Builders FirstSource, Inc. Income Taxes Disclosure

11. Income Taxes

(1) State taxes in California, Florida, and Texas made up the majority (greater than 50 percent) of the tax effect in this category.

We have $278.6 million of state net operating loss carryforwards and $4.9 million of state tax credit carryforwards expiring at various dates through 2055. We also have $177.2 million of federal net operating loss carryforwards and $65.4 million of federal tax credit carryforwards, the majority of which have no expiration date. We evaluate our deferred tax assets on a quarterly basis to determine whether a valuation allowance is required. In accordance with the Income Taxes topic of the Codification, we assess

whether it is more likely than not that some or all of our deferred tax assets will not be realized. Significant judgment is required in estimating valuation allowances for deferred tax assets, and in making this determination, we consider all available positive and negative evidence and make certain assumptions. The realization of a deferred tax asset ultimately depends on the existence of sufficient taxable income in the applicable carryforward period. Changes in our estimates of future taxable income and tax planning strategies will affect our estimate of the realization of the tax benefits of these tax carryforwards. As of December 31, 2025, or 2024, we carried no valuation allowances against our net deferred tax assets.

We base our estimate of deferred tax assets and liabilities on current tax laws and rates. In certain cases, we also base our estimate on business plan forecasts and other expectations about future outcomes. Changes in existing tax laws or rates could affect our actual tax results, and future business results may affect the amount of our deferred tax liabilities or the valuation of our deferred tax assets over time. Due to uncertainties in the estimation process, particularly with respect to changes in facts and circumstances in future reporting periods, as well as the residential homebuilding industry’s cyclicality and sensitivity to changes in economic conditions, it is possible that actual results could differ from the estimates used in previous analyses.

The balance for uncertain tax positions, excluding penalties and interest, was $20.3 million and $19.7 million as of December 31, 2025, and 2024, respectively, with $0.6 million, $0.5 million and $2.9 million recorded in the Company’s consolidated statements of operations for the years ended December 31, 2025, 2024 and 2023, respectively. We accrue interest and penalties on our uncertain tax positions as a component of our provision for income taxes. We accrued no significant interest and penalties in 2025, 2024 or 2023.

We are subject to U.S. federal income tax as well as income tax of multiple state jurisdictions and in very limited situations, foreign jurisdictions. Based on completed examinations and the expiration of statutes of limitations, we have concluded all U.S. federal income tax matters for years through 2018. We are currently under IRS audit for various aspects of our 2019, 2020, and 2021 tax years. We report income-based tax in 42 states with various years open to examination.

In December 2021, the Organization for Economic Co-operation and Development (“OECD”) released Model Global Anti-Base Erosion rules under Pillar Two. These rules provide for the taxation of large multinational corporations at a minimum rate of 15%, calculated on a jurisdictional basis. Countries in which we operate enacted legislation to implement aspects of the Pillar Two rules beginning in 2024, with certain remaining impacts effective from January 1, 2025. Pillar Two did not have a material impact on our consolidated financial statements.

On July 4, 2025, H.R.1 - One Big Beautiful Bill was enacted into law (the “Act”). The Act makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. The Company’s deferred income tax liabilities as of December 31, 2025 and 2024 were $178.0 million and $148.2 million, respectively. The increase was primarily due to the bonus depreciation and domestic research cost expensing elements of the Act. The Act did not have a material impact on our income tax expense for the year ending December 31, 2025. The Act has multiple effective dates, with certain provisions effective in the Company’s fiscal 2025 and others becoming effective in fiscal 2026. With further guidance from the U.S. Treasury and IRS expected, the Company is continuing to analyze the full impact of the Act on the Company’s financial statements and related disclosures. We anticipate the Act to have a material impact on our future financial results including cash flows. The permanent extension of 100% bonus depreciation and reinstating the expensing of domestic research costs has reduced our cash tax payments in the current year, and is anticipated to reduce our cash tax payments and increase our operating cash flows in future years.