Koppers Holdings Inc.KOP
Koppers Holdings Inc. Income Taxes Disclosure
Income Taxes
Income Tax Provision
Components of our income tax provision are as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (Dollars in millions) | |||||||||||||||||
| Income before income taxes: | |||||||||||||||||
| US | $ | 22.0 | $ | 21.2 | $ | 47.8 | |||||||||||
| Foreign | 59.2 | 48.1 | 76.8 | ||||||||||||||
| Total income before income taxes | $ | 81.2 | $ | 69.3 | $ | 124.6 | |||||||||||
| Current: | |||||||||||||||||
| US Federal | $ | 1.1 | $ | 1.9 | $ | 7.3 | |||||||||||
| US State and Local | 0.2 | 0.6 | 1.7 | ||||||||||||||
| Foreign | 12.6 | 15.4 | 20.1 | ||||||||||||||
| Total current tax provision | $ | 13.9 | $ | 17.9 | $ | 29.1 | |||||||||||
| Deferred: | |||||||||||||||||
| US Federal | $ | 5.5 | $ | 1.8 | $ | 3.1 | |||||||||||
| US State and Local | 2.0 | 0.2 | 0.6 | ||||||||||||||
| Foreign | 3.8 | 0.8 | 2.0 | ||||||||||||||
| Total deferred tax provision | $ | 11.3 | $ | 2.8 | $ | 5.7 | |||||||||||
| Total income tax provision: | |||||||||||||||||
| US Federal | $ | 6.6 | $ | 3.7 | $ | 10.4 | |||||||||||
| US State and Local | 2.2 | 0.8 | 2.3 | ||||||||||||||
| Foreign | 16.4 | 16.2 | 22.1 | ||||||||||||||
| Total income tax provision | $ | 25.2 | $ | 20.7 | $ | 34.8 | |||||||||||
Components of our cash paid for income taxes are as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (Dollars in millions) | |||||||||||||||||
| Domestic: | |||||||||||||||||
| US Federal | $ | (4.6) | $ | 7.9 | $ | 3.2 | |||||||||||
| US State and Local | 0.8 | 1.3 | 1.4 | ||||||||||||||
| Total domestic | $ | (3.8) | $ | 9.2 | $ | 4.6 | |||||||||||
| Foreign: | |||||||||||||||||
| Australia | $ | 9.3 | $ | 9.7 | $ | 15.9 | |||||||||||
Netherlands(1) | 0.0 | 2.2 | 8.0 | ||||||||||||||
Canada(1) | 1.6 | 1.9 | 0.0 | ||||||||||||||
| Brazil | 0.8 | 1.9 | 2.4 | ||||||||||||||
Chile(1) | 0.9 | 0.0 | 0.0 | ||||||||||||||
| Other | 0.6 | 2.7 | 3.4 | ||||||||||||||
| Total foreign | $ | 13.2 | $ | 18.4 | $ | 29.7 | |||||||||||
| Total cash paid for income taxes | $ | 9.4 | $ | 27.6 | $ | 34.3 | |||||||||||
(1)The amount of income taxes paid during certain years does not meet the five percent disaggregation threshold; therefore, the amount is not disclosed.
The provision for income taxes is reconciled with the federal statutory income tax rate as follows:
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||||||||||||||||||
| (Dollars in millions) | ||||||||||||||||||||||||||||||||||||||
| Domestic federal income tax | $ | 17.1 | 21.0 | % | $ | 14.6 | 21.0 | % | $ | 26.2 | 21.0 | % | ||||||||||||||||||||||||||
| Tax credits | (0.6) | (0.7) | (0.6) | (0.9) | (0.2) | (0.2) | ||||||||||||||||||||||||||||||||
| Nontaxable and nondeductible items: | ||||||||||||||||||||||||||||||||||||||
| Section 162(m) adjustment | 1.1 | 1.4 | 1.6 | 2.3 | 1.6 | 1.3 | ||||||||||||||||||||||||||||||||
| Excess tax benefits on stock-based payments | 0.3 | 0.4 | (1.1) | (1.6) | (0.6) | (0.5) | ||||||||||||||||||||||||||||||||
| Other | 0.4 | 0.5 | 0.6 | 0.9 | 0.6 | 0.5 | ||||||||||||||||||||||||||||||||
| Cross-border tax laws | ||||||||||||||||||||||||||||||||||||||
| Global intangible low-taxed income | 1.2 | 1.5 | (0.1) | (0.2) | (1.4) | (1.1) | ||||||||||||||||||||||||||||||||
| Other | 0.0 | 0.0 | (0.2) | (0.3) | (0.2) | (0.2) | ||||||||||||||||||||||||||||||||
| Other | (0.4) | (0.5) | (0.1) | (0.1) | 0.6 | 0.5 | ||||||||||||||||||||||||||||||||
| State and local, net of federal | 1.7 | 2.1 | 0.7 | 1.0 | 1.7 | 1.4 | ||||||||||||||||||||||||||||||||
| Foreign tax effects | ||||||||||||||||||||||||||||||||||||||
| Australia statutory income tax rate difference | 2.7 | 3.3 | 2.6 | 3.8 | 4.5 | 3.6 | ||||||||||||||||||||||||||||||||
| Australia other | 0.2 | 0.2 | 0.0 | 0.0 | (0.1) | (0.1) | ||||||||||||||||||||||||||||||||
| Netherlands fiscal unity | 0.2 | 0.2 | 0.8 | 1.2 | 0.2 | 0.2 | ||||||||||||||||||||||||||||||||
| China change in valuation allowance | 0.0 | 0.0 | 2.6 | 3.8 | 0.0 | 0.0 | ||||||||||||||||||||||||||||||||
| China other | 0.0 | 0.0 | (0.4) | (0.6) | (0.1) | (0.1) | ||||||||||||||||||||||||||||||||
| New Zealand deferred tax liability adjustment | 0.0 | 0.0 | (1.0) | (1.4) | 0.0 | 0.0 | ||||||||||||||||||||||||||||||||
| New Zealand other | 0.0 | 0.0 | (0.2) | (0.3) | 0.0 | 0.0 | ||||||||||||||||||||||||||||||||
| Other foreign jurisdictions | 1.3 | 1.6 | 1.6 | 2.3 | 1.7 | 1.4 | ||||||||||||||||||||||||||||||||
| Change in unrecognized tax benefits | 0.0 | 0.0 | (0.7) | (1.0) | 0.3 | 0.2 | ||||||||||||||||||||||||||||||||
| Annual effective income tax | $ | 25.2 | 31.0 | % | $ | 20.7 | 29.9 | % | $ | 34.8 | 27.9 | % | ||||||||||||||||||||||||||
In 2025, state and local income taxes in Georgia, Illinois, Kentucky, North Carolina, Virginia and Texas comprise the majority of the domestic state and local income taxes, net of federal effect. In 2024, state and local income taxes in South Carolina and Texas comprise the majority of the domestic state and local income taxes, net of federal effect. In 2023, state and local income taxes in Georgia, Pennsylvania, South Carolina and Texas comprise the majority of the domestic state and local income taxes, net of federal effect.
On July 4, 2025, H.R. 1, the U.S. budget reconciliation bill, was signed into law. We have analyzed the various components of the bill and incorporated the effects into our US tax provision. We have determined that the financial statement impact of the budget reconciliation bill is not material and the effect on our effective income tax rate is not material. The primary impact of the budget reconciliation bill is an increase of our current year interest expense deduction under Section 163(j).
Effective January 1, 2024, certain jurisdictions in which we operate have enacted legislation that is consistent with one or more Organization for Economic Co-operation and Development Global Anti-Base Erosion Model Rules (commonly referred to as "Pillar Two"). These Pillar Two rules include minimum domestic top up taxes, income inclusion rules and undertaxed profit rules all aimed to ensure that multinationals pay a minimum effective corporate tax rate of 15 percent in each jurisdiction in which they operate. We have analyzed our tax profile by jurisdiction and have determined that we are not subject to top up taxes in 2025.
Taxes Excluded from Net Income Attributable to Koppers
The amount of deferred income tax benefit (expense) included in comprehensive income but excluded from net income attributable to Koppers relates primarily to adjustments to copper and interest rate swap contracts of $(1.1) million, $0.5 million and $0.8 million for the years ended December 31, 2025, 2024 and 2023, respectively.
The amount of deferred income tax benefit (expense) included in comprehensive income but excluded from net income attributable to Koppers relates to adjustments to reflect the unfunded status of employee post-retirement benefit plans of $(7.8) million, $(0.3) million and $1.1 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Deferred Tax Assets and Liabilities
Deferred income taxes reflect the net tax effects of differences between the carrying amounts of assets and liabilities for financial reporting purposes and for income tax purposes. Significant components of our deferred tax assets and liabilities are as follows:
| Year Ended December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (Dollars in millions) | ||||||||||||||
| Deferred tax assets: | ||||||||||||||
| Federal and state tax loss carryforwards, expiring in 2026 to 2045 | $ | 27.7 | $ | 20.8 | ||||||||||
| Interest disallowance | 14.3 | 15.4 | ||||||||||||
| Tax credits | 12.1 | 17.3 | ||||||||||||
| Foreign tax loss carryforwards | 11.3 | 8.1 | ||||||||||||
| Reserves, including insurance and environmental | 9.3 | 11.8 | ||||||||||||
| Inventory | 8.0 | 8.6 | ||||||||||||
| Asset retirement obligations | 6.7 | 4.8 | ||||||||||||
| Accrued employee compensation | 5.7 | 8.2 | ||||||||||||
| Pension and other post-retirement benefits obligations | 3.6 | 3.9 | ||||||||||||
| Other | 10.1 | 11.3 | ||||||||||||
| Valuation allowance | (42.0) | (46.6) | ||||||||||||
| Total deferred tax assets | 66.8 | 63.6 | ||||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Tax over book depreciation and amortization | 97.0 | 83.1 | ||||||||||||
| Gain (loss) on derivative contracts | 6.5 | (2.0) | ||||||||||||
| Total deferred tax liabilities | 103.5 | 81.1 | ||||||||||||
| Net deferred tax liabilities | $ | (36.7) | $ | (17.5) | ||||||||||
As a result of the Tax Cuts and Jobs Act of 2017 (the Tax Act) and the one-time mandatory transition tax, all previously unremitted earnings for which a U.S. deferred tax liability had not been accrued have now been subject to U.S. tax. As of December 31, 2025, there was approximately $591 million of such unremitted earnings. Substantially all unremitted earnings will remain indefinitely invested in our foreign subsidiaries for the foreseeable future unless we can remit any earnings as a dividend in a tax-free manner. In the event any earnings are remitted as a dividend with a tax cost due to currency gains or losses, state taxes, or foreign withholding taxes, we estimate that we will not incur significant additional taxes on those potential remittances.
Management evaluated the ability to realize the deferred tax assets that are related to our domestic and international operations. In assessing the need for a valuation allowance, management considered all positive and negative evidence related to the realization of our net deferred tax assets. We believe that we will be in a taxable income position in the foreseeable future and we will have sufficient taxable income to utilize deferred tax assets that do not have a valuation allowance related to our domestic and international operations.
A valuation allowance is necessary when it is more likely than not that a deferred tax asset will not be realized. Certain deferred tax assets reflected above are not expected to be realized, and a valuation allowance has been provided for them.
Valuation allowances are recorded to offset the following deferred tax assets:
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (Dollars in millions) | ||||||||||||||
| State temporary differences, net operating losses and tax credits | $ | 20.4 | $ | 20.4 | ||||||||||
| Federal foreign tax credits | 10.8 | 15.8 | ||||||||||||
| Foreign temporary differences, net operating losses and capital losses | 10.8 | 10.4 | ||||||||||||
| Total valuation allowances | $ | 42.0 | $ | 46.6 | ||||||||||
Unrecognized Tax Benefits
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (Dollars in millions) | ||||||||||||||||||||
| Balance at beginning of year | $ | 1.0 | $ | 1.5 | $ | 1.4 | ||||||||||||||
| Additions based on tax provisions related to the current year | 0.3 | 0.2 | 0.3 | |||||||||||||||||
| Reductions resulting from a lapse in the statute of limitations | (0.2) | (0.7) | (0.2) | |||||||||||||||||
| Balance at end of year | $ | 1.1 | $ | 1.0 | $ | 1.5 | ||||||||||||||
As of December 31, 2025 and 2024, the total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate, was approximately $1.1 million and $1.0 million, respectively. We do not anticipate significant increases or decreases to the amount of unrecognized tax benefits within the next twelve months.
We recognize interest expense and any related penalties from unrecognized tax benefits in income tax expense. For the year ended December 31, 2025, we recognized less than $0.1 million in interest and penalties. As of December 31, 2025 and 2024, we had accrued interest and penalties of approximately $0.2 million for each year.
Koppers Holdings and its subsidiaries file income tax returns in the U.S. federal jurisdiction, individual U.S. state jurisdictions and non-U.S. jurisdictions. With few exceptions, we are no longer subject to U.S. federal, U.S. state, or non-U.S. income tax examinations by tax authorities for years before 2020.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 24, 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.