In 2003, the tax rate on capital gains and dividends was lowered from ordinary income levels – with a maximum rate of nearly 36 percent – to flat rate of 15 percent. Originally scheduled to expire in 2008, in 2006, these lower rates were extended until December 31, 2010.
On, December 20, 2010, President Obama signed into law the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. The bill was approved by the House of Representatives on Thursday, December 16, by a vote of 277 to 148, and in the Senate on Wednesday, December 15, by a vote of 81 to 19.
In a major victory for utility companies, as well as all dividend- paying companies, the 15 percent maximum federal tax rate on dividends and capital gains paid to individual taxpayers was extended until December 31, 2012.