Short answer:
Yes. The $0.40 per‑share cash dividend that Nike’s Board has just declared will be taxed in the year it is received, and the amount of that tax can materially reduce the “net” return that an investor actually keeps. The exact impact depends on the investor’s tax status (U.S. vs. foreign, type of account, income‑tax bracket, and whether the dividend qualifies for the lower “qualified‑dividend” rate).
Below is a step‑by‑step breakdown of the most common tax considerations that can affect the net proceeds from this dividend.
1. When the dividend is taxed
| Event | Tax consequence |
|---|---|
| Declaration (Aug 7 2025) – No tax. | |
| Record date (Sept 2 2025) – Determines who receives the dividend; tax is still not due. | |
| Payment date (Oct 1 2025) – The dividend is taxable in the 2025 calendar year for the recipient, even if the cash is reinvested or held in a brokerage account. |
Bottom line: The $0.40 per share will be included in the investor’s 2025 taxable income, regardless of when the cash is actually used.
2. Types of dividend tax treatment (U.S. investors)
| Type | Definition | Typical tax rate (2025) | How it applies to Nike’s dividend |
|---|---|---|---|
| Qualified dividend | Paid by a U.S. corporation, the stock has been held for the required holding period (generally > 60 days during the 121‑day period that surrounds the ex‑dividend date). | 0 % (if in the “0‑bracket”), 15 % (most taxpayers), or 20 % (high‑income bracket). | Nike’s $0.40 is potentially qualified if you owned the shares on the record date and did not sell them within the 60‑day holding‑period window. |
| Non‑qualified (ordinary) dividend | Does not meet the qualified‑dividend requirements (e.g., you bought the shares within the 60‑day window, the stock is held in a foreign corporation, or the dividend is from a REIT, etc.). | Taxed at your marginal ordinary‑income rate (10 %–37 % in 2025). | If you bought Nike shares after the ex‑dividend date or held them in a non‑tax‑advantaged account that breaks the holding‑period rule, the $0.40 will be non‑qualified and taxed at your ordinary rate. |
Practical implication:
- For a typical high‑income investor (20 % qualified‑dividend rate), the net after‑tax dividend would be $0.40 × (1 – 0.20) = $0.32 per share.
- For a mid‑bracket investor (15 % qualified‑dividend rate), net = $0.34 per share.
- For a low‑bracket investor (0 % qualified‑dividend rate), net = $0.40 per share (no federal tax).
- If the dividend is non‑qualified and the investor is in the 24 % marginal bracket, net = $0.40 × (1 – 0.24) = $0.30 per share.
Thus, the tax drag can range from 0 % to 20 % (or more for non‑qualified dividends) of the $0.40 payment.
3. State and local taxes
- Most states tax qualified dividends as ordinary income at the same rate as other wages.
- Some states (e.g., New Hampshire, Tennessee) do not tax dividend income at the state level.
- Local income taxes (e.g., New York City, Chicago) can add another 1 %–4 % on top of the federal rate.
Result: A resident of a high‑tax state could see an additional 3 %–5 % tax, further cutting the net dividend.
4. Foreign investors
| Situation | Typical withholding |
|---|---|
| Non‑U.S. resident (no treaty) | 30 % U.S. withholding on non‑qualified dividends; qualified dividends may still be subject to 30 % unless the foreign country’s treaty reduces it. |
| Resident of a treaty country (e.g., Canada, UK, Japan) | Treaty may lower the rate to 15 % (or even 0 % for certain countries) on qualified dividends. |
| Foreign‑accounted shares (e.g., ADRs) | Same withholding rules apply, but the dividend is usually paid in U.S. dollars and reported on Form 1042‑S. |
Bottom line: For many foreign shareholders, the dividend could be net of a 15 %–30 % withholding tax, dramatically reducing the $0.40 per‑share amount before any foreign‑home‑country tax credit is applied.
5. Tax‑advantaged accounts (IRA, 401(k), Roth IRA, HSAs)
| Account type | Tax impact on dividend |
|---|---|
| Traditional IRA / 401(k) | No current tax; dividend is tax‑deferred until withdrawal (ordinary income tax then). |
| Roth IRA / Roth 401(k) | No tax now and no tax on qualified withdrawals (assuming the account has been open ≥ 5 years). |
| HSA (investment side) | Same treatment as a Roth: tax‑free growth, tax‑free qualified withdrawals. |
Result: If the Nike shares are held inside a Roth IRA, the $0.40 dividend is completely tax‑free to the investor, preserving the full amount for reinvestment or cash use.
6. Dividend‑reinvestment plans (DRIPs)
- Even if you enroll in a DRIP and the $0.40 is automatically used to buy additional shares, the dividend still counts as taxable income in the year it is paid.
- The cost basis of the newly purchased shares is the after‑tax amount (i.e., the net cash actually received), which can affect future capital‑gain calculations.
7. Net‑return perspective (illustrative)
Assume an investor holds 1,000 Nike shares (typical for a retail investor).
| Scenario | Gross dividend | Federal tax (qualified) | State tax (10 %) | Net dividend |
|---|---|---|---|---|
| High‑income (20 % fed) | $0.40 × 1,000 = $400 | $80 | $40 | $280 |
| Mid‑bracket (15 % fed) | $400 | $60 | $40 | $300 |
| Low‑bracket (0 % fed) | $400 | $0 | $40 | $360 |
| Foreign (30 % withholding) | $400 | $120 (withheld) | $0 (no state) | $280 (after credit may reduce) |
The “net dividend” column shows the cash that actually stays in the investor’s pocket after the most common tax layers. In the high‑income case, the tax drag is *20 %** of the gross dividend, cutting the net return from $0.40 to $0.28 per share.*
8. Practical tips for investors
- Check the holding‑period rule – Keep the shares for at least 60 days around the ex‑dividend date to qualify for the lower qualified‑dividend rate.
- Use tax‑advantaged accounts – Holding Nike in a Roth IRA or a traditional IRA can defer or eliminate the tax on the $0.40 dividend.
- Plan for state tax – If you live in a high‑tax state, factor the additional 3 %–5 % into your net‑return calculations.
- Foreign investors – Review the U.S.–home‑country tax treaty to see if the withholding can be reduced; file Form 1040NR/1040 and claim any foreign‑tax credits.
- DRIP vs. cash – Even if you auto‑reinvest, you still must report the dividend as income on your tax return.
Bottom line
The $0.40 quarterly dividend that Nike announced is taxable in 2025 for anyone who is the record holder on September 2 2025.
- U.S. investors will most likely treat it as a qualified dividend (subject to 0 %, 15 % or 20 % federal rates) if they meet the holding‑period requirement, but they must still add the amount to their taxable income and may owe state and local taxes.
- Foreign investors can face a 30 % withholding (or a reduced treaty rate) that can dramatically lower the net cash received.
- Tax‑advantaged accounts can shelter the dividend from current tax, preserving the full $0.40 per share.
Consequently, the tax impact can reduce the net return on the dividend by anywhere from 0 % to 20 % (or more for non‑qualified or foreign‑withheld dividends), so investors should factor this into any cash‑flow or total‑return analysis for Nike’s upcoming dividend.