How are ETF dividends taxed?

In a taxable account, ETF distributions can be taxed depending on their type. Equity ETF dividends may be qualified or ordinary based on tax rules and holding periods. Bond ETF distributions are typically interest income and often taxed as ordinary income.

Some ETFs can have special tax characteristics, such as municipal bond ETFs (often tax-exempt federally in the U.S.) or certain commodity products with different tax treatment.

If taxes matter, rely on the ETF's tax reporting (like a 1099-DIV in the U.S.) to see the actual breakdown. Two ETFs with similar yields can have very different after-tax outcomes.