio.

SORL-Q425-062

Dividends are payments that investors can receive from stocks, exchange-traded funds (ETFs), and mutual funds. These earnings count as income and may be taxable, depending on your income and filing status.

We’ll investigate dividend tax rates and the difference between ordinary and qualified dividends.

Defining Ordinary and Qualified Dividends

The IRS divides stock dividends into two categories: ordinary and qualified. The federal tax rate is different for each category. A qualified dividend is one that qualifies for a lower tax rate based on the concept of capital gains. An ordinary dividend, meanwhile, is one that doesn’t qualify for a lower rate.

When a company declares a dividend payment, your dividend is ordinary if you’ve held their stock for less than 61 days over a 121-day period. If, however, you make the stock purchase on or before the date that it’s declared, and then hold it for at least 61 days, it is considered qualified.

The timing also matters. Let’s say that you own stock in Company A, and they announce that a dividend will be paid on December 1. The day before, November 30, is called the ex-dividend date, or ex-date. If you bought your shares of stock 60 days or fewer before November 30, then your dividend is ordinary. But if you bought the stock more than 60 days before November 30, your dividend is qualified.

“Not all investment types generate the same type of taxation,” says Brian Walsh, CFP® and Head of Advice & Planning at SoFi. “When deploying a tax-efficient investment strategy, it’s crucial to know how an investment is going to be taxed.”

Qualified Dividend Documentation

When it’s tax time, you’ll receive a 1099-DIV. This is the form that financial institutions use to report dividends to the IRS and relevant taxpayers. Box 1a shows the total ordinary dividends you received during this tax period. Box 1b shows your qualified dividends. The form will also show any federal or state income tax that was withheld. You can use this information plus the federal dividend tax rate to determine what you owe.

Financial institutions must issue a 1099-DIV to shareholders who receive more than $10 in dividends and other distributions for the year.

Tax Information for Ordinary and Qualified Dividends

The ordinary dividend tax rate is the same as an individual’s income tax bracket for the year.

The qualified dividend tax rate for 2025 is calculated using capital gains tax rates. This may be 0% depending on your taxable income and filing status. Here are the latest figures from the IRS for the 2025 tax year:

•   Less than $48,350 for single or married filing separately.

•   Less than $64,750 for head of household.

•   Less than $96,701 for married filing jointly or qualifying widow(er).

The qualified dividend tax rate rises to 15% for the next tax brackets:

•   $48,351 through $533,400 for single filers.

•   $48,351 through $300,000 for married filing separately.

•   $64,751 through $566,700 for head of household.

•   $96,701 through $600,050 for married filing jointly or qualifying widow(er).

Once your household income exceeds the 15% bracket, you’ll pay a 20% tax rate on any qualified dividends. There may also be a 3.8% net investment income tax. Consult your accountant or financial advisor regarding your situation.

Recommended: What Are the Tax Benefits of Marriage?

Dividend Tax Rate 2024

The thresholds can change by year. For example, the dividend tax rate for 2024 was as follows

•   0% dividend tax rate:

◦   Single filers, up to $47,025

◦   Married filing jointly, up to $94,050

•   15% dividend tax rate:

◦   Single filers, $47,026 through $518,900

◦   Married filing jointly, $94,051 through $583,750

•   20% dividend tax rate:

◦   Single filers, $518,900+

◦   Married filing jointly, $583,750+

Dividend Tax Rate 2026

Looking ahead, we’ve got some insights into the 2026 tax year, which you’ll file in 2027. A married couple filing jointly won’t pay taxes on qualified dividends until their income is above $98,900. Above that amount, the tax rate will be 15%. The tax raise will go up to 20% when a couple earns more than $613,700.

Individual filers won’t pay 15% until their income is greater than $49,450. They’ll pay 20% when income exceeds $545,500.

Whether you’re paying a tax bill or getting a refund this year, it helps to have your financial house in order. With a money tracker app, you can set budgets, manage bill paying, and monitor your credit.

Recommended: Guide to Filing Your Taxes for the First Time

Why Are the Two Types of Dividends Taxed Differently?

Qualified dividends are more favorably taxed as an incentive to investors to hold onto stocks for a longer period of time. This is based on the concept of capital gains.

Additional Qualified Dividend Requirements

Besides the holding period described above, the dividend must have been paid by a corporation in the U.S. or a qualifying foreign one. Plus, the payment can’t be a dividend in name only. For example, payments given by tax-exempt agencies don’t qualify.

If a payment doesn’t satisfy all three requirements, then it can’t be a qualified dividend. It may be an ordinary dividend or another type of income.

The Takeaway

There are two broad types of dividends: ordinary and qualified. Qualified dividends are taxed at a lower rate than ordinary dividends. For a dividend to be qualified, an investor must hold the stock for at least 61 days during a particular time frame. A 1099-DIV will break out dividends into qualified and ordinary for the taxpayer’s information. There are three tax rates for qualified dividends. The lowest tax brackets pay nothing. The next brackets pay 15%, and the highest brackets pay 20%. Ordinary dividends are taxed as regular income.

To seamlessly track your finances, consider a spending app, which allows you to handle tasks like budgeting, paying bills, and more.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

What is the tax rate on dividends in 2025 and 2026?

The ordinary dividend tax rate is based on your tax bracket. With a qualified dividend tax rate, it depends on your filing status and your income. The lowest tax brackets pay nothing, the middle brackets pay 15%, and the highest brackets pay 20%.

How do I calculate my qualified dividends?

Investors receive form 1099-DIV from their financial institution, which provides the amount of ordinary and qualified dividend income received during the year. The IRS also provides a worksheet.

Why are my qualified dividends being taxed?

Dividends are a type of income, and investors who receive them typically pay taxes on them. It’s true that individuals who make less than $48,350 in 2025 pay no tax on qualified dividends. However, taxpayers in higher brackets must pay 15% or 20%.

Photo credit: iStock/AsiaVision

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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The amount you’ll end up paying in income taxes doesn’t have to remain a mystery until you complete your federal return.

With a fundamental understanding of how taxes work and some basic information about your household, you may be able to estimate what your tax liability or refund will be. And with that knowledge, you can better plan your finances for 2026 and 2027.

Read on for a look at what your 2026 taxes might look like, and how your income, filing status, and other factors can impact your bottom line.

What Is an Income Tax Calculator?

A federal tax calculator for 2026 can help you estimate the federal tax you may owe on the income you earn this year. It isn’t meant to replace the tax service or software you usually use to complete your return. But it could help you plan ahead and make informed choices as you prepare for a potential tax bill, or refund, when you file in 2027.

Historical Tax Rates, Compared

Most people think taxes are too high now, but they could be — and have been — much higher. In 2026, the top tax rate is 37% for individuals whose taxable income is over $640,600 ($768,700 for married couples filing jointly). But in 1944, the highest rate — for anyone who made over $200,000 — was 94%. It wasn’t until 1987 that the top rate dropped below 40%.

The current rates, dictated by the Tax Cuts and Jobs Act of 2017, were made permanent in 2025. The tax code, officially called the Internal Revenue Code, is interpreted and implemented by the U.S. Treasury Department and the Internal Revenue Service (IRS), but tax laws are written by Congress.

How Is the Tax Rate Decided?

There are seven federal income tax rates: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The more taxable income you have, the more you can expect to pay.

That’s because in the U.S., income tax rates are graduated, which means each of these progressively higher tax rates is assigned to a specific income range, rather than a household’s entire taxable income. Each time your taxable income reaches a new level, you’ll pay a higher rate, but only on the portion that’s in that range.

The ranges, or brackets, differ depending on a taxpayer’s filing status (single, married filing jointly, married filing separately, or head of household), as seen in the table below.

Income Tax Rates and Brackets for 2026 Tax Year

If you’re a single filer with $60,000 in taxable income in 2026, for example, you won’t pay your highest tax rate (22%) on that entire amount. You’ll pay 10% on up to $12,400 of your taxable income; 12% on the amount between $12,401 to $50,400 ($38,000); and 22% on the amount between $50,401 and your taxable income of $60,000 ($9,600).

Recommended: How Much Do You Have to Make to File Taxes?

How to Calculate Federal Taxes in 2026-2027

Determining your income tax each year is, of course, much more complicated than simply applying the various tax rates to the money you’ve earned.

Depending on the complexity of your return, it may take several calculations to come up with the final amount you owe — or what you’ve overpaid and can expect to be refunded. Whether you’re filing taxes for the first time or you’ve been paying income taxes for years, here’s a quick summary of the basic steps that may go into figuring out your federal taxes in 2026-27:

1. Calculate Your Gross Income

This is the total of all the money you made for the year. Think income from your job, including tips; business income; dividend and interest income; etc.

2. Determine Your Adjusted Gross Income (AGI)

Once you know your gross income, you can subtract certain adjustments, such as alimony payments, student loan interest, health insurance premiums (if you’re self-employed), some retirement contributions, and more to determine your AGI.

3. Subtract Applicable Deductions

A tax deduction is an amount you can subtract from your AGI to further reduce your income and lower your tax. You can either choose to list, or itemize, all the tax deductions that apply to you, or you can take the standard deduction. Most taxpayers go with the standard deduction, which for tax year 2026 is:

•   $16,100 for single filers and married individuals filing separately;

•   $24,150 for heads of households; and

•   $32,200 for married couples who file jointly.

However, you may want to run the numbers to see if it makes sense to go with itemized deductions. Some common deductions that must be itemized but could help further reduce your tax burden include mortgage interest, charitable contributions, and medical and dental expenses. But there are many more options to choose from.

4. Apply the Appropriate Tax Rates from the Table

Once you’ve calculated your taxable income, you can apply the 2026 tax rates. Remember, your entire taxable income won’t be taxed at the same rate; the tax rate goes up at various levels, or brackets.

5. Use Any Applicable Tax Credits

Unlike tax deductions, which reduce how much of your income is subject to taxes, tax credits directly reduce dollar-for-dollar the amount of tax you owe. When you’re preparing for tax season, your tax professional or tax software can help you find your applicable tax credits.

Some common credits include the Child Tax Credit, education credits, the Saver’s Credit for retirement savings contributions, and the premium tax credit that helps eligible individuals and families cover the premiums for their health insurance purchased through the federal marketplace.

6. Don’t Forget What You’ve Already Paid

Keep in mind that you’ve likely had money withheld from your paychecks throughout the year to put toward your federal income tax. Or, if you’re self-employed, you may have been making quarterly estimated tax payments. Once you know what you owe (after applying tax credits), you can subtract what you’ve already paid to get a final tax amount. If the number is positive, you can expect to owe the IRS. If it’s negative, and your calculations are correct, you can expect to get a refund.

How Much Does the Average American Pay in Taxes?

A Tax Foundation analysis of the most recent available data from the IRS (2022) found that the average tax rate for all U.S. taxpayers was 14.5%, and the average amount of income taxes paid was $13,890. The highest-earning Americans paid an effective average tax rate of 26%, while the bottom 50% paid 3.74% of their income to the IRS.

Of course, there are other types of taxes you may also have to pay, including sales tax, property tax, state and local taxes, estate tax, and more. And this means taxes can eat up a hefty portion of your hard-earned money.

Need help managing your finances? A money tracker can help you keep tabs on where your money is coming and going.

Example Tax Scenarios

Your federal income tax bill each year will depend on several factors, including your gross income, your filing status, the deductions and credits you can use to lower the amount you owe, and what you’ve already paid during the year. Here are two basic examples of how taxes might be calculated in 2026 for a single filer with a salary of $80,000 and a married couple with a gross household income of $120,000.

Joe, the Single Filer

Joe has a salary of $80,000 in 2026, so his gross income is $80,000.

He decides to go with the standard deduction in 2026, which is $16,100 for a single filer. This brings his taxable income to $63,900.

Joe then uses the applicable tax brackets.

•   The first layer of Joe’s taxable income, up to $12,400, is taxed at 10%, which comes to $1,240.

•   The next layer of Joe’s taxable income, from $12,401 to $50,400, is taxed at 12%, which comes to $4,560.

•   The next layer of Joe’s taxable income, from $50,401 to $63,900 is taxed at 22%, which comes to $2,970.

Joe would have a total federal income tax of $8,770.

Joe finds a couple of credits he can apply that take another $1,000 off of his tax bill. And he figures out that he will have paid $6,000 in federal income tax withholding for the year.

Joe estimates that he’ll owe $1,770 when he files his taxes 2027, and he’s building that into his budget so that he’s prepared when it’s time to pay. (Tip: An online budget planner can take the guesswork out of budgeting.)

Mary and Sam, Married Filing Jointly

Mary and Sam’s combined salaries in 2026 equal $120,000, so their gross income is $120,000.

They don’t have any kids yet, and they haven’t yet purchased a house. So, they decide to use the standard deduction in 2026, which is $32,200. This brings their taxable income to $87,800.

According to the applicable tax brackets:

•   The first layer of their taxable income, up to $24,800, is taxed at 10%, which comes to $2,480.

•   The next layer of their taxable income, from $24,801 to $87,800, is taxed at 12%, which comes to $7,560.

Mary and Sam would have a total federal income tax of $10,040.

Mary and Sam think they’re eligible for $2,000 in tax credits that they can take off their tax bill. And between them they will have paid $10,000 in federal withholding in 2026.

Mary and Sam estimate that they’ll get a refund of $1,960 when they file their 2026 tax return, and they plan to put that refund toward a down payment on a house in 2027.

Recommended: What Tax Bracket Am I In?

How Federal Taxes Impact You

The U.S. tax system is the federal government’s single largest source of revenue, and compliance with federal tax laws is mandatory. The money taxes bring in is meant to finance various public services, including veterans’ benefits, Social Security, health programs, national defense, education, transportation, and more.

That said, there’s a popular quote from an old Morgan Stanley ad that says: “You must pay taxes. But there’s no law that says you gotta leave a tip.”

For high earners, especially, taxes may be one of the most significant expenses they encounter each year and over their lifetime. But all taxpayers can benefit from understanding how taxes work and from the type of proactive planning that can help them legally hold on to more of their money. Staying on top of any changes can also help you avoid common tax filing mistakes, as many deductions, credits, and income thresholds are adjusted annually for inflation.

The Takeaway

If you have an idea of how much you’ll bring in from various income streams this year, and you’re aware of some of the basic deductions and credits that might reduce the amount you’ll owe, you can use the 2026 brackets to calculate a pretty good tax estimate.

Whether you expect to pay when you file your return or you think you’ll get a refund, calculating your tax bill in advance can help you budget appropriately. And you may even find some additional savings in 2026 and beyond.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

What will the tax brackets be for 2026?

The IRS has already published the 2026 tax rate table for single filers, married couples filing jointly, married couples filing separately, and heads of household. Each bracket has been adjusted slightly to reflect inflation.

How can you calculate estimated tax payments for 2026?

To calculate your estimated tax, you must figure your expected adjusted gross income, taxable income, deductions, and credits for the year.

Will tax returns be bigger in 2026?

Some taxpayers may qualify for a larger refund on their 2026 return (due in April 2027), thanks to inflation-related adjustments to the tax brackets and standard deduction amounts. Changes to the tax laws could also impact 2027 returns (due in April 2028), but it’s harder to predict what tax bills will look like at that time.

How much is the standard deduction for 2026?

The standard deduction amount depends on your filing status. In 2026, the standard deduction will be $16,100 for single filers and married individuals filing separately; $24,150 for heads of households; and $32,200 for married couples who file jointly.

What is the tax offset for 2026?

A taxpayer’s offset amount can vary depending on the type of debt that is owed.

What is the filing deadline for 2026 federal tax returns?

Federal income tax returns for 2026 are due on Thursday, April 15, 2027.

Photo credit: iStock/Anastasiia Makarevich

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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