Income Taxes

Income tax expense on the Consolidated Statements of Operations for the years ended December 31 was as follows:


	2025		2024		2023
	(In thousands)
Current:
Federal	$	21,690	$	51,899	$	45,746
State	8,955		17,767		18,296
	30,645		69,666		64,042
Deferred:
Income taxes:
Federal	19,032		(1,082)		263
State	6,459		732		(1,869)
	25,491		(350)		(1,606)
Total income tax expense	$	56,136	$	69,316	$	62,436

Components of deferred tax assets and deferred tax liabilities at December 31 were as follows:


	2025		2024
	(In thousands)
Deferred tax assets:
Deferred compensation/compensation related	$	20,750	$	23,751
Asset retirement obligations	20,506		15,420
Operating lease liabilities	13,317		12,725
Accrued pension costs	9,958		9,528
Capitalized inventory overheads	9,951		8,359
Net operating loss	3,318		5,528
Section 174 costs	—		4,051
Other	7,053		4,645
Total deferred tax assets	$	84,853	$	84,007


	2025		2024
	(In thousands)
Deferred tax liabilities:
Basis differences on property, plant and equipment	$	317,809	$	209,488
Intangible assets	17,347		13,574
Operating lease right-of-use-assets	13,317		12,725
Other	21,269		17,419
Total deferred tax liabilities	369,742		253,206
Valuation allowance	3,028		5,528
Net deferred income tax liability	$	(287,917)	$	(174,727)

As of December 31, 2025 and 2024, we had various state income tax net operating loss carryforwards of $62.5 million and $98.6 million, respectively. The state income tax net operating loss carryforwards are due to

expire between 2026 and 2044. Changes in tax regulations or assumptions regarding current and future taxable income could require additional valuation allowances in the future.

The following table reconciles the change in the net deferred income tax liability from December 31, 2024, to December 31, 2025, to deferred income tax expense:


	2025		2024
	(In thousands)
Change in net deferred income tax liability from the preceding table	$	113,190	$	185
Deferred taxes established due to acquisition	(88,031)		—
Deferred taxes associated with other comprehensive loss	332		(670)
Other	—		135
Deferred income tax expense for the period	$	25,491	$	(350)

Total income tax expense differs from the amount computed by applying the statutory federal income tax rate to income before taxes. The reasons for this difference were as follows:


Years ended December 31,	2025			2024			2023
	Amount		%	Amount		%	Amount		%
	(Dollars in thousands)
Computed tax at federal statutory rate	$	44,770	21.0	$	56,909	21.0	$	51,515	21.0
Increases (reductions) resulting from:
State income taxes, net of federal income tax*	12,189		5.7	14,559		5.4	12,977		5.3
Depletion allowance	(2,359)		(1.1)	(2,767)		(1.0)	(2,808)		(1.1)
Nondeductible expenses	2,041		1.0	1,258		0.5	2,299		0.9
Tax credits	(549)		(0.3)	(720)		(0.3)	(1,722)		(0.7)
Unrecognized tax benefits	44		—	77		—	175		0.1
Total income tax expense	$	56,136	26.3	$	69,316	25.6	$	62,436	25.5

__________________

*State taxes in Oregon and California for 2025; and Oregon, Minnesota, and California for 2024 and 2023 constitute the majority (greater than 50%) of the tax effect within this category.

The following table provides cash taxes paid (net of refunds) for the year end December 31 were as follows:


Jurisdiction	2025		2024
	(In thousands)
Federal	$	26,500	$	40,736
Oregon	6,350		7,229
Minnesota	1,300		4,396
Other States/Cities	7,615		9,820
Total	$	41,765	$	62,181

Knife River and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state and local jurisdictions. We are no longer subject to U.S. federal or non-U.S. income tax examinations by tax authorities for years ending prior to 2022. With few exceptions, as of December 31, 2025, we are no longer subject to state and local income tax examinations by tax authorities for years ending prior to 2022.

Total reserves for uncertain tax positions were not material. We recognize interest and penalties accrued relative to unrecognized tax benefits in income tax expense.

Historical Timeline

Fiscal Year	Filed
2025	Feb 20, 2026	Showing above
2024	Feb 21, 2025

2023	Feb 27, 2024

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.

Knife River Corp Income Taxes Disclosure

Historical Timeline

About Income Taxes Disclosures

Other Available Disclosures