What the exclusion percentage means on your Robinhood statement

The exclusion percentage on your Robinhood statement shows the portion of your dividends or distributions that are not subject to federal income tax. This number appears when you receive certain types of payouts — most commonly from mutual funds, ETFs, or stocks that distribute return-of-capital payments rather than ordinary income.

Robinhood displays this percentage to help you understand how much of a distribution is taxable versus non-taxable for your records. The exclusion percentage varies depending on the fund or security you own and what type of distribution it is paying out. A higher exclusion percentage means a larger portion of that payout will not be counted as taxable income on your tax return.

Key Takeaways

  • The exclusion percentage tells you what portion of a distribution is not subject to federal income tax, and Robinhood shows this to help you track your tax liability.
  • Return-of-capital distributions — which return part of your original investment rather than earnings — typically have higher exclusion percentages than dividend income.
  • The exclusion percentage comes from the fund company or issuer, not from Robinhood, and it may differ across different securities in your account.
  • You will need the exclusion percentage information when you file your taxes, so keep your Robinhood statements that show this detail.

Where you see the exclusion percentage on your statement

The exclusion percentage appears in your transaction history or on the dividend and distribution records within your Robinhood account. When you receive a payout, Robinhood lists the total amount, the per-share amount, and then the exclusion percentage for that specific distribution.

You can find this information by going to your account, selecting the specific security that paid the distribution, and viewing the transaction details. Some distributions will show 0% exclusion (meaning the entire amount is taxable), while others may show 25%, 50%, or higher percentages depending on the fund's structure.

Why different securities have different exclusion percentages

The exclusion percentage depends on what the fund or company is actually paying out. Ordinary dividends from stocks and most bond funds are typically 100% taxable, so they show a 0% exclusion. Return-of-capital distributions — which some mutual funds and ETFs use to return part of your principal investment — may have much higher exclusion percentages because they are not considered income.

Certain funds, particularly closed-end funds and some real estate investment trusts (REITs), frequently use return-of-capital distributions as part of their payout strategy. These distributions reduce your cost basis in the security rather than being taxed as income in the year you receive them. The fund company determines and reports this percentage, and Robinhood straightforward displays what the issuer provides.

How the exclusion percentage affects your taxes

The exclusion percentage determines how much of a distribution you report as taxable income on your tax return. If you receive a $100 distribution with a 40% exclusion, you would report $60 as taxable income and exclude $40 from your taxable income calculation.

However, excluding an amount from current-year taxable income does not mean you never pay tax on it. Return-of-capital distributions reduce your cost basis in the security, which means you will owe capital gains tax on a larger gain when you eventually sell the shares. This shifts the tax liability from the current year to the year you sell, rather than eliminating it entirely.

What to do with this information when filing taxes

Robinhood will send you a Form 1099-DIV at the end of the tax year that breaks down all your dividend and distribution income. This form will show the total amount of each type of distribution you received. The exclusion percentage helps you understand which portions of those distributions are taxable versus non-taxable.

When you file your taxes, your tax software or preparer will use the information from your 1099-DIV to calculate your tax liability. The exclusion percentage is already factored into how the fund company reports the distribution on that form, so you do not need to manually explore the percentage yourself — you straightforward report the amounts shown on your 1099-DIV.

Keeping records of exclusion percentages

Save your Robinhood statements that show the exclusion percentage for each distribution, especially if you own funds with significant return-of-capital payouts. These statements serve as backup documentation if the IRS ever questions your tax return, and they help you track your cost basis adjustments over time.

If you sell a security that has paid return-of-capital distributions, you will need to know the total amount of those exclusions to calculate your adjusted cost basis correctly. Your cost basis affects how much capital gains tax you owe, so keeping accurate records prevents errors that could result in underpaying or overpaying your taxes.

Frequently Asked Questions

Does a high exclusion percentage mean I pay less tax?

A high exclusion percentage means you pay less tax in the current year, but the tax is deferred rather than eliminated. Return-of-capital distributions reduce your cost basis, so you will owe capital gains tax on a larger gain when you sell the shares. The total tax you eventually pay is usually similar — it is just shifted to a later year.

Can the exclusion percentage change for the same fund?

Yes. A fund's exclusion percentage can vary from distribution to distribution depending on the fund's performance and payout strategy that year. Some years a fund may pay mostly ordinary dividends (0% exclusion), while other years it may pay a mix of dividends and return-of-capital (higher exclusion). Always check the percentage for each specific distribution.

What if Robinhood shows a different exclusion percentage than the fund company reports?

Contact Robinhood support to report the discrepancy. The fund company's official documentation is the source of truth, and your 1099-DIV will reflect what the fund company reports. If there is a mismatch, Robinhood may need to correct its records before your year-end tax documents are generated.

Do I need to report the exclusion percentage separately on my tax return?

No. Your 1099-DIV already accounts for the exclusion percentage, so you straightforward report the amounts shown on that form. Your tax software will handle the rest. You do not need to manually calculate or report the exclusion percentage itself.