Are there any tax implications for shareholders receiving the increased dividend in the upcoming fiscal year?
Tax implications for shareholders who receive Badger Meter’s increased dividend
| What the news tells us | How it translates into tax treatment |
|---|---|
| Dividend increase: 18 % – from $0.34 to $0.40 per share (quarterly) → $1.60 per share annually | The cash dividend is ordinary taxable income for the shareholder in the year it is received. Because the dividend is paid in cash, the full amount is treated as dividend income – not a return of capital or a capital‑gain. |
| Record date: 22 August 2025 Payable (distribution) date: 5 September 2025 |
For U.S. taxpayers, the dividend is taxable in the 2025 calendar year (the date of actual receipt). It will be reported on the 2025 Form 1040, typically on Schedule B (Interest and Ordinary Dividends). |
| Company statement: No mention of a special tax‑status change | The dividend is a regular cash dividend; the tax rules that apply are the standard ones for publicly‑traded U.S. equities. Badger Meter has not indicated any “return‑of‑capital” or “non‑qualified” classification that would alter the default treatment. |
1. Federal income‑tax considerations
Qualified vs. non‑qualified dividend
If you have held the shares for the required period (generally > 60 days during the 121‑day window that includes the ex‑dividend date), the dividend will be a *qualified dividend** and taxed at the lower qualified‑dividend rates (0 %, 15 % or 20 % depending on your taxable‑income bracket).
If the holding period is not met, the dividend is *non‑qualified** (ordinary) and is taxed at your regular marginal tax rate.*Impact on Adjusted Gross Income (AGI)
The $1.60 per share will increase your AGI for 2025. For high‑income investors (AGI > $200,000 for single filers, $250,000 for married filing jointly) the Net Investment Income Tax (NIIT) of 3.8 % may apply to the dividend portion that exceeds the threshold.Potential backup withholding
If the broker or the payer does not have a valid taxpayer identification number (TIN) on file, the dividend may be subject to a 24 % backup withholding (or the rate set by the IRS) regardless of your actual tax liability. Ensure your account information is up‑to‑date to avoid this.Form 1099‑DIV
After the September 5 2025 payment, Badger Meter (or your brokerage) will issue a Form 1099‑DIV by the end of January 2026, showing the total dividend amount you received in 2025. Use this form to complete Schedule B on your 2025 tax return.
2. State and local tax considerations
- State income tax – Most states that levy an income tax treat dividend income the same way the federal government does (i.e., as ordinary income). Check your state’s specific rate; some states (e.g., New Hampshire, Tennessee) have no tax on dividend income, while others (e.g., California, New York) tax it at the ordinary marginal rate.
- Local taxes – If you live in a city or municipality that imposes an income tax, the dividend will be included in that calculation as well.
3. International (non‑U.S.) shareholders
- The news release does not specify any change in the dividend’s foreign‑tax‑withholding status. Generally, non‑U.S. investors are subject to 30 % withholding on U.S. source dividends unless a tax treaty reduces the rate. You would need to file a Form 1042‑S (or the foreign‑person equivalent) and claim a treaty benefit, if applicable.
4. Practical steps for shareholders
- Confirm your holding period – Verify you owned Badger Meter shares on the record date (22 Aug 2025) and that you have satisfied the qualified‑dividend holding‑period rules.
- Update your brokerage TIN – Ensure your taxpayer identification number is current to prevent backup withholding.
- Plan for the AGI increase – Anticipate the $1.60 per share boost when estimating your 2025 tax liability, especially if you are near the NIIT thresholds.
- Consult a tax professional – If you have a complex situation (e.g., high‑income, multiple state residencies, or foreign status), a CPA or tax adviser can help you determine whether the dividend will be qualified, how the NIIT may apply, and whether any treaty benefits are available.
Bottom line
- Yes, there are tax implications: the increased cash dividend will be taxable in the 2025 tax year for U.S. shareholders, potentially at the qualified‑dividend rate if the holding period is met, or at ordinary rates otherwise.
- The dividend will increase your AGI, may trigger the Net Investment Income Tax for high‑income taxpayers, and is subject to state/local taxes and possible backup withholding.
- Non‑U.S. investors should be aware of standard 30 % withholding (or reduced treaty rates) unless they have filed the appropriate forms.
Action: Review your share‑holding dates, confirm your tax‑status with your broker, and, if needed, seek professional advice to ensure the dividend is reported correctly and any applicable tax planning is addressed.