ARCBEST CORP /DE/ Income Taxes Disclosure
NOTE E – INCOME TAXES
On July 4, 2025, the United States Congress passed budget reconciliation bill H.R. 1 referred to as the One Big Beautiful Bill Act (the “OBBB”). The OBBB contains several changes to corporate taxation, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act of 2017, including 100% expensing of qualified depreciable assets and modifications to capitalization of research and development expenses. The OBBB has multiple effective dates with certain provisions effective in 2025 and others implemented through 2027. As a result of the OBBB changes, the Company recognized a one-time accelerated current tax benefit of $26.6 million during 2025. This benefit primarily reflects $101.2 million of tax deductions for 100% expensing of fixed asset additions purchased between January 20 and June 30, 2025, and the immediate expensing of previously capitalized research and development costs. These items increased deferred tax liability and reduced the federal income tax liability and related tax payments for 2025, with no material impact on the 2025 effective tax rate.
The Company prospectively applied Accounting Standards Update (“ASU”) No. 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). As such, information presented below for 2024 and 2023 has not been recast to conform to current-year presentation.
Income before provision for income taxes was as follows for the year ended December 31:
| 2025 | | ||
(in thousands) | ||||
Domestic | $ | 81,820 | ||
Foreign |
| 1,275 | ||
Total income before income taxes | $ | 83,095 | ||
Significant components of the total provision for income taxes for the years ended December 31 were as follows:
| 2025 | | 2024 | | 2023 | | ||||
(in thousands) |
| |||||||||
Current provision (benefit) on continuing operations: | | | | | | | ||||
Federal | $ | (10,336) | $ | 18,195 | $ | 38,860 | ||||
State |
| (464) |
| 3,793 |
| 10,949 | ||||
Foreign |
| 425 |
| 928 |
| 508 | ||||
| (10,375) |
| 22,916 |
| 50,317 | |||||
Deferred provision (benefit) on continuing operations: | ||||||||||
Federal |
| 27,288 |
| 17,532 |
| (4,882) | ||||
State |
| 6,161 |
| 5,058 |
| (682) | ||||
Foreign |
| (77) |
| (153) |
| (2) | ||||
| 33,372 |
| 22,437 |
| (5,566) | |||||
Current provision on discontinued operations: | | | | | | |||||
Federal | — | 169 | 14,656 | |||||||
State |
| — |
| 36 |
| 3,599 | ||||
| — |
| 205 |
| 18,255 | |||||
Total provision for income taxes | $ | 22,997 | $ | 45,558 | $ | 63,006 | ||||
Reconciliation of the provision for income taxes to the amount computed by applying the statutory federal income tax rate to income before income taxes after the adoption of ASU 2023-09 is as follows for the year ended December 31:
2025 | |||||||
(in thousands, except percentages) | |||||||
Income tax provision at the statutory federal rate | | $ | 17,450 | 21.0 | % | ||
State income taxes, net of federal income tax effect(1) |
| 6,158 | 7.4 | ||||
Foreign income tax provision |
| 1,169 | 1.4 | ||||
Tax credits | |||||||
Federal research and development tax credits | (1,543) | (1.9) | |||||
Federal employment tax credits | (1,577) | (1.9) | |||||
Foreign tax credits generated | (1,068) | (1.3) | |||||
Net increase in valuation allowance | 1,063 | 1.3 | |||||
Nontaxable and nondeductible items | 237 | 0.3 | |||||
Other adjustments |
| 1,108 | 1.4 | ||||
Total provision for income taxes | $ | 22,997 | 27.7 | % | |||
| (1) | The states and local jurisdictions that contribute to the majority (greater than ) of the tax effect in this category include Pennsylvania, California, Illinois, Wisconsin, Indiana, New Mexico, and Florida. |
Reconciliation between effective income tax rate, as computed on income from continuing operations before income taxes, and the statutory federal income tax rate for years ended December 31 prior to the adoption of ASU 2023-09 is presented in the following table:
2024 | 2023 | ||||||
(in thousands, except percentages) | |||||||
Income tax provision at the statutory federal rate of 21.0% | $ | 45,930 | | $ | 39,252 | ||
Federal income tax effects of: | |||||||
State income taxes |
| (1,859) |
| (2,156) | |||
Settlement of share-based compensation(1) | (9,169) | (3,989) | |||||
Non-deductible compensation under IRC Section 162(m) | 3,668 | 3,103 | |||||
Other |
| (2,843) |
| (2,232) | |||
Federal income tax provision |
| 35,727 |
| 33,978 | |||
State income tax provision |
| 8,851 |
| 10,267 | |||
Foreign income tax provision |
| 775 |
| 506 | |||
Total provision for income taxes | $ | 45,353 | $ | 44,751 | |||
Effective tax rate |
| 20.7 | % |
| 23.9 | % | |
| (1) | The tax benefits for 2024 and 2023 are primarily due to the vesting of RSUs granted in 2021 and 2022 at the end of a four-year and three-year period, respectively. RSUs granted subsequent to 2021 follow a graded vesting schedule, with RSUs vesting incrementally over a specified period of time, rather than fully vesting at the end of the vesting period. |
The Company's total effective tax rate was 27.7%, 20.8% and 24.4% for 2025, 2024 and 2023, respectively, including discontinued operations. The effective tax rate from discontinued operations was 25.5% for both 2024 and 2023. State tax rates vary among states and average approximately 6.0%, although some state rates are higher, and a small number of states do not impose an income tax.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the deferred tax assets and liabilities of continuing operations at December 31 were as follows:
2025 | 2024 |
| |||||
(in thousands) |
| ||||||
Deferred tax assets: | | | | | |||
Accrued expenses | $ | 67,563 | $ | 66,211 | |||
Operating lease right-of-use liabilities | 60,067 | 56,119 | |||||
Multiemployer pension fund withdrawal | 4,468 | 4,688 | |||||
Postretirement liabilities other than pensions |
| 3,599 |
| 3,428 | |||
Share-based compensation |
| 2,044 |
| 2,239 | |||
Federal and state net operating loss carryovers |
| 6,722 |
| 4,383 | |||
Receivable allowances | 2,556 | 2,666 | |||||
Other |
| 4,038 |
| 2,580 | |||
Total deferred tax assets |
| 151,057 |
| 142,314 | |||
Valuation allowance |
| (4,452) |
| (1,731) | |||
Total deferred tax assets, net of valuation allowance | $ | 146,605 | $ | 140,583 | |||
Deferred tax liabilities: | |||||||
Amortization, depreciation, and basis differences for property, plant and equipment, and other long-lived assets | $ | 153,825 | $ | 121,400 | |||
Operating lease right-of-use assets | 55,010 | 48,271 | |||||
Intangibles |
| 33,392 |
| 33,680 | |||
Prepaid expenses |
| 6,655 |
| 6,345 | |||
Total deferred tax liabilities |
| 248,882 |
| 209,696 | |||
Net deferred tax liabilities | $ | (102,277) | $ | (69,113) | |||
Income taxes paid, net of refunds, were as follows for the year ended December 31:
| 2025 | | ||
(in thousands) | ||||
Federal | $ | 2,300 | ||
State | $ | 2,275 | ||
Tennessee | 594 | |||
Foreign | $ | 2,203 | ||
Canada Federal | 1,621 | |||
Total income taxes paid, net of refunds | $ | 6,778 | ||
Income taxes paid, excluding income tax refunds of $33.1 million, totaled $71.1 million in 2024, while income taxes paid, excluding income tax refunds of $36.4 million, totaled $115.7 million in 2023.
Under Accounting Standards Codification Topic 718, Compensation – Stock Compensation, the Company may experience volatility in its income tax provision as a result of recording all excess tax benefits and tax deficiencies in the income statement upon settlement of awards, which occurs primarily during the second quarter of each year. The 2025 tax rate reflects an expense of 1.2% related to the settlement of share-based compensation, while the 2024 and 2023 tax rates reflect tax benefits of 5.2% and 2.8%, respectively.
At December 31, 2025, the Company had gross federal net operating loss carryforwards of $0.3 million, which do not expire. Gross state net operating losses of $155.3 million have expiration dates ranging from 2033 through 2045. Gross state net operating losses of $63.9 million are for subsidiaries that have had taxable losses for three or more prior tax years in jurisdictions with a carryforward period of less than 15 years or have other nexus issues that reduce the likelihood of the losses. These net operating loss carryforwards have been fully reserved with valuation allowances of $2.4 million at December 31, 2025 and $0.7 million at December 31, 2024.
As the Canadian tax rate is higher than the U.S. tax rate, it is unlikely that foreign tax credit carryforwards will be usable, as U.S. taxes will be paid at a lower rate than the tax rates in Canada. Thus, the foreign tax credit carryover is fully reserved, resulting in valuation allowances of $2.1 million at December 31, 2025 and $1.0 million at December 31, 2024.
Consolidated federal income tax returns filed for tax years through 2021 are closed by the applicable statute of limitations. The Company is currently under examination by two foreign taxing authorities at December 31, 2025. No federal or examinations were in process at December 31, 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Feb 28, 2017 | |
| 2015 | Feb 26, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.