ATMOS ENERGY CORPATO
ATMOS ENERGY CORP Income Taxes Disclosure
Income Taxes
Income Tax Expense
Reconciliations of the provision for income taxes computed at the statutory rate of 21 percent to the reported provisions for income taxes from continuing operations for 2025, 2024, and 2023 are set forth below:
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| (In thousands) | % | (In thousands) | % | (In thousands) | % | ||||||||||||||||||||||||||||||
| U.S federal statutory tax rate | $ | 310,387 | 21.0 | % | $ | 259,513 | 21.0 | % | $ | 209,925 | 21.0 | % | |||||||||||||||||||||||
State and local income taxes, net of federal income tax effect (1) | 24,254 | 1.6 | % | 27,367 | 2.2 | % | 19,853 | 2.0 | % | ||||||||||||||||||||||||||
| Changes in valuation allowances | — | — | % | 1,106 | 0.1 | % | — | — | % | ||||||||||||||||||||||||||
| Changes in unrecognized tax benefits | 2,004 | 0.1 | % | 926 | 0.1 | % | 5,302 | 0.5 | % | ||||||||||||||||||||||||||
| Nontaxable or nondeductible items | 741 | 0.1 | % | 2,464 | 0.2 | % | 1,000 | 0.1 | % | ||||||||||||||||||||||||||
| Amortization of excess deferred taxes | (60,727) | (4.1) | % | (100,270) | (8.1) | % | (123,953) | (12.4) | % | ||||||||||||||||||||||||||
| Other, net | 2,621 | 0.2 | % | 1,775 | 0.1 | % | 1,652 | 0.2 | % | ||||||||||||||||||||||||||
| Income tax expense | $ | 279,280 | 18.9 | % | $ | 192,881 | 15.6 | % | $ | 113,779 | 11.4 | % | |||||||||||||||||||||||
(1) The states that contribute to the majority (greater than 50%) of the tax effect in this category include Texas and Louisiana.
Deferred income taxes reflect the tax effect of differences between the basis of assets and liabilities for book and tax purposes. The tax effect of temporary differences that gave rise to significant components of the deferred tax liabilities and deferred tax assets at September 30, 2025 and 2024 are presented below:
| 2025 | 2024 | ||||||||||
| (In thousands) | |||||||||||
| Deferred tax assets: | |||||||||||
| Employee benefit plans | $ | 34,202 | $ | 41,184 | |||||||
| Net operating loss carryforwards | 473,642 | 484,816 | |||||||||
| Charitable and other credit carryforwards | 14,200 | 12,301 | |||||||||
| Regulatory excess deferred tax | 31,387 | 46,330 | |||||||||
| Lease asset | 72,973 | 63,747 | |||||||||
| Other | 31,145 | 34,934 | |||||||||
| Total deferred tax assets | 657,549 | 683,312 | |||||||||
| Valuation allowance | (1,365) | (1,457) | |||||||||
| Net deferred tax assets | 656,184 | 681,855 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Difference in net book value and net tax value of assets | (3,200,535) | (2,914,854) | |||||||||
| Gas cost adjustments | (43,819) | (49,443) | |||||||||
| Winter Storm Uri regulatory asset | (17,993) | (20,846) | |||||||||
| Lease liability | (66,831) | (57,177) | |||||||||
| Rate deferral adjustment | (64,640) | (50,571) | |||||||||
| Interest rate agreements | (135,640) | (134,536) | |||||||||
| Other | (45,073) | (47,770) | |||||||||
| Total deferred tax liabilities | (3,574,531) | (3,275,197) | |||||||||
| Net deferred tax liabilities | $ | (2,918,347) | $ | (2,593,342) | |||||||
At September 30, 2025, we had $435.3 million (tax effected) of federal net operating loss carryforwards. The federal net operating loss carryforwards are available to offset future taxable income and have no expiration date. The Company has $11.8 million (tax effected) charitable contribution carryforwards to offset future taxable income as of September 30, 2025.
The Company also has $38.3 million (tax effected) of state net operating loss carryforwards (net of $10.1 million of federal effects) and $2.4 million of state tax credits carryforwards (net of $0.6 million of federal effects). Depending on the jurisdiction in which the state net operating loss was generated, the carryforwards expiration period begins in fiscal 2026.
At September 30, 2025 and 2024, we had recorded liabilities associated with unrecognized tax benefits totaling $60.3 million and $57.8 million, which includes $10.1 million and $11.6 million in deferred tax liabilities. The following table reconciles the beginning and ending balance of our unrecognized tax benefits:
| 2025 | 2024 | 2023 | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Unrecognized tax benefits - beginning balance | $ | 57,797 | $ | 58,638 | $ | 52,683 | |||||||||||
| Decrease resulting from prior period tax positions | (1,759) | (2,867) | (631) | ||||||||||||||
| Decrease resulting from a lapse in statute of limitations | (5,699) | (6,188) | — | ||||||||||||||
| Increase resulting from current period tax positions | 9,993 | 8,214 | 6,586 | ||||||||||||||
| Unrecognized tax benefits - ending balance | 60,332 | 57,797 | 58,638 | ||||||||||||||
| Less: deferred federal and state income tax benefits | (12,670) | (12,137) | (12,314) | ||||||||||||||
Total unrecognized tax benefits that, if recognized, would impact the effective income tax rate as of the end of the year (1) | $ | 47,662 | $ | 45,660 | $ | 46,324 | |||||||||||
(1) As of September 30, 2025, there is an anticipated $43.3 million regulatory offset and associated impact to tax expense to be recorded upon recognition of unrecognized tax benefits.
The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties included within interest charges in our consolidated statements of comprehensive income. During the years ended September 30, 2025, 2024, and 2023, the Company recognized approximately $0.1 million, $0.1 million, and $3.4 million in interest and penalties.
The Company had approximately $15.1 million for the payment of interest and penalties accrued at September 30, 2025, 2024, and 2023.
We file income tax returns in the U.S. federal jurisdiction as well as in various states where we have operations. We have concluded substantially all U.S. federal income tax matters through fiscal year 2009 and concluded substantially all Texas income tax matters through fiscal year 2010.
Regulatory Excess Deferred Taxes
Regulatory excess net deferred taxes represent changes in our net deferred tax liability related to our cost of service ratemaking due to the enactment of the Tax Cuts and Jobs Act of 2017 (the TCJA), a Kansas legislative change enacted in fiscal 2020, and a Louisiana legislative change enacted in fiscal 2025. As of September 30, 2025 and 2024, $72.8 million and $79.7 million is recorded in other current liabilities.
Currently, the regulatory excess net deferred tax liability of $140.5 million is being returned over various periods. Of this amount, $91.8 million is being returned to customers over 36 - 60 months. An additional $47.7 million is being returned to customers on a provisional basis over 15 - 69 years until our regulators establish the final refund periods. The refund of the remaining $1.0 million will be addressed in future rate proceedings.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 14, 2025 | Showing above |
| 2024 | Nov 18, 2024 | |
| 2023 | Nov 14, 2023 | |
| 2022 | Nov 14, 2022 | |
| 2021 | Nov 12, 2021 | |
| 2020 | Nov 13, 2020 | |
| 2019 | Nov 12, 2019 | |
| 2018 | Nov 13, 2018 | |
| 2017 | Nov 13, 2017 | |
| 2016 | Nov 14, 2016 | |
| 2015 | Nov 6, 2015 | |
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.