CNX Resources CorpCNX
CNX Resources Corp Income Taxes Disclosure
INCOME TAXES:
In December 2023, the FASB issued ASU 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the transparency and decision usefulness of income tax disclosures. The amendments address more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The ASU also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in this ASU are effective for public business entities for annual periods beginning after December 15, 2024 and may be applied prospectively or retrospectively. Effective for the year ended December 31, 2025, we have retrospectively adopted this guidance, which did not have an impact on our financial statements, although it did result in expanded income tax-related disclosures, which are included below.
Income tax expense (benefit) provided on earnings consisted of:
| For the Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
U.S. Federal | $ | 421 | $ | 756 | $ | — | |||||||||||
U.S. State | 8,148 | 3,245 | 4,777 | ||||||||||||||
| 8,569 | 4,001 | 4,777 | |||||||||||||||
| Deferred: | |||||||||||||||||
U.S. Federal | 132,228 | (27,917) | 455,224 | ||||||||||||||
U.S. State | 28,982 | (5,952) | 42,208 | ||||||||||||||
| 161,210 | (33,869) | 497,432 | |||||||||||||||
| Total Income Tax Expense (Benefit) | $ | 169,779 | $ | (29,868) | $ | 502,209 | |||||||||||
The components of the net deferred taxes are as follows:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred Tax Assets: | |||||||||||
Net Operating Loss- Federal | $ | 149,684 | $ | 137,476 | |||||||
| Federal Tax Credits | 79,118 | 44,457 | |||||||||
| Section 174 Expenses | 65,566 | 91,342 | |||||||||
| Gas Well Closing | 61,234 | 33,541 | |||||||||
| Gas Derivatives | 60,306 | 130,834 | |||||||||
Net Operating Loss - State | 53,679 | 70,689 | |||||||||
| Operating Lease Liabilities | 38,960 | 25,650 | |||||||||
| Interest Limitation | 25,623 | 62,271 | |||||||||
| State Deferred Tax Adjustment | 15,983 | 15,983 | |||||||||
| Salary Retirement | 8,073 | 8,037 | |||||||||
| Equity Compensation | 4,670 | 6,659 | |||||||||
| Convertible Note Amortization | 360 | 2,121 | |||||||||
Other | 3,649 | 2,687 | |||||||||
Total Deferred Tax Assets | 566,905 | 631,747 | |||||||||
Valuation Allowance | (32,262) | (36,879) | |||||||||
Net Deferred Tax Assets | 534,643 | 594,868 | |||||||||
| Deferred Tax Liabilities: | |||||||||||
Property, Plant and Equipment | (1,350,179) | (1,261,971) | |||||||||
| Operating Lease Right-of-Use Assets | (38,173) | (25,071) | |||||||||
| Investment in Partnerships | (3,110) | (2,825) | |||||||||
| Advance Gas Royalties | (437) | (515) | |||||||||
Other | (111) | (622) | |||||||||
Total Deferred Tax Liabilities | (1,392,010) | (1,291,004) | |||||||||
Net Deferred Tax Liability | $ | (857,367) | $ | (696,136) | |||||||
Deferred taxes are recorded for certain tax benefits, including net operating losses and tax credit carry-forwards, if management assesses the utilization of those assets to be more likely than not. A valuation allowance is required when it is not more likely than not that all or a portion of a deferred tax asset will be realized. All available evidence, both positive and negative, must be considered in determining the need for a valuation allowance. Positive evidence considered included financial earnings generated over the past three years for certain subsidiaries, reversals of financial to tax temporary differences and the implementation of and/or ability to employ various tax planning strategies. Negative evidence includes financial and tax losses generated in prior periods and the inability to achieve forecasted results for those periods.
As of December 31, 2025, the Company has a deferred tax asset related to federal net operating losses of $149,684. Because of the Tax Cuts and Jobs Act (TCJA) enacted on December 22, 2017 and the Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted on March 27, 2020, the federal net operating losses (NOLs) generated in 2018 - 2025 do not expire but may only offset 80% of taxable income in any tax years beginning after 2020.
As of December 31, 2025 and 2024, the Company has $79,118 and $44,457, respectively, of Federal Tax Credits available to offset future federal tax. These credits expire between 2036 and 2045.
CNX has, on an after federal tax basis, a deferred tax asset related to state operating losses of $53,679 with a related valuation allowance of $32,262 at December 31, 2025. The deferred tax asset related to state operating losses, on an after-tax adjusted basis, was $70,689 with a related valuation allowance of $36,879 at December 31, 2024. A review of positive and negative evidence regarding these state tax attributes concluded that the valuation allowances for various CNX subsidiaries was warranted.
On July 4, 2025, the United States enacted into law the One, Big, Beautiful Bill Act ("OBBBA"). The OBBBA, which, among other things, allows for 100% bonus depreciation on a permanent basis for property acquired and placed in service on or after January 19, 2025, permanently reinstates the EBITDA limitation for the calculation of the deduction for interest expense after December 31, 2024, and allows permanent expensing rather than a five-year amortization period for domestic R&D amounts paid or incurred in tax years beginning after December 31, 2024. The OBBBA primarily impacts CNX's taxable temporary differences and certain deferred tax assets and liabilities with no material impact to the estimated annual effective tax rate.
On November 12, 2025, Pennsylvania enacted legislation that effectively decoupled from the provision of the OBBBA that allows for permanent expensing rather than a 5-year amortization period for domestic R&D amounts paid or incurred in tax years beginning after December 31, 2024. West Virginia and Virginia have yet to update its Internal Revenue Code fixed date conformity date to a period post enactment of OBBBA, thereby also decoupling from the OBBBA provision discussed above in their entirety.
Pennsylvania enacted legislation in July 2022 that, among other things, gradually reduced the corporate net income tax rate over the next several years beginning in 2023 to 8.99% to ultimately 4.99% in 2031. Beginning in 2022 and in each year thereafter, the Company revised the deferred state income tax rates and apportionment factors for several states to reflect, among other things, the PA rate reduction resulting in a benefit to deferred tax expense in the Consolidated Statements of Income. Deferred taxes also include changes relating to valuation allowance assertions against various state net operating losses due to the tax accounting treatment of unrealized gains and losses on commodity derivatives.
Management will continue to assess the potential for realized deferred tax assets based upon income forecast data and the feasibility of future tax planning strategies and may record adjustments to valuation allowances against deferred tax assets in future periods, as appropriate, that could materially impact net income.
The following is a reconciliation, stated as a percentage of pretax income, of the United States statutory federal income tax rate to CNX's effective tax rate:
| For the Years Ended December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||
| $ | 168,618 | 21.0 | % | $ | (25,276) | 21.0 | % | $ | 466,814 | 21.0 | % | ||||||||||||||||||||||||
| State Income Taxes, Net of Federal | |||||||||||||||||||||||||||||||||||
| Income Tax Effect (1) | 37,330 | 4.7 | (4,610) | 3.8 | 83,379 | 3.8 | |||||||||||||||||||||||||||||
| Effect of Changes in Tax Laws or Rates | |||||||||||||||||||||||||||||||||||
| Enacted in the Current Period | 2,706 | 0.3 | 2,806 | (2.3) | 297 | — | |||||||||||||||||||||||||||||
| Tax Credits | |||||||||||||||||||||||||||||||||||
| Research and development tax credits | (14,251) | (1.8) | 850 | (0.7) | (28,974) | (1.3) | |||||||||||||||||||||||||||||
| Energy-related tax credits | (36,217) | (4.5) | (15,266) | 12.7 | — | — | |||||||||||||||||||||||||||||
| Foreign Tax Credits | — | — | — | — | 7,738 | 0.3 | |||||||||||||||||||||||||||||
| Changes in Valuation Allowances | (4,617) | (0.6) | (2,385) | 2.0 | (45,345) | (2.0) | |||||||||||||||||||||||||||||
| Nontaxable or Nondeductible Items | |||||||||||||||||||||||||||||||||||
| Share-based payment awards | 1,098 | 0.1 | (40) | — | 1,036 | — | |||||||||||||||||||||||||||||
| Other | 356 | — | 515 | (0.4) | 428 | — | |||||||||||||||||||||||||||||
| Changes in Unrecognized Tax Benefits | 15,807 | 2.0 | 13,309 | (11.1) | 17,673 | 0.8 | |||||||||||||||||||||||||||||
| Other Adjustments | (1,051) | (0.1) | 229 | (0.2) | (837) | — | |||||||||||||||||||||||||||||
| Effective Tax Rate | $ | 169,779 | 21.1 | % | $ | (29,868) | 24.8 | % | $ | 502,209 | 22.6 | % | |||||||||||||||||||||||
(1) State taxes in Pennsylvania, Virginia and West Virginia made up the majority (greater than 50 percent) of the tax effect in this category.
The effective tax rate for the year ended December 31, 2025 differs from the U.S. federal statutory rate primarily due to federal income tax credits, offset by uncertain tax positions, state taxes, equity compensation, and the decrease in certain state valuation allowance assertions.
The effective tax rate for the year ended December 31, 2024 differs from the U.S. federal statutory rate primarily due to federal income tax credits, offset by uncertain tax positions, state taxes, equity compensation, and the decrease in certain state valuation allowance assertions.
The effective tax rate for the year ended December 31, 2023 differs from the U.S. federal statutory rate primarily due to federal income tax credits, offset by uncertain tax positions, state taxes (West Virginia tax law change), equity compensation, and the decrease in certain state valuation allowance assertions as a result of a higher-than-expected unrealized gain on commodity derivative instruments generated during 2023.
CNX files income tax returns in the U.S. federal and various state jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state, or local income tax examinations by tax authorities for the years before 2022.
A reconciliation of the beginning and ending gross amounts of unrecognized tax benefits is as follows:
| For the Years Ended | |||||||||||
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Balance at Beginning of Period | $ | 113,227 | $ | 99,918 | |||||||
| Additions based on tax positions related to the current year | 17,341 | 18,224 | |||||||||
| Additions for tax positions of prior years | 1,821 | — | |||||||||
| Reductions for tax positions of prior years | (3,355) | (4,915) | |||||||||
| Balance at End of Period | $ | 129,034 | $ | 113,227 | |||||||
If these unrecognized tax benefits were recognized, $129,034 and $113,227 would affect CNX’s effective tax rate for 2025 and 2024, respectively.
In 2025 and 2024, CNX recognized an increase in unrecognized tax benefits of $17,341 and $18,224, respectively, for tax benefits resulting from tax positions expected to be taken on our 2025 federal tax return for federal tax credits. CNX also recognized a change in unrecognized tax benefits of $(1,534) and $(4,915), respectively, for tax benefits resulting from tax positions taken during prior period federal tax returns for federal tax credits.
CNX recognizes accrued interest related to unrecognized tax benefits in its interest expense. As of December 31, 2025 and 2024, the Company reported no accrued liability relating to interest in Other Liabilities in the Consolidated Balance Sheets. During the years ended December 31, 2025 and 2024, CNX paid no interest related to income tax deficiencies.
CNX recognizes penalties accrued related to uncertain tax positions in its income tax expense. CNX had no accrued liabilities for tax penalties as of December 31, 2025 and 2024.
The following table summarizes income taxes paid (net of refunds received). All jurisdictions in which income taxes paid (net of refunds received) were equal to or greater than five percent of total income taxes paid are included below (if the noted jurisdiction did not meet the five percent threshold for a particular year, the amount for that year is not included below).
| For the Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| U.S. Federal | $ | 2,500 | $ | 650 | $ | — | ||||||||||||||
| Pennsylvania | 4,898 | 5,402 | 7,327 | |||||||||||||||||
| Total Income Taxes Paid | $ | 7,398 | $ | 6,052 | $ | 7,327 | ||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 10, 2026 | Showing above |
| 2024 | Feb 11, 2025 | |
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.