AdvanSix Inc.ASIX
AdvanSix Inc. Income Taxes Disclosure
Income Taxes
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Income before taxes | |||||||||||||||||
U.S. | $ | 54,354 | $ | 45,497 | $ | 69,055 | |||||||||||
Non-U.S. | 77 | 78 | 168 | ||||||||||||||
| $ | 54,431 | $ | 45,575 | $ | 69,223 | ||||||||||||
Income taxes
Income tax expense (benefit) consists of:
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Current Provision (benefit): | |||||||||||||||||
Federal | $ | (4,954) | $ | 7,525 | $ | 20,707 | |||||||||||
State | 2,263 | 2,865 | 3,159 | ||||||||||||||
Non-U.S. | 22 | 23 | 47 | ||||||||||||||
| Total current provision (benefit) | $ | (2,669) | $ | 10,413 | $ | 23,913 | |||||||||||
Deferred Provision (benefit): | |||||||||||||||||
Federal | $ | 6,516 | $ | (8,192) | $ | (8,886) | |||||||||||
State | 1,298 | (795) | (427) | ||||||||||||||
| Total deferred provision (benefit) | 7,814 | (8,987) | (9,313) | ||||||||||||||
Total income tax expense | $ | 5,145 | $ | 1,426 | $ | 14,600 | |||||||||||
Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 2, Recent Accounting Pronouncements, the U.S. federal statutory income tax rate is reconciled to the effective income tax rate as follows. ASU 2023-09 has been retrospectively adopted and the table below has been updated for all periods presented:
| Years Ended December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
| Amount | Percentage | Amount | Percentage | Amount | Percentage | |||||||||||||||||||||
| U.S. federal statutory income tax rate | $ | 11,431 | 21.0 | % | $ | 9,570 | 21.0 | % | $ | 14,536 | 21.0 | % | ||||||||||||||
U.S. state income taxes, net of federal income tax effect (a) | 2,798 | 5.1 | % | 1,635 | 3.6 | % | 2,157 | 3.1 | % | |||||||||||||||||
| Foreign tax effects | 6 | — | % | 6 | — | % | 14 | — | % | |||||||||||||||||
| Effect of cross-border tax laws: | ||||||||||||||||||||||||||
| Foreign derived intangible income deduction | — | — | % | (384) | (0.8) | % | (842) | (1.2) | % | |||||||||||||||||
| Other | 2 | — | % | 4 | — | % | (21) | — | % | |||||||||||||||||
| Tax Credits: | ||||||||||||||||||||||||||
| Energy credits | (9,702) | (17.8) | % | (9,748) | (21.4) | % | — | — | % | |||||||||||||||||
| Research and development tax credits | (624) | (1.2) | % | (433) | (1.0) | % | (935) | (1.4) | % | |||||||||||||||||
| Other | (28) | — | % | (29) | (0.1) | % | (30) | (0.1) | % | |||||||||||||||||
| Nontaxable or nondeductible items: | ||||||||||||||||||||||||||
| Executive compensation limitations | 1,455 | 2.7 | % | 1,774 | 3.9 | % | 697 | 1.0 | % | |||||||||||||||||
| Excess tax benefits of equity compensation | (399) | (0.7) | % | (959) | (2.1) | % | (1,003) | (1.3) | % | |||||||||||||||||
| Other | 206 | 0.4 | % | (10) | — | % | 27 | — | % | |||||||||||||||||
| Effective income tax rate | $ | 5,145 | 9.5 | % | $ | 1,426 | 3.1 | % | $ | 14,600 | 21.1 | % | ||||||||||||||
(a) During the year ended December 31, 2023, states taxes in South Carolina and West Virginia made up the majority (greater than 50%) of the tax effect in this category.
During the year ended December 31, 2024, states taxes in Alabama, Georgia, Kentucky and Michigan made up the majority (greater than 50%) of the tax effect in this category.
During the year ended December 31, 2025, states taxes in Delaware, Iowa, Minnesota and Pennsylvania made up the majority (greater than 50%) of the tax effect in this category.
Upon adoption of ASU 2023-09, cash paid for income taxes, net of refunds, during the years ended December 31, 2025, 2024, and 2023 were as follows:
| Income Taxes Paid and Refunds: | Years Ended December 31, | ||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Federal taxes paid, net of refunds | $ | 12,900 | $ | 15,383 | $ | 6,006 | |||||||||||
| State and local taxes paid, net of refunds | 2,220 | 1,189 | 1,548 | ||||||||||||||
| Foreign taxes paid, net of refunds | 9 | 19 | 40 | ||||||||||||||
| Income taxes paid, net of refunds | $ | 15,129 | $ | 16,591 | $ | 7,594 | |||||||||||
The Company's effective income tax rate differs from the U.S. statutory rate of 21% due to state taxes and executive compensation limitations which generally increase the effective income tax rate. Research tax credits, excess tax benefits of equity compensation and the foreign derived intangible income deduction recorded in a period generally decrease the effective income tax rate.
Additionally, the Company's effective income tax rate for 2024 and 2025 was less than the U.S. Federal statutory rate of 21% due to Internal Revenue Code (IRC) Section 45Q tax credits of approximately $9.7 million claimed in each of those years for credits generated in tax periods 2018, 2019 and 2020. IRC Section 45Q allows a taxpayer to receive a tax credit for carbon capture and utilization at its facilities. For certain utilization projects, the 45Q tax credit requires approval by the Internal Revenue Service (IRS) of a life-cycle assessment ("LCA") prior to claiming the tax credits. The Company received approval for its 2018 LCA in November 2024, which the Company was able to rely on for 2018 through 2020. Approximately $18.1 million of the 45Q tax credits claimed for these periods are reflected in Taxes receivable as of December 31, 2025. The Company continues to pursue IRC section 45Q tax credits for the periods after 2020.
The Company's effective income tax rate for 2023 approximated the U.S. Federal statutory rate of 21%. Increases to the effective income tax rate due primarily to state taxes and executive compensation limitations, were materially offset by research tax credits, excess tax benefits of equity compensation and the foreign-derived intangible income deduction.
On July 4, 2025, the One Big Beautiful Bill Act (the "Act") was enacted into law, which includes numerous tax provisions affecting businesses, including the reinstatement of full expensing of domestic research and experimental expenditures, modification of the
limitation on business interest and making permanent full expensing for certain business property. These provisions resulted in an approximately $9 million reduction in cash taxes in our financial results for the period ended December 31, 2025.
As of December 31, 2025 and 2024, there were no unrecognized tax benefits recorded by the Company. Although there are no unrecognized income tax benefits, when applicable, the Company’s policy is to report interest expense and penalties related to unrecognized income tax benefits in the income tax provision.
The Company is subject to taxation in the United States and various states and foreign jurisdictions. The Company is currently under audit for U.S. federal tax purposes for periods 2018 through 2021. Tax periods 2022 through 2025 remain open under the statute of limitations and are subject to examination by the tax authorities. There are no current state or foreign tax examinations; however, tax years 2021 through 2025 generally remain open under the statute of limitations and are subject to examination by the tax authorities.
Deferred tax assets (liabilities)
The tax effects of temporary differences which give rise to future income tax benefits and expenses are as follows:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss | $ | 98 | $ | 92 | |||||||
| Accruals and reserves | 6,399 | 4,317 | |||||||||
| Capitalization of research expenses | 459 | 7,787 | |||||||||
| Inventory | 22,545 | 17,346 | |||||||||
| Operating lease liability | 39,921 | 36,931 | |||||||||
| Equity compensation | 2,799 | 2,899 | |||||||||
| Other | 46 | — | |||||||||
| Total gross deferred tax assets | 72,267 | 69,372 | |||||||||
| Less: Valuation Allowance | — | — | |||||||||
| Total deferred tax assets | $ | 72,267 | $ | 69,372 | |||||||
| Deferred tax liabilities: | |||||||||||
| Property, plant & equipment | $ | (169,962) | $ | (163,991) | |||||||
| Intangibles | (12,678) | (10,857) | |||||||||
| Operating lease asset | (39,665) | (36,822) | |||||||||
| Pension obligation | (1,135) | (421) | |||||||||
| Other | (2,888) | (2,580) | |||||||||
| Total deferred tax liabilities | (226,328) | (214,671) | |||||||||
| Net deferred taxes | $ | (154,061) | $ | (145,299) | |||||||
The net deferred taxes are primarily related to U.S. operations. The Company has no material state net operating losses (NOL) carryforwards and no material federal or state tax credit carryforwards remaining as of December 31, 2025. We believe that the state NOL and tax credit carryforwards and other deferred tax assets are more likely than not to be realized and we have not recorded a valuation allowance against the deferred tax assets.
The Company's accounting policy is to record the tax impacts of Global intangible low-taxed income as a period cost.
As of December 31, 2025 and 2024, there were no material undistributed earnings of the Company's non-U.S. subsidiaries and, as such, we have not provided a deferred tax liability for undistributed earnings.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 20, 2026 | Showing above |
| 2023 | Feb 16, 2024 | |
| 2022 | Feb 17, 2023 | |
| 2021 | Feb 18, 2022 | |
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.