Green Plains Inc.GPRE
Green Plains Inc. Income Taxes Disclosure
INCOME TAXES
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities and their respective tax bases, and net operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted rates expected to be applicable to taxable income in the years those temporary differences are recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in income during the period that includes the enactment date. A valuation allowance is recorded by the company when it is more likely than not that some portion or all of a deferred tax asset will not be realized.
The IRA was signed into law on August 16, 2022. The IRA includes significant law changes relating to tax, climate change, energy and health care. The IRA significantly expands clean energy related tax credits and permits more flexibility for taxpayers to use the credits with direct-pay and transferable credit options.
The OBBB was signed into law on July 4, 2025. The OBBB includes a broad range of tax reform provisions affecting businesses, including extending and modifying certain key provisions of the Tax Cuts & Jobs Act, and expanding certain IRA incentives while accelerating the phase-out of others. Important business provisions of the OBBB include reinstatement of permanent expensing of domestic research and development costs, higher EBITDA cap on the deduction for interest expense and 100% bonus depreciation. In addition, the OBBB extends the tax credit for Clean Fuel Production under Section 45Z to December 31, 2029, and leaves credits generated from carbon capture under Section 45Q substantially unchanged. The company will benefit from the reinstatement of permanent expensing of domestic research and development costs and the higher EBITDA cap on the deduction for interest expense, as well as the extension of the tax credit for Clean Fuel Production under Section 45Z to December 31, 2029.
The Section 45Z clean fuel production credit is a general business credit under Section 38 that is allowed with respect to clean transportation fuel produced domestically after December 31, 2024, and before December 31, 2029. This credit, which was part of the IRA, and subsequently extended by the OBBB, incentivizes the production of clean fuels at our plants that reduce GHG emissions below a CI score of 50. The tax credit is calculated by multiplying the gallons of clean transportation
fuel produced times the CI emission factor times the applicable credit rate per gallon ($0.20 for non-SAF transportation fuel, or $1.00 if the taxpayer satisfies the prevailing wage requirements under Section 45). The company expects that it is more-likely-than-not that prevailing wage requirements will be met for 2025 for six facilities and has calculated the credit at the highest credit rate.
On September 16, 2025, the company entered into an agreement, pursuant to which the company agreed to supply production tax credits available under Section 45Z to a buyer from the production of the company's ethanol at its Nebraska facilities between January 1, 2025 and December 31, 2025. On December 10, 2025, the agreement was amended to add Section 45Z production tax credits produced at three more of the company's facilities. All credits generated during the year ended December 31, 2025, were sold in accordance with these agreements. The final proceeds are dependent on actual production and the final CI score at the company's facilities. Based on production and CI scores for the year ended December 31, 2025, the company recorded an income tax benefit of $54.2 million, net of a valuation allowance, related to 45Z production tax credits. The company expects to benefit from certain energy related tax credits in future years.
On January 9, 2024, the transactions contemplated by the Merger Agreement were completed as described in more detail in Note 4 – Merger and Dispositions included herein. For income tax purposes, the total consideration given by the company in exchange for the remaining interest in the partnership, creates a tax basis in the acquired interest. Because the GAAP basis in the acquired interest is less than the total consideration, a new deferred tax asset was created. The company's valuation allowance on deferred tax assets increased by a corresponding amount, which did not have a material impact on the company's consolidated financial statements.
On July 30, 2025 the company settled our federal R&D tax credit audit covering years 2013 through 2018 with the IRS Independent Office of Appeals. The final settlement was in accordance with the agreement in-principle reached in November 2024. As a result of the settlement, the company released our reserve for unrecognized tax benefits and adjusted our R&D tax credit carry-forward to reflect the post settlement amount. The settlement did not have a material impact on the company's consolidated financial statements. The company’s federal income tax returns for the tax years ended December 31, 2022 through 2024 are still subject to audit.
In accordance with ASU 2023-09, income tax expense (benefit) consists of the following (in thousands):
Year Ended December 31, | |||||
| 2025 | |||||
| Current | |||||
| Federal | $ | 1,181 | |||
| State | 58 | ||||
| Foreign | — | ||||
| Total current | 1,239 | ||||
| Deferred | |||||
| Federal | (53,098) | ||||
| State | 113 | ||||
| Foreign | — | ||||
| Total deferred | (52,985) | ||||
| Total income tax expense (benefit) | $ | (51,746) | |||
Income tax expense (benefit) consists of the following (in thousands):
Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
Current | $ | 2,268 | $ | 1,238 | |||||||
| Deferred | 3,944 | (6,855) | |||||||||
| Total income tax expense (benefit) | $ | 6,212 | $ | (5,617) | |||||||
In accordance with ASU 2023-09, the following table summarizes differences between income tax expense (benefit) at the statutory federal income tax rate and as presented on the consolidated statements of operations (in thousands):
| Year Ended December 31, | |||||||||||
| 2025 | |||||||||||
| Tax expense at federal statutory rate | $ | (35,841) | 21.0% | ||||||||
State income tax expense, net of federal benefit (1) | 231 | (0.1) | |||||||||
Foreign tax effects | — | — | |||||||||
Effect of changes in tax laws or rates | — | — | |||||||||
Effect of cross-border taxes | — | — | |||||||||
Tax Credits | |||||||||||
Section 45Z production tax credits | (63,180) | 37.0% | |||||||||
Changes in valuation allowances | 45,595 | (26.7)% | |||||||||
Nontaxable or nondeductible items | |||||||||||
Stock compensation | 2,798 | (1.6)% | |||||||||
Other | 811 | (0.5)% | |||||||||
Changes in unrecognized tax benefits | — | —% | |||||||||
Other adjustments | |||||||||||
Deferred tax asset adjustment | (2,487) | 1.4% | |||||||||
Other | 327 | (0.2)% | |||||||||
| Income tax expense (benefit) | $ | (51,746) | 30.3% | ||||||||
(1)State taxes in Louisiana and New Jersey accumulated to over 50% of the tax effect in this category.
Differences between income tax expense (benefit) at the statutory federal income tax rate and as presented on the consolidated statements of operations are summarized as follows (in thousands):
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Tax expense at federal statutory rate | $ | (14,750) | $ | (17,293) | |||||||
| State income tax expense (benefit), net of federal benefit | 1,123 | (662) | |||||||||
| Nondeductible compensation | 1,388 | 2,787 | |||||||||
| Noncontrolling interests | (150) | (3,660) | |||||||||
| Dissolution of MLP | 23,919 | — | |||||||||
| R&D tax credit audit agreement in-principle | (232) | — | |||||||||
| Increase (decrease) in valuation allowance | (5,491) | 15,892 | |||||||||
| Stock compensation | 278 | (4,440) | |||||||||
| Other | 127 | 1,759 | |||||||||
| Income tax expense (benefit) | $ | 6,212 | $ | (5,617) | |||||||
Significant components of deferred tax assets and liabilities are as follows (in thousands):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets | |||||||||||
| Net operating loss carryforwards - Federal | $ | 55,667 | $ | 26,104 | |||||||
| Net operating loss carryforwards - State | 21,474 | 15,777 | |||||||||
| Tax credit carryforwards - Federal | 74,501 | 35,098 | |||||||||
| Tax credit carryforwards - State | 370 | 1,359 | |||||||||
| Section 174 capitalized expenses | 38,849 | 54,470 | |||||||||
| Interest expense carryforward | 32,756 | 20,003 | |||||||||
| Investment in partnerships and joint ventures | 4,657 | 3,807 | |||||||||
| Inventory valuation | 1,178 | 983 | |||||||||
| Stock-based compensation | 1,811 | 1,377 | |||||||||
| Accrued expenses | 10,723 | 7,818 | |||||||||
| Lease obligations | 17,640 | 18,693 | |||||||||
| Organizational and start-up costs | 331 | 379 | |||||||||
| Other | 1,658 | 1,580 | |||||||||
| Total | 261,615 | 187,448 | |||||||||
| Valuation allowance | (118,865) | (77,657) | |||||||||
| Total deferred tax assets | 142,750 | 109,791 | |||||||||
| Deferred tax liabilities | |||||||||||
| Fixed assets | (91,831) | (98,485) | |||||||||
| Derivative financial instruments | (1,043) | (78) | |||||||||
| Right-of-use assets | (16,039) | (17,081) | |||||||||
| Total deferred tax liabilities | (108,913) | (115,644) | |||||||||
| Deferred income taxes, net | $ | 33,837 | $ | (5,853) | |||||||
At December 31, 2025, the company has federal research and development credits of $28.5 million which will begin to expire in 2033 and federal 45Z production tax credits of $40.3 million, which are contracted for sale with a third-party. The company also has $0.3 million of state credits which will expire, subject to taxable income, beginning in 2026. The company has federal net operating losses of $55.7 million, which do not have an expiration date and state net operating losses of $21.5 million, some of which begin expiring in 2026. The company also has a capital loss carry-forward of $1.0 million which will expire in 2030.
The company has established a valuation allowance against its deferred tax assets due to uncertainty that it will realize these assets in the future. The valuation allowance on deferred tax assets was recognized as a result of negative evidence, including cumulative losses in recent years, outweighing the more subjective positive evidence. Management considers whether it is more likely than not that some or all of the deferred tax assets will be realized, which is dependent on the generation of future taxable income and other tax attributes during the periods those temporary differences become deductible. Scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies are considered to make this assessment. The company will continue to regularly assess the realizability of deferred tax assets. Changes in earnings performance and future earnings projections, among other factors, may cause the company to adjust its valuation allowance on deferred tax assets, which would impact the company’s results of operations in the period it is determined that these factors have changed.
The company has no unrecognized tax benefits at December 31, 2025. The company had $79.5 million of unrecognized tax benefits at December 31, 2024. Unrecognized tax benefits were recorded as a reduction of the deferred tax asset associated with the federal tax credit carryforwards. Interest and penalties associated with uncertain tax positions are accrued as part of income taxes payable. On July 30, 2025, the company settled our federal R&D tax credit audit covering tax years
2013 through 2018 with the IRS Independent Office of Appeals. As a result of the settlement, the company released its reserve for unrecognized tax benefits.
Income taxes paid, net of refunds, were as follows (in thousands):
| Year Ended December 31, | |||||
| 2025 | |||||
Federal | $ | 76 | |||
State | 1,692 | ||||
Foreign | — | ||||
Total | $ | 1,768 | |||
State jurisdictions exceeding 5% of total income taxes paid, net of refunds | |||||
Texas | $ | 1,283 | |||
New Jersey | 109 | ||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 10, 2026 | Showing above |
| 2024 | Feb 7, 2025 | |
| 2023 | Feb 9, 2024 | |
| 2022 | Feb 10, 2023 | |
| 2021 | Feb 18, 2022 | |
| 2020 | Feb 16, 2021 | |
| 2019 | Feb 20, 2020 | |
| 2018 | Feb 20, 2019 | |
| 2017 | Feb 14, 2018 | |
| 2016 | Feb 22, 2017 | |
| 2015 | Feb 18, 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.