Hess Midstream LP Income Taxes Disclosure
Note 13. Income Taxes
Although the Company is a Delaware limited partnership, we are subject to corporate income tax on our share of the Partnership’s earnings because of our election to be treated as a corporation for U.S. federal and state income tax purposes. The provision for income taxes consisted of:
|
|
Year Ended December 31, |
|
|||||||||
(in millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Federal |
|
|
|
|
|
|
|
|
|
|||
Current |
|
$ |
0.2 |
|
|
$ |
0.2 |
|
|
$ |
0.1 |
|
Deferred taxes and other accruals |
|
|
93.6 |
|
|
|
59.1 |
|
|
|
31.2 |
|
State |
|
|
20.0 |
|
|
|
12.5 |
|
|
|
6.6 |
|
Total provision for income taxes |
|
$ |
113.8 |
|
|
$ |
71.8 |
|
|
$ |
37.9 |
|
The reconciliation between the U.S. statutory federal income tax rate and the Company’s effective income tax rate for the year ended December 31, 2025, in accordance with ASU 2023-09 guidance is as follows:
|
|
Year Ended December 31, 2025 |
|||||||
|
|
Amount |
|
|
Percent |
||||
. statutory rate |
|
$ |
167.7 |
|
|
|
21.0 |
|
% |
Noncontrolling interest in partnership |
|
|
(69.6 |
) |
|
|
(8.7 |
) |
|
State income taxes, net of federal income tax(1) |
|
|
15.7 |
|
|
|
2.0 |
|
|
Effective rate |
|
$ |
113.8 |
|
|
|
14.3 |
|
% |
(1) State taxes in North Dakota made up the majority (greater than 50%) of the tax effect in this category.
The reconciliation between the U.S. statutory federal income tax rate and the Company’s effective income tax rate for the years ended December 31, 2024 and 2023, as previously reported, is as follows:
|
|
Year Ended December 31, |
||||||||
|
|
2024 |
|
2023 |
||||||
U.S. statutory rate |
|
|
21.0 |
|
% |
|
|
21.0 |
|
% |
Noncontrolling interest in partnership |
|
|
(12.5 |
) |
|
|
|
(15.9 |
) |
|
State income taxes, net of federal income tax |
|
|
1.4 |
|
|
|
|
0.8 |
|
|
Effective rate |
|
|
9.9 |
|
% |
|
|
5.9 |
|
% |
As a result of the equity offering and unit repurchase transactions (see Note 3, Equity Transactions), we recognized an additional deferred tax asset in the total amount of $305.0 million (2024: $329.8 million) related to the change in the temporary difference between the carrying amount and the tax basis of our investment in the Partnership. The effect of recognizing the additional deferred tax asset was included in Class A shareholders’ equity balance in the accompanying consolidated statement of changes in partners’ capital due to the transactions being characterized as transactions among or with shareholders.
The components of deferred tax assets and liabilities are as follows:
|
|
December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
(in millions) |
|
|
|
|
|
|
||
Deferred tax liabilities |
|
|
|
|
|
|
||
Investments |
|
$ |
(0.5 |
) |
|
$ |
(0.5 |
) |
Total deferred tax liabilities |
|
|
(0.5 |
) |
|
|
(0.5 |
) |
Deferred tax assets |
|
|
|
|
|
|
||
Investments |
|
|
650.3 |
|
|
|
514.5 |
|
Net operating loss carryforwards |
|
|
123.6 |
|
|
|
68.1 |
|
Total deferred tax assets |
|
|
773.9 |
|
|
|
582.6 |
|
Net deferred tax assets (liabilities) |
|
$ |
773.4 |
|
|
$ |
582.1 |
|
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Feb 23, 2021 | |
| 2019 | Feb 21, 2020 | |
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.