AVA

What tax considerations should investors be aware of for the dividend payout on Sept 15, 2025?

Created August 06, 2025 at 08:50 PM

Overview of the dividend

Company: Avista Corp. (NYSE: AVA)
Dividend amount: $0.49 per share (quarterly)
Pay‑date: September 15, 2025
Record date: August 19, 2025 (shareholders of record at the close of business on this date receive the dividend)

Because the dividend is paid on September 15, 2025, the tax‑reporting year for U.S. taxpayers will be 2025 (the dividend will appear on the 2025 Form 1099‑DIV that you receive in early 2026). Below is a thorough rundown of the tax implications you should consider.

1. Federal Income‑Tax Treatment

Item	Details	Why it matters
Qualified vs. non‑qualified dividend	Most U.S. corporate dividends are qualified if you (a) own the shares for more than 60 days during the 121‑day period that begins 60 days before the ex‑dividend date (the ex‑date is usually the day after the record date).	Qualified dividends are taxed at the long‑term capital‑gain rates (0 %, 15 % or 20 % depending on your ordinary tax bracket). Non‑qualified dividends are taxed at ordinary income rates (10 %–37 % in 2025).
Holding‑period requirement	60‑day holding period for common stock (or 30 days for preferred stock). If you bought AVA shares within 60 days prior to the record date, the dividend will be non‑qualified for the portion of shares that do not meet the holding period.	May push you into a higher tax bracket on the dividend; also affects the net after‑tax yield.
Tax rates for qualified dividends (2025)	- 0 % – if your taxable income (including the dividend) is ≤ $44,625 (single) / ≤ $89,250 (married filing jointly). - 15 % – if income is between $44,626–$492,150 (single) / $89,251–$553,850 (MFJ). - 20 % – if income exceeds $492,150 (single) / $553,850 (MFJ).	Use the rates that apply to your total 2025 taxable income.
Net Investment Income Tax (NIIT)	3.8 % NIIT applies to the lesser of net investment income or the amount by which your modified adjusted gross income (MAGI) exceeds $200,000 (single) or $250,000 (MFJ). Dividends are included in net investment income.	If you are above these thresholds, you owe an extra 3.8 % on the dividend (in addition to the qualified dividend rate).
Medicare surtax/alternative minimum tax (AMT)	Generally, qualified dividends are exempt from the AMT (since they are taxed at capital‑gain rates). However, non‑qualified dividends are treated as ordinary income and can increase AMT liability.	Keep track of the proportion of qualified vs. non‑qualified dividends.
Form 1099‑DIV	AVA will issue a Form 1099‑DIV (Box 1a for total ordinary dividends, Box 1b for qualified dividends). You will receive this in early 2026 for the 2025 tax year.	You must report the amounts on your 2025 Form 1040 (Schedule B if >$1,500 of ordinary dividends; otherwise directly on line 3b).
Tax‑advantaged accounts	Traditional IRAs/401(k): dividend is tax‑deferred (no current tax). Roth IRA/401(k): dividend is tax‑free if qualified distribution.	If you hold AVA in a retirement account, the dividend has no current tax impact (except for potential early‑withdrawal penalties).
Wash‑sale rule	The wash‑sale rule does not apply to dividend income (only to the sale of securities). No impact on dividend taxation, but keep in mind if you sell AVA shares around the dividend date.	Not a direct tax issue for the dividend, but relevant for overall tax planning.

2. State (and Local) Tax Considerations

Washington State

No personal state income tax – Washington does not tax dividends.
Potential local taxes – Some municipalities or special districts may impose a small local tax on dividends, but in Washington this is rare.

If you are a non‑U.S. investor

Situation	Withholding	How to reclaim	Comments
U.S. citizen / resident alien	No withholding on qualified dividends (if you submit a correct W‑9).	N/A	Ensure your brokerage has a valid W‑9 on file.
Foreign investor (non‑resident)	30 % statutory withholding on U.S. source dividends (unless a treaty reduces it).	File Form 1040‑NR and claim treaty benefits (e.g., 15 % for many countries).	Use Form 1042‑S (provided by the broker) to report the withholding.
Canadian resident	Treaty reduces rate to 15 % (or 0 % on certain qualified dividend types).	File Canadian tax return and claim foreign tax credit.	U.S. tax withheld can be claimed as a foreign tax credit in Canada.

3. Timing and Cash‑Flow Issues

Timing	Impact
Record date (Aug 19) – you must be a shareholder of record at the close of business on this date.	If you buy AVA after this date, you won’t receive the dividend, but you will still have a deferred tax liability if you purchase before the ex‑dividend date and then sell before the record date (the “dividend capture” strategy).
Pay‑date (Sept 15) – the cash will be deposited into your brokerage account on this date.	You may incur transaction costs if you sell the shares after the dividend is paid.
Tax‑payment deadline – April 15 2026 (for 2025 tax year) to file your return.	Plan cash reserves for potential tax payment if you’re in a high bracket and the dividend pushes you into a higher tax bracket.
Quarterly tax payments – If you have a sizable dividend and expect to owe additional tax (e.g., NIIT), consider estimated‑tax payments by Oct 15 2025 to avoid under‑payment penalties.

4. How to Determine Whether Your Dividend Is Qualified

Check the ex‑dividend date (usually one business day before the record date). In this case, the ex‑date is August 18, 2025.
Confirm your holding period:
- If you purchased AVA more than 60 days before August 18 (i.e., before June 19, 2025), the dividend qualifies.
- If you bought AVA between June 20 and Aug 18, the dividend is non‑qualified for those shares.
Look for the “qualified dividend” amount on the 1099‑DIV (Box 1b). Your broker will calculate this based on the holding period data they have.
If you sell AVA before the dividend’s payment date (but after the record date), you will still receive the dividend. The tax treatment stays the same; the sale triggers a capital‑gain/loss on the sale of the shares that must be reported separately.

5. Practical Steps for Investors

Review your cost basis for AVA shares in your brokerage account. This matters for any subsequent sale.
Confirm your residency status with your broker (W‑9 vs. W‑8BEN). Ensure the correct tax‑withholding is applied.
Determine your tax bracket for 2025 (use projected income). This tells you whether your qualified dividend will be taxed at 0 %, 15 % or 20 %.
Check if the dividend pushes you into NIIT (if your MAGI is near the $200k / $250k thresholds). If so, plan for the additional 3.8 % tax.
Consider deferring or accelerating the dividend (by buying or selling AVA) if you want to manage tax brackets.
If you hold AVA in an IRA/401(k, the dividend is tax‑deferred or tax‑free (Roth), so the federal rates above do not apply.
If you are a non‑U.S. investor, verify whether a tax treaty applies and ensure the proper W‑8 form is on file to avoid the default 30 % withholding.
Keep the 1099‑DIV for your records. On the 2025 Form 1040:
- Line 3b = qualified dividend amount (from Box 1b).
- Line 3a = total ordinary dividends (Box 1a).
- Schedule B (if needed) for reporting totals >$1,500.
- Form 8960 to compute NIIT, if applicable.

6. Example Calculations

Assume you own 10,000 AVA shares on the record date:

Dividend received: 10,000 × $0.49 = $4,900.
If qualified (say you are a 12 % ordinary tax bracket but qualified dividend rate is 15 %):
- Federal tax: $4,900 × 15 % = $735.
- NIIT (if applicable): $4,900 × 3.8 % = $186.20.
- Total federal tax (if NIIT applies): $735 + $186.20 = $921.20.
If non‑qualified (ordinary income rate, say 24 %):
- Federal tax: $4,900 × 24 % = $1,176.
- NIIT (still applies on the total): $4,900 × 3.8 % = $186.20.
- Total: $1,362.20.

The difference between qualified and non‑qualified could be ~$441 in tax savings for this example, which underscores the importance of the 60‑day holding period.

7. Bottom‑Line Takeaways

What to Watch	Why it Matters	Action
Qualified vs. non‑qualified	Determines whether you pay the lower capital‑gain rate (0‑20 %) or ordinary income rate (10‑37 %).	Track your purchase dates relative to the ex‑date (Aug 18).
NIIT (3.8 %)	Additional tax for high‑income taxpayers.	Compute MAGI; if >$200k (single) or >$250k (MFJ), expect an extra 3.8 % on the dividend.
State taxes	Washington has no state income tax → no state tax on dividend.	No state‑tax filing needed for the dividend, but still file federal return.
Foreign investors	30 % withholding unless reduced by treaty.	File Form 1040‑NR or claim foreign‑tax credit.
Tax‑advantaged accounts	No current tax impact for traditional/ROTH accounts.	Consider holding dividend‑generating stocks inside IRAs/401(k)s for tax deferral or exemption.
Record & pay dates	Must own shares by Aug 19 to get the dividend.	Ensure your brokerage reflects ownership by that date; plan cash flow for Sept 15.
Reporting	1099‑DIV in early 2026.	Report on Form 1040 (or Schedule B) for the 2025 tax year.
Estimated tax	If the dividend pushes you into a higher bracket or triggers NIIT.	May need to increase estimated‑tax payments to avoid penalties.

Final Advice

Confirm your holding period and ensure the dividend qualifies for the lower rate.
Check your tax‑bracket and whether NIIT will apply.
Use your brokerage’s 1099‑DIV to separate qualified vs. ordinary dividends.
Plan cash for the September 15 payout and potential tax payment.
Consider the impact of any sale of AVA shares around the dividend date on both dividend eligibility and capital‑gain/loss treatment.
If you’re a non‑U.S. investor, verify treaty benefits and ensure correct withholding forms are on file.

Because tax rules can change and individual circumstances vary (e.g., other income sources, other deductions, state‑specific rules for residents of states with income tax, or complex foreign‑tax situations), consult a qualified tax professional to confirm how these rules apply to your specific situation.

What tax considerations should investors be aware of for the dividend payout on Sept 15, 2025?