Tax-aware investing
REIT income after tax, with the Section 199A deduction
A REIT dividend tax calculator: clients enter the distribution yield, their ordinary rate and the qualified REIT dividend deduction to see the effective tax rate and after-tax yield.
Included on every plan, even the free Practitioner plan. No card needed.
How are REIT dividends taxed?
Most REIT dividends are ordinary income, but qualified REIT dividends are eligible for the Section 199A deduction of 20%2026 · IRS, so only the remaining part is taxed. In a 24% bracket, the effective rate is 19.2%; a 5% yield becomes about 4.04% after tax. Real distributions also include capital gains and return of capital.
When 1099-DIVs show REIT dividends
Income-seeking clients hold REITs for yield and then see box 5 on their 1099-DIV. They want to understand the deduction and compare REIT income with bonds or dividend stocks on an after-tax basis.
What the client types into a search box
“how are REIT dividends taxed”
How a client works through it
Enter the REIT yield
The distribution yield.
Enter the ordinary rate
The client's marginal rate.
Confirm the deduction
The Section 199A percentage, prefilled.
See after-tax yield
Effective rate, after-tax yield and taxable-equivalent yield.
What lands in your inbox
When a client asks your firm to review the result, the request arrives as a contact record with their inputs and results attached, by email and, on paid plans, by webhook to your CRM.
Received
Yield and ordinary rate show income orientation and bracket. High-bracket clients holding REITs in taxable accounts may benefit from location review; those in IRAs may be missing the deduction's benefit.
Effective rate and equivalent yield
Effective Tax Rate is the ordinary rate applied to the part left after the deduction. After-Tax Yield is the yield after that tax. Taxable-Equivalent Yield is the fully taxable yield that would leave the same after-tax income.
The calculation treats the whole distribution as qualified REIT dividends; actual distributions are mixed.
Results shown: After-Tax Yield · Effective Tax Rate · Taxable-Equivalent Yield.
A 5% REIT yield in the 24% bracket
With the deduction, only 80% of the distribution is taxed: 24% × 0.8 = 19.2% effective. A 5% yield leaves 5% × (1 − 0.192) = 4.04% after tax.
Why REIT taxation is a firm conversation
REIT income straddles tax and investment planning: account location matters because the 199A benefit is lost inside IRAs, and REIT distributions vary in character. CPA firms explain the 1099; advisers manage placement.
The calculator gives a quick, accurate starting point for both.
Follow-ups this request opens
- Review where REITs are held across accounts
- Explain 1099-DIV box 5 and distribution character
- Compare after-tax yields across income investments
- Plan for return-of-capital basis adjustments
What this calculator leaves out
- Treats the entire distribution as qualified REIT dividends.
- Capital gain and return-of-capital portions not separated.
- State taxes not included.
- The deduction's other limits are not checked.
Platform disclaimer shown under the calculator: Estimates only. Treats the entire distribution as Section 199A ordinary income eligible for the 20% deduction; real REIT distributions mix ordinary income, capital gains and return of capital.
Compliance note for firms
REIT recommendations, especially non-traded REITs, carry significant suitability obligations. Keep the calculator focused on tax mechanics, and avoid linking it to particular offerings.
Not legal advice. See our disclaimer and the guide to compliance for client calculators.
2026 figures this page relies on
| Figure | Value | Tax year | Source |
|---|---|---|---|
| Section 199A deduction on qualified REIT dividends | 20% | 2026 | IRS (made permanent by the 2025 tax law) |
The same values drive the calculator. Full list on the 2026 figures page.
Terms your client sees in the calculator
These definitions appear in the calculator's collapsible Definitions block, so clients don't have to call to ask what a label means.
- Taxable-equivalent yield
- The yield a fully taxed investment would need to leave you with the same after-tax income as the REIT: after-tax yield divided by (1 − ordinary tax rate). It puts the REIT on equal terms with bonds, CDs or other income taxed at your full bracket. It does not account for differences in risk, price swings or how the payout is classified.
- Section 199A (QBI) deduction
- A tax deduction that lets eligible taxpayers deduct 20% of qualified REIT dividends, made permanent by the 2025 tax law (P.L. 119-21). Only the remaining 80% of the distribution is taxed at your ordinary rate, which is why the effective tax rate in this calculator is lower than your bracket. Qualified dividends and capital gain distributions are not eligible.
- REIT distribution yield
- The annual cash a real estate investment trust pays out, divided by the share price. A $100 share paying $5 a year yields 5%. This calculator treats the whole distribution as ordinary REIT dividends; in practice part may be capital gains or return of capital, which are taxed differently and would change the result.
- Effective tax rate
- The share of the distribution actually paid in tax once the deduction is applied: ordinary rate × (1 − QBI deduction). In a 24% bracket with a 20% deduction, the effective rate is 19.2%. It is lower than your bracket because only part of the dividend is taxable, and it is the rate used to find the after-tax yield.
- After-tax yield
- The distribution yield left after tax: yield × (1 − effective tax rate). With a 5% yield and a 19.2% effective rate, the after-tax yield is about 4.04%. It is the figure to compare with what you would keep from other income investments after their own taxes, and the starting point for the taxable-equivalent yield.
- Marginal tax rate
- The rate applied to your next dollar of ordinary income, often called your tax bracket. It is not your average rate across all income. The calculator applies it to the part of the distribution left after the QBI deduction, and uses it again to convert the after-tax yield into a taxable-equivalent yield. Include state tax if you want it reflected.
In our glossary: Section 199A deduction · Tax-equivalent yield
REIT Tax-Equivalent Distribution calculator: questions from firms and clients
What is the Section 199A REIT deduction?
A deduction of 20%2026 · IRS of qualified REIT dividends for eligible taxpayers.
Does it apply in an IRA?
No benefit there; IRA withdrawals are taxed as ordinary income regardless.
Are all REIT dividends qualified?
No. Some are capital gain distributions or return of capital.
Where do I see this on my 1099?
Box 5 of Form 1099-DIV shows Section 199A dividends.
Is the deduction permanent?
It was made permanent by the 2025 tax law.
Does state tax apply?
Usually; the calculator is federal only.
How does this compare with munis?
Use the tax-equivalent yield calculator for munis.
Which plan includes it?
Every plan, including the free Practitioner plan, which runs up to 5 calculators at once alongside the other investment tools. Firm (up to 50) and Network (no cap) add webhooks and white-label. See pricing.
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