HF Sinclair CorpDINO
HF Sinclair Corp Income Taxes Disclosure
Income Taxes
The U.S. and foreign components of Income before income tax expense are as follows:
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
U.S. | $ | 686 | $ | 129 | $ | 1,968 | ||||||||||||||
Foreign | 46 | 89 | 185 | |||||||||||||||||
Total | $ | 732 | $ | 218 | $ | 2,153 | ||||||||||||||
The provision for Income tax expense (benefit) is comprised of the following:
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| Current: | ||||||||||||||||||||
| Federal | $ | 123 | $ | 26 | $ | 180 | ||||||||||||||
| State | 17 | 12 | 24 | |||||||||||||||||
| Foreign | (1) | 45 | 45 | |||||||||||||||||
| Deferred: | ||||||||||||||||||||
| Federal | 14 | (34) | 155 | |||||||||||||||||
| State | (10) | (8) | 31 | |||||||||||||||||
| Foreign | 3 | (7) | 7 | |||||||||||||||||
| Total income tax expense | $ | 146 | $ | 34 | $ | 442 | ||||||||||||||
The statutory federal income tax rate applied to pre-tax book income reconciles to income tax expense as follows:
| Years Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
Amount | Percent (2) | Amount | Percent (2) | Amount | Percent (2) | |||||||||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||||||||||||||
| Tax computed at statutory rate | $ | 154 | 21.0 | % | $ | 46 | 21.0 | % | $ | 452 | 21.0 | % | ||||||||||||||||||||||||||
State income taxes, net of federal tax benefit (1) | 5 | 0.7 | 3 | 1.4 | 44 | 2.0 | ||||||||||||||||||||||||||||||||
Foreign tax effects: | ||||||||||||||||||||||||||||||||||||||
Canada: | ||||||||||||||||||||||||||||||||||||||
Statutory tax rate difference between Canada and U.S. | — | — | (5) | (2.3) | (11) | (0.5) | ||||||||||||||||||||||||||||||||
Canadian withholding taxes | 5 | 0.7 | 5 | 2.3 | 5 | 0.2 | ||||||||||||||||||||||||||||||||
Provincial taxes | (1) | (0.1) | 10 | 4.6 | 21 | 1.0 | ||||||||||||||||||||||||||||||||
Cyprus: | ||||||||||||||||||||||||||||||||||||||
Statutory tax rate difference between Cyprus and U.S. | (3) | (0.4) | (3) | (1.4) | (3) | (0.1) | ||||||||||||||||||||||||||||||||
Foreign tax credit | (4) | (0.5) | (4) | (1.8) | (4) | (0.2) | ||||||||||||||||||||||||||||||||
Netherlands: | ||||||||||||||||||||||||||||||||||||||
Changes in valuation allowances | 3 | 0.4 | 4 | 1.8 | 1 | — | ||||||||||||||||||||||||||||||||
Other foreign jurisdictions | (9) | (1.2) | 1 | 0.5 | 4 | 0.2 | ||||||||||||||||||||||||||||||||
Effect of cross-border tax laws | — | — | 1 | 0.5 | 2 | 0.1 | ||||||||||||||||||||||||||||||||
Nontaxable or nondeductible items: | ||||||||||||||||||||||||||||||||||||||
Nontaxable renewable fuel incentives | (7) | (1.0) | (51) | (23.4) | (43) | (2.0) | ||||||||||||||||||||||||||||||||
Fines and penalties | — | — | 8 | 3.7 | — | — | ||||||||||||||||||||||||||||||||
| Tax benefit on equity investment dividends received | (4) | (0.5) | (3) | (1.4) | (2) | (0.1) | ||||||||||||||||||||||||||||||||
| Other | 9 | 1.1 | 4 | 1.8 | 1 | 0.1 | ||||||||||||||||||||||||||||||||
| Noncontrolling interest in net income | (2) | (0.3) | (2) | (0.9) | (25) | (1.2) | ||||||||||||||||||||||||||||||||
Changes in unrecognized tax benefits | — | — | 20 | 9.2 | — | — | ||||||||||||||||||||||||||||||||
Income tax expense | $ | 146 | 19.9 | % | $ | 34 | 15.6 | % | $ | 442 | 20.5 | % | ||||||||||||||||||||||||||
(1)State income taxes, net of federal tax benefit largely consists of expense from New Mexico, Kansas, Oklahoma and Colorado.
(2)Due to rounding of reported numbers, some amounts may not calculate exactly.
Income taxes paid, net of refunds consist of the following:
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| Federal | $ | 43 | $ | 86 | $ | 175 | ||||||||||||||
State and local: | ||||||||||||||||||||
Oregon | * | 10 | * | |||||||||||||||||
Kansas | (5) | (12) | * | |||||||||||||||||
Other | 4 | (3) | 47 | |||||||||||||||||
Total state and local | $ | (1) | $ | (5) | $ | 47 | ||||||||||||||
Foreign: | ||||||||||||||||||||
Canada | 11 | 31 | 28 | |||||||||||||||||
Other | (2) | (2) | 1 | |||||||||||||||||
Total foreign | $ | 9 | $ | 29 | $ | 29 | ||||||||||||||
Income taxes paid, net of refunds | $ | 51 | $ | 110 | $ | 251 | ||||||||||||||
* Income taxes paid, net of refunds does not meet disaggregation threshold.
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. Our deferred income tax assets and liabilities as of December 31, 2025 and 2024 are as follows:
| December 31, 2025 | ||||||||||||||||||||
| Assets | Liabilities | Total | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| Deferred income taxes: | ||||||||||||||||||||
| Properties, plants, equipment and intangibles (due primarily to tax in excess of book depreciation) | $ | — | $ | (1,183) | $ | (1,183) | ||||||||||||||
| Lease obligation | 112 | — | 112 | |||||||||||||||||
| Accrued employee benefits | 23 | — | 23 | |||||||||||||||||
| Accrued post-retirement benefits | 11 | — | 11 | |||||||||||||||||
| Accrued environmental costs | 41 | — | 41 | |||||||||||||||||
| Inventory differences | — | (59) | (59) | |||||||||||||||||
| Deferred turnaround costs | — | (208) | (208) | |||||||||||||||||
| Net operating loss and tax credit carryforwards | 42 | — | 42 | |||||||||||||||||
| Valuation allowance | (10) | — | (10) | |||||||||||||||||
| Other | — | (9) | (9) | |||||||||||||||||
| Total | $ | 219 | $ | (1,459) | $ | (1,240) | ||||||||||||||
| December 31, 2024 | ||||||||||||||||||||
| Assets | Liabilities | Total | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| Deferred income taxes: | ||||||||||||||||||||
| Properties, plants, equipment and intangibles (due primarily to tax in excess of book depreciation) | $ | — | $ | (1,174) | $ | (1,174) | ||||||||||||||
| Lease obligation | 114 | — | 114 | |||||||||||||||||
| Accrued employee benefits | 22 | — | 22 | |||||||||||||||||
| Accrued post-retirement benefits | 10 | — | 10 | |||||||||||||||||
| Accrued environmental costs | 41 | — | 41 | |||||||||||||||||
| Inventory differences | — | (159) | (159) | |||||||||||||||||
| Deferred turnaround costs | — | (185) | (185) | |||||||||||||||||
| Net operating loss and tax credit carryforwards | 116 | — | 116 | |||||||||||||||||
| Interest Limitation under 163(j) | 19 | — | 19 | |||||||||||||||||
| Valuation allowance | (14) | — | (14) | |||||||||||||||||
| Other | — | (14) | (14) | |||||||||||||||||
| Total | $ | 308 | $ | (1,532) | $ | (1,224) | ||||||||||||||
We have tax benefits attributable to net operating losses of $18 million in the Netherlands that can be carried forward indefinitely and tax benefits attributable to net operating losses in Luxembourg of $14 million that can be carried forward 17 years and begin expiring in 2036. We have reflected a valuation allowance of $10 million in 2025 and $14 million in 2024 with respect to net operating carryforwards that primarily relate to losses in the Netherlands, China and Luxembourg. Additionally we have state income tax credits of $6 million that will begin expiring in 16 years.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| Balance at January 1 | $ | 24 | $ | 1 | $ | 1 | ||||||||||||||
| Additions for tax positions related to prior years | — | 23 | — | |||||||||||||||||
Reductions for tax positions related to prior years | (2) | — | — | |||||||||||||||||
| Balance at December 31 | $ | 22 | $ | 24 | $ | 1 | ||||||||||||||
At December 31, 2025, 2024 and 2023, there were $23 million, $24 million and $1 million, respectively, of unrecognized tax benefits that, if recognized, would affect our effective tax rate. Unrecognized tax benefits are adjusted in the period in which new information about a tax position becomes available or the final outcome differs from the amount recorded.
We are subject to U.S. and Canadian federal income tax as well as multiple other state and local jurisdictions. The Company is currently under audit with the Internal Revenue Service for the tax years 2020 and 2021, and under audit with the Canada Revenue Agency for the tax years 2018, 2019, 2020 and 2021.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 28, 2023 | |
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.