EQT CorpEQT
EQT Corp Income Taxes Disclosure
Income Taxes
The following table summarizes the Company's income tax expense.
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (Thousands) | |||||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | (7,296) | $ | 1,222 | $ | (10,894) | |||||||||||
| State | 1,344 | 6,125 | (4,818) | ||||||||||||||
| Current income tax (benefit) expense | (5,952) | 7,347 | (15,712) | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | 551,000 | (21,463) | 450,091 | ||||||||||||||
| State | 106,836 | 36,195 | (65,425) | ||||||||||||||
| Deferred income tax expense | 657,836 | 14,732 | 384,666 | ||||||||||||||
| Total income tax expense | $ | 651,884 | $ | 22,079 | $ | 368,954 | |||||||||||
For the year ended December 31, 2025, current income tax benefit is primarily composed of a reduction in prior year income tax liabilities and interest. For the year ended December 31, 2024, current income tax expense is composed of state and federal income tax liabilities. For the year ended December 31, 2023, current income tax benefit related primarily to 2014 through 2017 audit settlement interest and reduction in prior year state income tax liabilities.
On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (the OBBBA) into law. Significant provisions affecting the Company include (i) the reinstatement of 100% bonus depreciation for qualifying property, (ii) the allowance for immediate and full expensing of domestic research and experimentation expenditures and (iii) the use of earnings before interest, taxes, depreciation and amortization, or EBITDA, rather than earnings before interest and taxes, or EBIT, in determining adjusted taxable income for purposes of any interest deduction limitation. The enactment of the OBBBA did not have a material impact on the Company's effective tax rate for the year ended December 31, 2025.
The table below summarizes income tax payments, net of refunds.
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (Thousands) | |||||||||||||||||
| Federal | $ | (81,195) | $ | 12,149 | $ | 12,876 | |||||||||||
| State: | |||||||||||||||||
| Mississippi | * | * | 670 | ||||||||||||||
| Pennsylvania | * | (4,114) | * | ||||||||||||||
| Other U.S. states | 2,173 | (75) | (196) | ||||||||||||||
| Total taxes paid, net of refunds | $ | (79,022) | $ | 7,960 | $ | 13,350 | |||||||||||
*Indicates that the amount paid or refunded did not exceed the applicable disclosure threshold for the periods presented and is included in other U.S. states.
The table below summarizes the reasons for income tax expense differences from amounts computed at the federal statutory rate of 21% on pre-tax income.
| Years Ended December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Amount | Rate | Amount | Rate | Amount | Rate | ||||||||||||||||||||||||||||||
| (Thousands) | (Thousands) | (Thousands) | |||||||||||||||||||||||||||||||||
| Income before income taxes | $ | 2,977,542 | $ | 264,194 | $ | 2,103,498 | |||||||||||||||||||||||||||||
| U.S. federal statutory tax rate | $ | 625,284 | 21.0 | % | $ | 55,481 | 21.0 | % | $ | 441,735 | 21.0 | % | |||||||||||||||||||||||
| State and local income taxes, net of federal benefit (a) | 95,217 | 3.2 | % | 35,115 | 13.3 | % | (55,993) | (2.7) | % | ||||||||||||||||||||||||||
| Tax credits: | |||||||||||||||||||||||||||||||||||
| Research and development credits | (181) | — | % | (5,779) | (2.2) | % | (4,896) | (0.2) | % | ||||||||||||||||||||||||||
| Other | (536) | — | % | (758) | (0.3) | % | 180 | — | % | ||||||||||||||||||||||||||
| Changes in valuation allowances: | |||||||||||||||||||||||||||||||||||
| Capital loss carryforward | — | — | % | (52,820) | (20.0) | % | 78 | — | % | ||||||||||||||||||||||||||
| Other | 977 | — | % | 818 | 0.3 | % | 1,301 | 0.1 | % | ||||||||||||||||||||||||||
| Nontaxable or nondeductible items: | |||||||||||||||||||||||||||||||||||
| Transaction costs | — | — | % | 6,041 | 2.3 | % | — | — | % | ||||||||||||||||||||||||||
| Other | 1,814 | 0.1 | % | 2,639 | 1.0 | % | (2,984) | (0.1) | % | ||||||||||||||||||||||||||
| Changes in unrecognized tax benefits (b) | (9,636) | (0.3) | % | (16,977) | (6.4) | % | (7,015) | (0.3) | % | ||||||||||||||||||||||||||
| Other adjustments: | |||||||||||||||||||||||||||||||||||
| Noncontrolling interests in consolidated subsidiaries | (60,156) | (2.0) | % | (2,724) | (1.0) | % | (334) | — | % | ||||||||||||||||||||||||||
| Other | (899) | — | % | 1,043 | 0.4 | % | (3,118) | (0.1) | % | ||||||||||||||||||||||||||
| Total income tax expense and effective tax rate | $ | 651,884 | 21.9 | % | $ | 22,079 | 8.4 | % | $ | 368,954 | 17.5 | % | |||||||||||||||||||||||
(a)The majority of the net state and local income tax effect relates to state income taxes in Pennsylvania and West Virginia for all periods presented.
(b)Changes in unrecognized tax benefits are presented on an aggregated basis for all jurisdictions.
The Company's effective tax rate for the year ended December 31, 2025 was higher compared to the U.S. federal statutory rate primarily as a result of state taxes net of valuation allowances, partly offset by the Midstream Joint Venture's and Eureka Holdings' income attributable to the noncontrolling interests.
The Company's effective tax rate for the year ended December 31, 2024 was lower compared to the U.S. federal statutory rate due primarily to the release of valuation allowances related to capital loss carryforward utilization, expiration of a statute of limitations related to uncertain tax positions, inclusive of interest, and net state deferred tax benefit related to a rate reduction from a Pennsylvania tax law change enacted on July 8, 2022 (the Pennsylvania Tax Legislation). The Pennsylvania Tax Legislation lowered the corporate net income tax rate from 8.99% to 8.49% in 2024 and continues to lower the corporate net income tax rate by 0.5% annually thereafter until the corporate net income tax rate reaches 4.99% in 2031. The rate reductions were partly offset by valuation allowances limiting certain state income tax benefits and non-deductible transaction costs incurred with the Equitrans Midstream Merger.
The Company's effective tax rate for the year ended December 31, 2023 was lower compared to the U.S. federal statutory rate due primarily to the release of valuation allowances limiting certain state deferred tax assets and net state deferred tax benefit related to a rate reduction from the Pennsylvania Tax Legislation and the Tug Hill and XcL Midstream Acquisition. The Pennsylvania Tax Legislation lowered the corporate net income tax rate from 9.99% to 8.99% in 2023.
The following table summarizes the source and tax effects of temporary differences between financial reporting and tax bases of assets and liabilities.
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (Thousands) | |||||||||||
| Deferred tax asset: | |||||||||||
| NOL carryforwards | $ | 789,888 | $ | 708,518 | |||||||
| Federal tax credits | 98,813 | 89,644 | |||||||||
| Interest disallowance limitation | 45,222 | 106,622 | |||||||||
| Incentive compensation and deferred compensation plans | 26,432 | 18,032 | |||||||||
| State capital loss carryforward | 22,062 | 44,496 | |||||||||
| Net unrealized losses | — | 80,723 | |||||||||
| Other | — | 2,433 | |||||||||
| Deferred tax asset | 982,417 | 1,050,468 | |||||||||
| Valuation allowance | (254,460) | (257,218) | |||||||||
| Net deferred tax asset | 727,957 | 793,250 | |||||||||
| Deferred tax liability: | |||||||||||
| Property, plant and equipment | (2,792,495) | (2,516,074) | |||||||||
| Investment in partnerships | (1,392,717) | (1,128,279) | |||||||||
| Net unrealized gains | (13,070) | — | |||||||||
| Other | (1,685) | — | |||||||||
| Deferred tax liability | (4,199,967) | (3,644,353) | |||||||||
| Net deferred tax liability | $ | (3,472,010) | $ | (2,851,103) | |||||||
During 2025, the net deferred tax liability increased by $620.9 million compared to 2024 due primarily to temporary differences created by 100% bonus depreciation enacted with the OBBBA and the incremental accelerated deductions from the Olympus Energy Acquisition.
The following table presents the expiration periods of the net operating loss (NOL) carryforward deferred tax assets and associated valuation allowance by jurisdiction.
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (Thousands) | |||||||||||
| NOL carryforwards: | |||||||||||
| Federal (expires between 2032 and 2037) | $ | 14,644 | $ | 14,644 | |||||||
| Federal (indefinite expiration) | 386,846 | 322,258 | |||||||||
| State (expires between 2026 and 2045) | 354,822 | 347,279 | |||||||||
| State (indefinite expiration) | 33,576 | 24,337 | |||||||||
| Total NOL carryforwards | $ | 789,888 | $ | 708,518 | |||||||
| Valuation allowance on NOL carryforwards: | |||||||||||
| Federal | $ | (13,870) | $ | (14,263) | |||||||
| State | (202,472) | (187,321) | |||||||||
| Total valuation allowance on NOL carryforwards | $ | (216,342) | $ | (201,584) | |||||||
The Company recognizes a valuation allowance when it is more likely than not that all or a portion of a deferred tax asset will not be realized. All available evidence, both positive and negative, is considered when determining the need for a valuation allowance. To determine whether a valuation allowance is required, the Company uses judgment to estimate future taxable income and considers the tax consequences in the jurisdiction where such taxable income is generated as well as evidence including the Company's current financial position, actual and forecasted results of operations, the reversal of deferred tax liabilities and tax planning strategies in addition to the current and forecasted business economics of the oil and gas industry.
For 2025 and 2024, positive evidence considered included forecasts of future taxable income, the reversals of financial-to-tax temporary differences and the implementation of tax planning strategies. Negative evidence considered included historical pre-tax book losses of the Company and the uncertainty of future commodity prices and inability to generate capital gains. A review of positive and negative evidence regarding these tax benefits resulted in the conclusion that valuation allowances for certain NOLs and state capital loss carryforwards were warranted as it was more likely than not that the Company would not use them prior to expiration.
The remaining valuation allowance (not included in the NOL table above) is related primarily to state limitations on interest expense under Internal Revenue Code Section 163(j) and state capital loss carryforwards generated from the sales of the Company's equity investment in Equitrans Midstream between February 2020 and April 2022. Capital losses may be utilized only to offset capital gains and are generally subject to a three-year carryback and five year carryforward period for potential utilization. During 2024, the Company recognized capital gains from the NEPA Non-Operated Asset Divestitures that allowed the Company to recognize in the Statement of Consolidated Operations a federal and state income tax benefit of $52.8 million and $2.3 million, respectively, related to its valuation allowances for its capital loss carryforwards.
As of December 31, 2025, the Company had a valuation allowance related to the interest expense limitation of $10.5 million and the capital loss carryforward of $22.1 million for state income tax purposes due to the limitations on future potential utilization. As of December 31, 2024, the Company had a valuation allowance related to the interest expense limitation of $10.4 million and the capital loss carryforward of $44.5 million for state income tax purposes due to the limitations on future potential utilization. The reduction of the valuation allowance during 2025 primarily reflects the expiration of a portion of the capital loss carryforward.
The following table reconciles the beginning and ending amount of reserve for uncertain tax positions, excluding interest and penalties.
| 2025 | 2024 | 2023 | |||||||||||||||
| (Thousands) | |||||||||||||||||
| Balance at January 1 | $ | 72,743 | $ | 89,197 | $ | 204,035 | |||||||||||
| Additions for tax positions taken in current year | 8,291 | 11,720 | 11,986 | ||||||||||||||
| (Reductions) additions for tax positions taken in prior years | (6,131) | 15,177 | (883) | ||||||||||||||
| Reductions for tax positions settled with tax authorities | — | (29,645) | (125,941) | ||||||||||||||
| Reductions for lapse in statute of limitations | (14,574) | (13,706) | — | ||||||||||||||
| Balance at December 31 | $ | 60,329 | $ | 72,743 | $ | 89,197 | |||||||||||
The following table presents specific line items that were included in the reserve for uncertain tax positions.
| December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (Thousands) | |||||||||||||||||
| If recognized, effect to the effective tax rate | $ | 57,350 | $ | 67,105 | $ | 83,669 | |||||||||||
| Reduction of related deferred tax asset for general business credit carryforwards and NOLs | 50,612 | 60,415 | 77,013 | ||||||||||||||
The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. The Company recorded interest and penalties expense (income) of approximately $0.2 million, $0.6 million and $(19.8) million for the years ended December 31, 2025, 2024 and 2023, respectively. Interest and penalties of $3.1 million, $2.9 million, and $2.3 million were included in the Consolidated Balance Sheets as of December 31, 2025, 2024 and 2023, respectively.
In October 2025, the statute of limitation expired for an uncertain tax position, which resulted in a $0.9 million net reduction to the state tax liability and accrued interest reserve and a net increase to the state net operating loss of $10.9 million.
In September 2024, the Company settled its consolidated U.S. federal income tax liability with the IRS through 2019 for amounts included in the reserve for uncertain tax positions with minimal impact to the effective tax rate. The settlement resulted in forgone research and development tax credits of $29.6 million, which are reflected in the table above. The refundable alternative minimum tax credits realized with the settlement of the previous IRS audit are included in the income tax receivable in the Consolidated Balance Sheet as of December 31, 2024 and was received by the Company in May 2025. During 2025, the IRS commenced an audit of EQM Midstream Partners, LP (EQM), a wholly owned tax partnership of EQT, for the tax year ended December 31, 2023. As of December 31, 2025, the Company is no longer subject to state examinations by income tax authorities for years prior to 2016 and has considered ongoing state income tax matters in its reserve for uncertain tax positions.
There were no material changes to the Company's methodology for accounting for unrecognized tax benefits during 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 18, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 14, 2024 | |
| 2022 | Feb 16, 2023 | |
| 2021 | Feb 10, 2022 | |
| 2020 | Feb 17, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Feb 14, 2019 | |
| 2017 | Feb 15, 2018 | |
| 2016 | Feb 9, 2017 | |
| 2015 | Feb 11, 2016 | |
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.