Knight-Swift Transportation Holdings Inc.KNX
Knight-Swift Transportation Holdings Inc. Income Taxes Disclosure
Income Taxes
Income Tax Disclosures as adopted by ASU 2023-09
The following table presents the Company's income tax expense:
| 2025 | |||||
| (In thousands) | |||||
| Income before income taxes: | |||||
| United States | $ | 66,524 | |||
| Foreign | 28,798 | ||||
| All jurisdictions | $ | 95,322 | |||
| Current expense: | |||||
| Federal | 29,908 | ||||
| State | 7,968 | ||||
| Foreign | 7,536 | ||||
| All jurisdictions | 45,412 | ||||
| Deferred (benefit) expense: | |||||
| Federal | (16,121) | ||||
| State | 1,571 | ||||
| Foreign | (1,094) | ||||
| All jurisdictions | (15,644) | ||||
| Total income tax expense | $ | 29,768 | |||
Income Taxes Paid — The components of income taxes paid, net of refunds received, are presented below:
| Year ended December 31, | |||||
| 2025 | |||||
| (In thousands) | |||||
| Federal | $ | 36,299 | |||
| State | 5,079 | ||||
| Foreign | 8,934 | ||||
| Total | $ | 50,312 | |||
Income taxes paid (net of refunds) exceeded 5 percent of total income taxes paid (net of refunds) in the following jurisdictions:
| Year ended December 31, | |||||
| 2025 | |||||
| (In thousands) | |||||
| State | |||||
| Florida | $ | 617 | |||
| Missouri | $ | (509) | |||
| Oregon | $ | 401 | |||
| Pennsylvania | $ | 555 | |||
| Texas | $ | 2,158 | |||
| Virginia | $ | 460 | |||
| Foreign | |||||
| Mexico | $ | 8,934 | |||
Rate Reconciliation — Expected tax expense is computed by applying the US federal corporate income tax rate of 21.0% to earnings before income taxes for 2025. Actual tax expense differs from expected tax expense as follows:
| 2025 | |||||||||||
| Amount | Percent | ||||||||||
| (In thousands) | |||||||||||
| Computed "expected" tax expense | $ | 20,018 | 21.0 | % | |||||||
| Increase (decrease) in income taxes resulting from: | |||||||||||
State income taxes, net of federal income tax benefit 1 | 7,777 | 8.1 | % | ||||||||
| Foreign tax effects | |||||||||||
| Mexico | |||||||||||
| Effect of Mexico rates different than statutory | 2,339 | 2.4 | % | ||||||||
| Other | (1,175) | (1.2) | % | ||||||||
| Effect of cross-border tax laws | |||||||||||
| Global intangible low-taxed income | 1,812 | 1.9 | % | ||||||||
| Tax credits | |||||||||||
| Foreign tax credits | (2,038) | (2.1) | % | ||||||||
| Employment tax credits | (2,462) | (2.6) | % | ||||||||
| Other credits | (860) | (0.9) | % | ||||||||
| Nontaxable or nondeductible items | |||||||||||
| Nondeductible per-diem paid to drivers | 3,048 | 3.2 | % | ||||||||
| Dividend received deduction | (1,262) | (1.3) | % | ||||||||
| Excess compensation | 2,198 | 2.3 | % | ||||||||
| Other | 1,714 | 1.8 | % | ||||||||
| Other Adjustments | |||||||||||
| Effect of refunds from amended federal returns | (1,341) | (1.4) | % | ||||||||
| Effective Tax Rate | $ | 29,768 | 31.2 | % | |||||||
1For the period ending December 31, 2025, state taxes in Arizona, California, Florida, Georgia, Illinois, Indiana, Pennsylvania, and Texas made up the majority (greater than 50 percent) of the tax effect in this category.
Deferred Income Taxes — The components of the net deferred tax asset (liability) included in "Deferred tax liabilities" in the consolidated balance sheets were:
| December 31, | |||||
| 2025 | |||||
| (In thousands) | |||||
| Deferred tax assets: | |||||
| Accrued liabilities | $ | 18,960 | |||
| Allowance for doubtful accounts | 14,229 | ||||
| Bonus accrual | 1,875 | ||||
| Claims accrual | 137,925 | ||||
| Capital loss carryforward | 362 | ||||
| Deferred revenue | 3,763 | ||||
| Interest expense limitation carryforwards | 2,340 | ||||
| Lease reserve | 4,977 | ||||
| Net operating loss and credit carryforwards | 43,236 | ||||
| Stock amortization | 9,482 | ||||
| Operating Lease liabilities | 77,961 | ||||
| Research and development | 760 | ||||
| Vacation accrual | 5,506 | ||||
| Other | 1,046 | ||||
| Total deferred tax assets | 322,422 | ||||
| Valuation allowance | (11,869) | ||||
| Total deferred tax assets, net | 310,553 | ||||
| Deferred tax liabilities: | |||||
| Intangible assets | (418,235) | ||||
| Investments | (4,760) | ||||
| Property and equipment, principally due to differences in depreciation | (697,142) | ||||
| Prepaid taxes, licenses, and permits deducted for tax purposes | (18,329) | ||||
| Operating lease right-of-use assets | (72,947) | ||||
| Foreign accruals | (1,538) | ||||
| Unrecognized tax benefit | (1,677) | ||||
| Total deferred tax liabilities | (1,214,628) | ||||
| Deferred income taxes | $ | (904,075) | |||
As of December 31, 2025, the Company had a federal net operating loss carryforward with a tax effect of $2.5 million. This net operating loss can be carried forward indefinitely until utilized. The Company had federal credit carryforwards with a tax effect of $17.8 million as of December 31, 2025. These credits will expire between 2031 and 2042 if unutilized. 2031-12-31 2042-12-31
As of December 31, 2025, the Company had state net operating loss carryforwards with a tax effect of $21.6 million, before consideration of valuation allowance. Some state net operating losses will expire at various times between 2026 and 2054 if unutilized, while others will be carried forward indefinitely. The Company had state credit carryforwards with a tax effect of $1.3 million as of December 31, 2025. These credits will expire at various times between 2026 and 2035 if unutilized. 2026-12-31 2054-12-31 2026-12-31 2035-12-31
Valuation Allowance — Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company has a valuation allowance of $11.9 million at December 31, 2025 to offset the tax benefit of certain state net operating loss carryforwards. In 2025, the $0.8 million increase was to offset the tax benefit of certain separate company state operating loss carryforwards.
| 2025 | |||||
| (In thousands) | |||||
| Valuation allowance at beginning of year | $ | 11,063 | |||
| Additions charged to provision for income taxes | 805 | ||||
| Charges to other accounts | — | ||||
| Reductions, deferred tax assets realized or written-off | — | ||||
| Valuation allowance at end of year | $ | 11,869 | |||
Cumulative Undistributed Foreign Earnings — As of December 31, 2025, foreign withholding taxes have not been provided on approximately $189.6 million of cumulative undistributed earnings of foreign subsidiaries. The earnings are considered to be permanently reinvested outside the US. As such, the Company is not required to provide withholding taxes on these earnings until they are repatriated in the form of dividends or otherwise.
Unrecognized Tax Benefits — The Company's unrecognized tax benefits as of December 31, 2025 would favorably impact the Company's effective tax rate if subsequently recognized. Management does not expect a decrease in unrecognized tax benefits during the next twelve months.
See Note 2 for accounting policy related to the Company's income taxes.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits for 2025 is below:
| 2025 | |||||
| (In thousands) | |||||
| Unrecognized tax benefits at beginning of year | $ | 1,677 | |||
| Increases for tax positions taken in the current year | — | ||||
| Decreases for tax positions taken prior to beginning of year | — | ||||
| Lapse of statute of limitations | — | ||||
| Unrecognized tax benefits at end of year | $ | 1,677 | |||
Interest and Penalties — There were no accrued interest and penalties as of December 31, 2025.
Tax Examinations — Certain of the Company's subsidiaries are currently under examination by state jurisdictions for tax years ranging from 2022 to 2024. At the completion of these examinations, management does not expect any adjustments that would have a material impact on the Company's effective tax rate. Years subsequent to 2020 remain subject to examination.
Income Tax Disclosures prior to the adoption of ASU 2023-09
| 2024 | 2023 | ||||||||||
| Current expense: | |||||||||||
| Federal | $ | 34,201 | $ | 15,726 | |||||||
| State | 6,275 | 16,423 | |||||||||
| Foreign | 11,799 | 12,135 | |||||||||
| 52,275 | 44,284 | ||||||||||
| Deferred expense (benefit): | |||||||||||
| Federal | (13,448) | 17,353 | |||||||||
| State | (6,612) | (2,397) | |||||||||
| Foreign | 745 | (4,472) | |||||||||
| (19,315) | 10,484 | ||||||||||
| Income tax expense | $ | 32,960 | $ | 54,768 | |||||||
Rate Reconciliation — Expected tax expense is computed by applying the US federal corporate income tax rate of 21.0% to earnings before income taxes for 2024 and 2023. Actual tax expense differs from expected tax expense as follows:
| 2024 | 2023 | ||||||||||
| Computed "expected" tax expense | $ | 31,300 | $ | 56,761 | |||||||
| Increase (decrease) in income taxes resulting from: | |||||||||||
| State income taxes, net of federal income tax benefit | (1,654) | 10,578 | |||||||||
| Addition/(release) of valuation allowance | 628 | (14,604) | |||||||||
| Nondeductible per-diem paid to drivers | 2,954 | 2,406 | |||||||||
| Effect of rates different than statutory | 3,156 | 1,721 | |||||||||
| Mark-to-market adjustment | (7,690) | — | |||||||||
| Other, net | 4,266 | (2,094) | |||||||||
| Income tax expense | $ | 32,960 | $ | 54,768 | |||||||
Deferred Income Taxes — The components of the net deferred tax asset (liability) included in "Deferred tax liabilities" in the consolidated balance sheets were:
| December 31, | |||||
| 2024 | |||||
| Deferred tax assets: | |||||
| Accrued liabilities | $ | 16,340 | |||
| Allowance for doubtful accounts | 16,354 | ||||
| Bonus accrual | 2,136 | ||||
| Claims accrual | 136,779 | ||||
| Capital loss carryforward | 2,839 | ||||
| Deferred revenue | 4,596 | ||||
| Interest expense limitation carryforwards | 34,197 | ||||
| Lease reserve | 5,807 | ||||
| Net operating loss and credit carryforwards | 46,246 | ||||
| Stock amortization | 8,884 | ||||
| Operating Lease liabilities | 92,678 | ||||
| Research and development | 13,645 | ||||
| Vacation accrual | 5,788 | ||||
| Other | 896 | ||||
| Total deferred tax assets | 387,185 | ||||
| Valuation allowance | (11,063) | ||||
| Total deferred tax assets, net | 376,122 | ||||
| Deferred tax liabilities: | |||||
| Intangible assets | (426,185) | ||||
| Investments | (4,918) | ||||
| Property and equipment, principally due to differences in depreciation | (748,950) | ||||
| Prepaid taxes, licenses, and permits deducted for tax purposes | (18,784) | ||||
| Operating lease right-of-use assets | (91,172) | ||||
| Foreign accruals | (4,250) | ||||
| Unrecognized tax benefit | (1,677) | ||||
| Total deferred tax liabilities | (1,295,936) | ||||
| Deferred income taxes | $ | (919,814) | |||
Valuation Allowance — Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company has a valuation allowance of $11.1 million and $10.4 million at December 31, 2024 and December 31, 2023, respectively, to offset the tax benefit of capital loss and certain state net operating loss carryforwards.
| 2024 | 2023 | ||||||||||
| Valuation allowance at beginning of year | $ | 10,435 | $ | — | |||||||
| Additions charged to provision for income taxes | 3,616 | 35 | |||||||||
| Charges to other accounts | — | 25,039 | |||||||||
| Reductions, deferred tax assets realized or written-off | (2,988) | (14,639) | |||||||||
| Valuation allowance at end of year | $ | 11,063 | $ | 10,435 | |||||||
Unrecognized Tax Benefits — A reconciliation of the beginning and ending amounts of unrecognized tax benefits for 2024 and 2023 is below:
| 2024 | 2023 | ||||||||||
| Unrecognized tax benefits at beginning of year | $ | 1,677 | $ | 1,735 | |||||||
| Increases for tax positions taken in the current year | — | 1,677 | |||||||||
| Decreases for tax positions taken prior to beginning of year | — | (1,080) | |||||||||
| Lapse of statute of limitations | — | (655) | |||||||||
| Unrecognized tax benefits at end of year | $ | 1,677 | $ | 1,677 | |||||||
Interest and Penalties — There were no accrued interest and penalties as of December 31, 2024 and December 31, 2023.
See Note 2 for accounting policy related to the Company's income taxes.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Feb 17, 2017 | |
| 2015 | Feb 22, 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.