Portfolio income is any money earned from investments through capital gains, dividend payments, interest payments or royalties. It is important to remember that portfolio income does not count as passive income during tax season. If your stock pays a dividend, those dividends generally are taxed at a rate of up to 15% (20% for high earners) at the end of each year. In addition, if you sell a stock, you pay 15% (20% for high earners) of any profits you made over the time you held the stock. Those profits are known as capital gains, One of the best tax breaks in investing is that no matter how big a paper profit you have on a stock you own, you don't have to pay taxes until you actually sell your shares.