Delek US Holdings, Inc.DK
Delek US Holdings, Inc. Income Taxes Disclosure
Income Taxes
(1) State taxes in Arkansas, Louisiana, Tennessee, and Texas made up the majority (greater than 50 percent) of the tax effect in this category for the years ending December 31, 2025. State taxes in Arkansas, Tennessee, and Texas made up the majority (greater than 50 percent) of the tax effect in this category for the years ending December 31, 2024 and 2023.
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.
Significant components of Delek's continuing operations deferred tax assets (liabilities) reported in the accompanying consolidated financial statements as of December 31, 2025 and 2024 were as follows (in millions):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Non-Current Deferred Taxes: | |||||||||||
| Property, plant and equipment, and intangibles | $ | (218.8) | $ | (237.4) | |||||||
| Right-of-use asset | (19.0) | (23.7) | |||||||||
| Partnership and equity investments | (213.1) | (188.2) | |||||||||
| Total deferred tax liabilities | (450.9) | (449.3) | |||||||||
Interest expense limitation under 163j | 109.3 | 112.7 | |||||||||
| Compensation and employee benefits | 23.3 | 10.3 | |||||||||
| Net operating loss carryforwards | 111.2 | 134.8 | |||||||||
| Tax credit carryforwards | 8.2 | 11.3 | |||||||||
| Deferred revenues | 10.3 | 15.7 | |||||||||
| Lease obligation | 23.5 | 27.7 | |||||||||
| Reserves and accruals | 28.5 | 10.5 | |||||||||
| Derivatives and hedging | 3.1 | 0.8 | |||||||||
| Inventories | 2.6 | 1.0 | |||||||||
| Other | — | (3.8) | |||||||||
| Total deferred tax assets | 320.0 | 321.0 | |||||||||
| Valuation allowance | (87.0) | (86.5) | |||||||||
Total net deferred tax liabilities | $ | (217.9) | $ | (214.8) | |||||||
The difference between the actual income tax expense and the tax expense computed by applying the statutory federal income tax rate to income was attributable to the following (in millions):
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||||||||||||||||||
| U.S. Federal Statutory Rate | $ | 8.2 | 21.0 | % | $ | (148.2) | 21.0 | % | $ | 3.5 | 21.0 | % | ||||||||||||||||||||||||||
State income tax benefit, net of federal tax provision (1) | (9.4) | (24.3) | % | (0.6) | 0.1 | % | 4.6 | 27.9 | % | |||||||||||||||||||||||||||||
| Foreign Tax Effects | ||||||||||||||||||||||||||||||||||||||
| Canada | — | — | % | — | — | % | (0.4) | (2.6) | % | |||||||||||||||||||||||||||||
| Tax Credits | ||||||||||||||||||||||||||||||||||||||
| Energy Related Credits | — | — | % | (3.9) | 0.5 | % | (8.9) | (53.5) | % | |||||||||||||||||||||||||||||
| Research & Development Credit | (1.1) | (2.7) | % | (1.2) | 0.2 | % | (0.6) | (3.3) | % | |||||||||||||||||||||||||||||
| Other General Business Credits | (0.1) | (0.3) | % | (0.1) | — | % | (0.2) | (1.3) | % | |||||||||||||||||||||||||||||
| Changes in valuation allowance | 3.7 | 9.6 | % | 0.1 | — | % | (0.1) | (0.9) | % | |||||||||||||||||||||||||||||
| Nontaxable or Nondeductible Items | ||||||||||||||||||||||||||||||||||||||
| Income tax (benefit) expense attributable to non-controlling interest | (14.0) | (36.1) | % | (8.6) | 1.2 | % | (6.0) | (36.0) | % | |||||||||||||||||||||||||||||
| Goodwill impairment | — | — | % | 44.6 | (6.3) | % | — | — | % | |||||||||||||||||||||||||||||
| Officers compensation limitation | 4.9 | 12.6 | % | 1.7 | (0.2) | % | 3.2 | 19.0 | % | |||||||||||||||||||||||||||||
| Share-based payment awards | 1.5 | 4.0 | % | 2.5 | (0.4) | % | 1.6 | 9.7 | % | |||||||||||||||||||||||||||||
| Other | 0.5 | 1.3 | % | 1.6 | (0.2) | % | 0.2 | 1.0 | % | |||||||||||||||||||||||||||||
| Changes in Unrecognized Tax Benefits | 1.9 | 5.0 | % | (0.1) | — | % | — | — | % | |||||||||||||||||||||||||||||
| Other adjustments | (2.9) | (7.6) | % | 4.3 | (0.6) | % | 0.1 | 1.2 | % | |||||||||||||||||||||||||||||
| Effective Tax Rate | $ | (6.8) | (17.5) | % | $ | (107.9) | 15.3 | % | $ | (3.0) | (17.8) | % | ||||||||||||||||||||||||||
Pretax income was as follows (in millions):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Domestic | $ | 37.7 | $ | (705.4) | $ | 38.1 | |||||||||||
| Foreign | 1.2 | (0.6) | (21.5) | ||||||||||||||
| $ | 38.9 | $ | (706.0) | $ | 16.6 | ||||||||||||
Income tax expense (benefit) was as follows (in millions):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current | |||||||||||||||||
| U.S. Federal | $ | 3.8 | $ | (3.8) | $ | 2.6 | |||||||||||
| U.S. state and local | (0.3) | (0.5) | 1.0 | ||||||||||||||
| Foreign | 0.2 | — | (5.0) | ||||||||||||||
| Total current income tax expense (benefit) | $ | 3.7 | $ | (4.3) | $ | (1.4) | |||||||||||
| Deferred | |||||||||||||||||
| U.S. Federal | $ | (1.0) | $ | (107.4) | $ | (7.9) | |||||||||||
| U.S. state and local | (9.5) | 3.9 | 6.3 | ||||||||||||||
| Foreign | — | (0.1) | — | ||||||||||||||
| Total deferred income tax expense (benefit) | $ | (10.5) | $ | (103.6) | $ | (1.6) | |||||||||||
| Total income tax expense (benefit) | $ | (6.8) | $ | (107.9) | $ | (3.0) | |||||||||||
Income taxes paid (net of refunds) exceeded five percent of total income taxes paid (net of refunds) in the following jurisdictions:
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| Amount | Threshold | Amount | Threshold | Amount | Threshold | |||||||||||||||||||||||||||||||||
| U.S. Federal | $ | — | * | $ | — | * | $ | (11.4) | ||||||||||||||||||||||||||||||
| U.S. state and local: | ||||||||||||||||||||||||||||||||||||||
| Alabama | — | * | (1.5) | — | * | |||||||||||||||||||||||||||||||||
| Louisiana | 0.1 | (1.3) | — | * | ||||||||||||||||||||||||||||||||||
| Tennessee | — | * | (1.2) | 2.7 | ||||||||||||||||||||||||||||||||||
| Texas | 0.2 | 2.5 | 3.0 | |||||||||||||||||||||||||||||||||||
Other - state and local (1) | 0.1 | (0.1) | (0.3) | |||||||||||||||||||||||||||||||||||
| Foreign: | ||||||||||||||||||||||||||||||||||||||
| Canada | (0.5) | — | * | 1.0 | ||||||||||||||||||||||||||||||||||
| Israel | 0.1 | 0.1 | 0.2 | |||||||||||||||||||||||||||||||||||
| Total | $ | — | $ | (1.5) | $ | (4.8) | ||||||||||||||||||||||||||||||||
•Jurisdiction below the threshold for the period presented | ||||||||||||||||||||||||||||||||||||||
(1) Immaterial payments are included in Other - state and local. | ||||||||||||||||||||||||||||||||||||||
We carry valuation allowances against certain state deferred tax assets and net operating losses that may not be recoverable with future taxable income. We also carry valuation allowances related to basis differences that may not be recoverable. During the years ended December 31, 2025 and 2024, we recorded an increase to the valuation allowance of $0.5 million and $3.2 million, respectively. The 2025 valuation allowance increase was driven by changes in state attributes and the Section 163(j) interest limitation, while the 2024 increase was primarily driven by changes in state attributes.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods for which the deferred tax assets are deductible, management believes it is more likely than not Delek will realize the benefits of these deductible differences, net of the existing valuation allowance. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced. Subsequently recognized tax benefit or expense relating to the valuation allowance for deferred tax assets will be reported as an income tax benefit or expense in the consolidated statement of income.
Federal net operating loss and credit carryforwards at December 31, 2025 totaled $124.9 million and $3.1 million. Federal net operating losses have an indefinite carryforward life, and federal tax credit carryforwards will begin expiring in 2030. State net operating loss and credit
carryforwards at December 31, 2025 totaled $1,882.6 million and $5.1 million, respectively, a portion of which are subject to a valuation allowance. State net operating losses and tax credit carryforwards will begin expiring in 2026.
Delek files a consolidated U.S. federal income tax return, as well as income tax returns in various state jurisdictions. The Company is no longer subject to U.S. federal income tax examinations for years through 2017. The Congressional Joint Committee has completed its review of the Company’s federal income tax returns for tax years 2015 – 2020, with no material adjustments identified. Alon USA Partners, LP is currently under audit by the IRS for tax year 2019. Delek is also under audit in various state jurisdictions for tax years 2016 through 2019. No material adjustments have been identified to date.
Increases and decreases to unrecognized tax benefits, which includes interest and penalties, were as follows (in millions):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance at the beginning of the year | $ | 6.9 | $ | 10.9 | $ | 7.0 | |||||||||||
| Additions based on tax positions related to current year | — | 0.2 | 4.3 | ||||||||||||||
| Additions for tax positions related to prior years and acquisitions | 2.6 | 0.4 | 0.2 | ||||||||||||||
| Reductions for tax positions related to prior years | (0.2) | (0.1) | (0.2) | ||||||||||||||
| Reductions for tax positions related to lapse of applicable statute of limitations | (0.3) | (4.5) | (0.4) | ||||||||||||||
| Balance at the end of the year | $ | 9.0 | $ | 6.9 | $ | 10.9 | |||||||||||
The amount of the unrecognized benefit above, that if recognized would change the effective tax rate, is $8.0 million and $6.0 million as of December 31, 2025 and 2024, respectively.
Delek recognizes accrued interest and penalties related to unrecognized tax benefits as an adjustment to the current provision for income taxes. We recognized interest expense of $0.1 million, $0.2 million, and $0.2 million related to unrecognized tax benefits during the years ended December 31, 2025, 2024 and 2023, respectively. The total recognized liability for interest was $1.4 million and $1.3 million as of December 31, 2025 and 2024, respectively.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.