2023 Section 163(j) Interest Dividends

A fund that earns interest income may, in its discretion, designate all or a portion of ordinary dividends as Section 163(j) interest dividends, which would allow the recipient to treat the designated portion of such dividends as interest income for purposes of determining the business interest expense deduction limitation under Section 163(j) of the Internal Revenue Code.

To be eligible to treat a Section 163(j) interest dividend as interest income, you must have held the fund share for more than 180 days during the 361-day period beginning on the date which is 180 days before the date on which the share becomes ex-dividend with respect to such dividend unless an exception applies (see Footnote 1 below).

To determine the amount qualifying as Section 163(j) interest dividends, multiply the "percent qualifying as Section 163(j) Interest Dividends" (shown in the table) by the amount of your total ordinary dividends. Please note that ordinary dividends of a fund include, if applicable, net short-term capital gains and foreign taxes paid.

T. Rowe Price Fund Percent Qualifying as 163(j) Interest Dividends1
Domestic Stock Funds
Balanced - All Quarters 50.16%
Capital Appreciation 63.72%
Multi-Strategy Total Return 70.48%
Spectrum Conservative Allocation - All Quarters 49.99%
Spectrum Moderate Allocation - All Quarters 40.06%
Spectrum Moderate Growth Allocation 29.15%
International/Global Stock Funds
Global Allocation 40.13%
International/Global Bond Funds
Dynamic Credit 100.00%
Dynamic Global Bond 100.00%
Emerging Markets Bond 99.61%
Emerging Markets Corporate Bond 99.22%
Emerging Markets Local Currency Bond 100.00%
Global High Income Bond 100.00%
Global Multi-Sector Bond  90.40%
International Bond 100.00%
International Bond (USD Hedged) 100.00%
Taxable Bond and Money Market Funds
Cash Reserves 87.60%
Corporate Income 98.34%
Credit Opportunities 95.53%
Floating Rate 100.00%
GNMA 95.80%
Government Money 99.53%
High Yield 96.33%
Inflation Protected Bond 97.61%
Limited Duration Inflation Focused Bond  100.00%
New Income 98.04%
QM U.S. Bond Index 95.22%
Short Duration Income 99.90%
Short-Term Bond 99.01%
Total Return 93.80%
U.S. High Yield 98.21%
U.S. Limited Duration TIPS Index 99.11%
U.S. Treasury Intermediate Index 97.61%
U.S. Treasury Long-term Index 98.42%
U.S. Treasury Money 99.47%
Ultra Short-Term Bond 97.43%

T. Rowe Price ETFs

T. Rowe Price ETF Percent Qualifying as 163(j) Interest Dividends1
Floating Rate ETF 100.00%
QM U.S. Bond ETF 96.17%
Total Return ETF 99.57%
U.S. High Yield ETF 96.28%
Ultra Short-Term Bond ETF 97.68%

Percentages are the same for all fund classes (Investor, Advisor, R, and I classes). For more information on Advisor, R, Institutional, and Portfolio funds, please visit our website for financial intermediaries.

If a fund is not listed, it did not designate any ordinary dividends as Section 163(j) interest dividends.

1The holding period requirement does not apply to money market funds or funds that declare interest dividends on a daily basis in an amount equal to at least 90 percent of the fund’s excess Section 163(j) interest income and distribute such dividends on a monthly basis. You should always consult your own tax advisor concerning any tax item for your tax reporting purposes. Tax laws and regulations are complex and subject to change. The description of Section 163(j) interest dividends herein is very general, is provided for informational purposes only, and is not a complete description of the governing laws and regulations. T. Rowe Price does not provide legal or tax advice and does not guarantee the accuracy or completeness of the information herein, T. Rowe Price disclaims any and all liability arising out of your use of, or any tax position you have taken in reliance on, any of the information herein.


Related Content