Intrepid Potash, Inc.IPI
Intrepid Potash, Inc. Income Taxes Disclosure
We account for income taxes in accordance with ASC Topic 740, Income Taxes. This standard requires the recognition of deferred tax assets and liabilities for the tax effect of temporary differences between the financial statement and tax basis of recorded assets and liabilities at enacted tax rates in effect when the related taxes are expected to be settled or realized. We recognize income taxes in each of the tax jurisdictions where we conduct business. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
A summary of the provision for income taxes is as follows (in thousands):
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Current portion of income tax expense (benefit): | ||||||||||||||||||||
| Federal | $ | — | $ | — | $ | — | ||||||||||||||
| State | 544 | 110 | 82 | |||||||||||||||||
| Deferred portion of income tax expense (benefit): | ||||||||||||||||||||
| Federal | — | 146,457 | (8,538) | |||||||||||||||||
| State | — | 47,766 | 67 | |||||||||||||||||
| Total income tax expense (benefit) | $ | 544 | $ | 194,333 | $ | (8,389) | ||||||||||||||
As described in Note 2, Summary of Significant Accounting Policies, we have elected to prospectively adopt the guidance in ASU 2023-09, Improvement to Income Tax Disclosures. The following table is a reconciliation of the federal statutory income tax rate of 21% to our effective rate for the year ended December 31, 2025, in accordance with the guidance in ASU 2023-09 (in thousands, except percentages):
| Year Ended December 31, 2025 | ||||||||||||||
| Tax Amount | Tax Rate | |||||||||||||
| Federal tax at statutory rate | $ | 2,463 | 21.0 | % | ||||||||||
| State taxes, net of federal benefit | 544 | 4.6 | % | |||||||||||
| Change in valuation allowance | (2,521) | (21.5) | % | |||||||||||
| Non-deductible items: | ||||||||||||||
| Officers' compensation | 519 | 4.4 | % | |||||||||||
| Fines and penalties | 457 | 3.9 | % | |||||||||||
| Meals and entertainment | 38 | 0.3 | % | |||||||||||
| Other non-deductible items | 26 | 0.2 | % | |||||||||||
| Other | ||||||||||||||
| Percentage depletion | (1,068) | (9.1) | % | |||||||||||
| Stock compensation | (49) | (0.4) | % | |||||||||||
| Federal effect of changes to state tax rates | 89 | 0.8 | % | |||||||||||
| Other | 46 | 0.4 | % | |||||||||||
| Net expense as calculated | $ | 544 | 4.6 | % | ||||||||||
The following table is a reconciliation of the U.S. federal statutory rate of 21% to our effective tax rate for the years ended December 31, 2024, and 2023, in accordance with the guidance prior to the adoption of ASU 2023-09 (in thousands, except percentages):
| 2024 | 2023 | |||||||||||||
| Federal taxes at statutory rate | $ | (3,888) | $ | (9,253) | ||||||||||
| Add: | ||||||||||||||
| State taxes, net of federal benefit | (1,536) | (1,274) | ||||||||||||
| Change in valuation allowance | 199,006 | 1,121 | ||||||||||||
| Change in federal and state tax rates | 159 | 238 | ||||||||||||
| Officers' compensation | 760 | 848 | ||||||||||||
| Percentage depletion | (465) | (282) | ||||||||||||
| Other | 297 | 213 | ||||||||||||
| Net expense (benefit) as calculated | $ | 194,333 | $ | (8,389) | ||||||||||
| Effective tax rate | (1,049.8) | % | 19.0 | % | ||||||||||
Our effective tax rate for the years ended December 31, 2025, 2024, and 2023 differs from the U.S. federal statutory rate primarily due to the change in our valuation allowance.
As of December 31, 2025, and 2024, we had gross deferred tax assets of $198.9 million and $202.2 million, respectively. During the year ended December 31, 2025, our deferred tax assets decreased primarily from decreases in the amounts of our federal and state net operating loss carryforwards. Included in gross deferred tax assets as of December 31, 2025, were approximately $171.1 million of federal net operating loss carryforwards, which expire beginning in 2035, and approximately $252.2 million of state net operating loss carryforwards, the majority of which begin to expire in 2034. Also
included are $1.9 million of federal research and development credits which begin to expire in 2031. The federal loss carryforward could be subject to examination by the tax authorities within three years after the carryforward is utilized, while the state net operating loss carryforwards could be subject to examination by the tax authorities generally within three or four years after the carryforward is utilized, depending on jurisdiction. Significant components of our deferred tax assets and liabilities were as follows (in thousands):
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Deferred tax assets (liabilities): | ||||||||||||||
| Property, plant, equipment and mineral properties, net | $ | 121,092 | $ | 121,172 | ||||||||||
| Federal and state net operating loss carryforwards | 48,136 | 60,278 | ||||||||||||
| Asset retirement obligation | 9,961 | 8,468 | ||||||||||||
| Deferred revenue | 12,302 | 1,330 | ||||||||||||
| Other | 5,535 | 9,042 | ||||||||||||
| Federal R&D credits | 1,870 | 1,870 | ||||||||||||
| Total deferred tax assets | 198,896 | 202,160 | ||||||||||||
| Valuation allowance | (198,896) | (202,160) | ||||||||||||
| Deferred tax asset, net | $ | — | $ | — | ||||||||||
In assessing the need for a valuation allowance, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. We evaluate our ability to realize the tax benefits associated with deferred tax assets by analyzing the relative impact of all the available positive and negative evidence regarding our forecasted taxable income using both historical and projected future operating results, the reversal of existing taxable temporary differences, taxable income in prior carryback years, as permitted by regulation, and the availability of tax planning strategies. In determining how much of a valuation allowance to recognize we primarily consider our projections of future taxable income. All available evidence, both positive and negative, that may affect the realizability of deferred tax assets is identified and considered in determining the appropriate amount of the valuation allowance. The ultimate realization of deferred tax assets is dependent upon the generation of certain types of future taxable income during the periods in which those temporary differences become deductible. Assumptions of expected future taxable income are based primarily on prices and forecasted sales volumes which are subject to market volatility. In making this assessment, we consider the scheduled reversal of deferred tax liabilities, our ability to carry back the deferred tax asset, projected future taxable income, and tax planning strategies.
As of December 31, 2025, and 2024, we have a full valuation allowance against our deferred tax assets because we do not believe it is more likely than not that we will fully realize the benefit of the deferred tax assets. During 2025, our valuation allowance decreased $3.3 million. The decrease was mainly due to reversals of deferred tax assets related to net operating losses. Our deferred tax assets, net of the valuation allowance, at both December 31, 2025, and 2024, is zero.
The estimated statutory income tax rates that are applied to our current and deferred income tax calculations are impacted most significantly by the tax jurisdictions in which we conduct business. Changing business conditions for normal business transactions and operations, as well as changes to state tax rates and apportionment laws, potentially alter the apportionment of income among the states for income tax purposes. These changes to apportionment laws result in changes in the calculation of our current and deferred income taxes, including the valuation of our deferred tax assets and liabilities. The effects of any such changes are recorded in the period of the adjustment. Such adjustments can increase or decrease the net deferred tax asset on the balance sheet and impact the corresponding deferred tax benefit or deferred tax expense on the statement of operations.
A decrease of our state tax rate decreases the value of its deferred tax asset, resulting in additional deferred tax expense being recorded on the income statement. Conversely, an increase in our state income tax rate would increase the value of the deferred tax asset, resulting in an increase in our deferred tax benefit. Because of the magnitude of the temporary differences between our book and tax basis in the assets, relatively small changes in the state tax rate may have a pronounced impact on the value of our net deferred tax asset.
Each quarter we evaluate the need for a liability for uncertain tax positions. At December 31, 2025, and 2024, we had no items that required disclosure in accordance with FASB guidance on accounting for uncertainty in income taxes.
We operate, and accordingly file income tax returns, in the U.S. federal jurisdiction and various U.S. state jurisdictions. With few exceptions, we are no longer subject to income tax audits that could result in an assessment for years prior to 2022.
The following table presents income tax paid (refunded) for the year ended December 31, 2025:
| 2025 | 2024 | 2023 | ||||||||||||||||||
| New Mexico | $ | 206,723 | $ | (46,772) | — | |||||||||||||||
| Oregon | 190,784 | 10,000 | 104,090 | |||||||||||||||||
| Texas | 41,760 | 51,812 | 69,412 | |||||||||||||||||
| Alabama | 23,966 | — | (27,210) | |||||||||||||||||
| Pennsylvania | 14,299 | — | — | |||||||||||||||||
| Montana | 2,650 | (9,461) | — | |||||||||||||||||
| New Jersey | — | 6,000 | 20,842 | |||||||||||||||||
| Massachusetts | — | — | 9,000 | |||||||||||||||||
| California | — | — | (42,200) | |||||||||||||||||
| Other | 7,672 | (2,562) | 44,730 | |||||||||||||||||
| Income Taxes Paid | $ | 487,854 | $ | 9,017 | $ | 178,664 | ||||||||||||||
— The amount of income taxes paid during the year does not meet the five percent disaggregation threshold.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 5, 2026 | Showing above |
| 2024 | Mar 4, 2025 | |
| 2023 | Mar 7, 2024 | |
| 2022 | Mar 7, 2023 | |
| 2021 | Mar 8, 2022 | |
| 2020 | Mar 2, 2021 | |
| 2019 | Mar 3, 2020 | |
| 2018 | Mar 12, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 28, 2017 | |
| 2015 | Feb 29, 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.