Everus Construction Group, Inc.ECG
Everus Construction Group, Inc. Income Taxes Disclosure
Income Taxes
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Income before income taxes and income from equity method investments consisted solely of U.S. domestic income.
Income tax expense on the consolidated statements of income was as follows:
Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
(In thousands) | |||||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 49,658 | $ | 36,964 | $ | 39,468 | |||||||||||
State and local | 16,312 | 10,933 | 8,923 | ||||||||||||||
Total current | 65,970 | 47,897 | 48,391 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | 4,891 | 1,214 | (2,629) | ||||||||||||||
State and local | 1,450 | 412 | (476) | ||||||||||||||
Total deferred | 6,341 | 1,626 | (3,105) | ||||||||||||||
Total income tax expense | $ | 72,311 | $ | 49,523 | $ | 45,286 | |||||||||||
Total income tax expense differs from the amount computed by applying the statutory federal income tax rate to income before taxes and income from equity method investments. The reasons for this difference were as follows:
Year ended December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
Amount | % | Amount | % | Amount | % | ||||||||||||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||||||||||||||
U.S. federal statutory tax rate | $ | 57,557 | 21.0 | % | $ | 40,518 | 21.0 | % | $ | 38,328 | 21.0 | % | |||||||||||||||||||||||
Increases (reductions) resulting from: | |||||||||||||||||||||||||||||||||||
State and local income taxes, net of federal income tax effect* | 14,664 | 5.4 | 8,939 | 4.6 | 6,535 | 3.6 | |||||||||||||||||||||||||||||
Nondeductible expenses | 1,550 | 0.6 | 1,254 | 0.7 | 1,605 | 0.9 | |||||||||||||||||||||||||||||
Tax credits | (1,509) | (0.6) | (1,185) | (0.6) | (1,084) | (0.6) | |||||||||||||||||||||||||||||
Changes in unrecognized tax benefits | 49 | — | (3) | — | (98) | (0.1) | |||||||||||||||||||||||||||||
Effective tax rate | $ | 72,311 | 26.4 | % | $ | 49,523 | 25.7 | % | $ | 45,286 | 24.8 | % | |||||||||||||||||||||||
*State taxes in Oregon and California constitute the majority (greater than 50%) of the tax effects in this category.
Components of deferred tax assets and deferred tax liabilities as of December 31 were as follows:
| 2025 | 2024 | ||||||||||
| (In thousands) | |||||||||||
Deferred tax assets: | |||||||||||
Operating lease liabilities | $ | 22,643 | $ | 16,808 | |||||||
| Compensation-related | 18,927 | 13,573 | |||||||||
Employee benefit plans costs | 2,181 | 1,614 | |||||||||
Workers’ compensation reserve | 1,862 | 1,878 | |||||||||
Allowance for expected credit losses | 1,121 | 1,437 | |||||||||
Capital investment overhead on contracts | 347 | 535 | |||||||||
Research and development costs | — | 5,596 | |||||||||
| Other | 3,251 | 2,764 | |||||||||
Total deferred tax assets | $ | 50,332 | $ | 44,205 | |||||||
Deferred tax liabilities: | |||||||||||
Operating lease right-of-use-assets | $ | (22,163) | $ | (16,672) | |||||||
Basis differences on property, plant and equipment | (21,278) | (17,664) | |||||||||
Intangible assets | (11,897) | (10,912) | |||||||||
Prepaid expenses | (7,802) | (6,597) | |||||||||
| Other | (1,540) | — | |||||||||
Total deferred tax liabilities | (64,680) | (51,845) | |||||||||
Valuation allowance | (521) | (521) | |||||||||
Net deferred income tax liabilities | $ | (14,869) | $ | (8,161) | |||||||
As of both December 31, 2025 and 2024, the Company had various state income tax net operating loss carryforwards of $16.5 million. The state income tax net operating loss carryforwards are due to expire beginning in 2031. It is likely that a portion of the benefit from certain carryforwards will not be realized; therefore, valuation allowances have been provided. As of both December 31, 2025 and 2024, the total valuation allowance on deferred tax assets, related to the state income tax net operating loss carryforwards, was approximately $0.5 million. Changes in tax regulations or assumptions regarding current and future taxable income could require an adjustment to the valuation allowance in the future.
The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. The Company is no longer subject to U.S. federal tax examinations by tax authorities for years ending prior to 2022. With few exceptions, as of December 31, 2025, the Company is no longer subject to state and local income tax examinations by tax authorities for years ending prior to 2022.
Reconciliations of unrecognized tax benefits were as follows as of December 31:
| 2025 | 2024 | 2023 | |||||||||||||||
| (In thousands) | |||||||||||||||||
Balance at beginning of year | $ | 732 | $ | 656 | $ | 570 | |||||||||||
Additions based on tax positions related to current year | 170 | 145 | 145 | ||||||||||||||
Additions for tax positions of prior years | 118 | 78 | 279 | ||||||||||||||
Reductions for tax positions of prior years | (55) | — | (60) | ||||||||||||||
Reductions resulting from a lapse of the applicable statute of limitations periods | (136) | (147) | (278) | ||||||||||||||
Balance at end of year | $ | 829 | $ | 732 | $ | 656 | |||||||||||
As of December 31, 2025, 2024 and 2023, there were $0.8 million, $0.7 million and $0.7 million of unrecognized tax benefits that if recognized would affect the annual effective tax rate.
The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in Selling, general and administrative expenses. During the years ended December 31, 2025, 2024, and 2023, the Company recognized an immaterial amount of interest and penalties. The Company recognizes the liability for all unrecognized tax benefits in Taxes
payable and accrued interest and penalties in Other accrued liabilities on the consolidated balance sheets. The Company had an immaterial amount for payment of interest and penalties accrued as of both December 31, 2025 and 2024.
Income taxes paid, net of refunds, was as follows:
Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
(In thousands) | |||||||||||||||||
| Federal | $ | 56,836 | $ | 39,420 | $ | 40,105 | |||||||||||
| State | 20,983 | 10,787 | 12,217 | ||||||||||||||
Total income taxes paid, net of refunds | $ | 77,819 | $ | 50,207 | $ | 52,322 | |||||||||||
Income taxes paid, net of refunds, exceeded 5% of total income taxes paid, net of refunds, in the following jurisdictions: | |||||||||||||||||
| State | |||||||||||||||||
Oregon | $ | 9,395 | $ | 4,362 | $ | 5,859 | |||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 28, 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.