LSB INDUSTRIES, INC. Income Taxes Disclosure

6. Income Taxes

The current provision (benefit) for federal and state income taxes shown above includes federal and state income tax after the consideration of permanent and temporary differences between income for U.S. GAAP and tax purposes.

The deferred tax provision (benefit) results from the recognition of changes in our prior year deferred tax assets and liabilities, and the utilization of federal and state net operating loss (“NOL”) carryforwards and other temporary differences. We reduce income tax expense for tax credits in the year they arise and are earned. On December 31, 2025, our gross amount of tax credits available to offset state income taxes was $6.0 million ($4.7 million net of federal benefit). Most of these tax credits carryforward indefinitely. The gross amount of federal tax credits was $8.1 million. These credits carryforward for 20 years and begin expiring in 2034.

In 2025, we utilized approximately $17.3 million and $26.5 million of federal and state NOL carryforwards, respectively, to reduce tax liabilities. In 2024, we utilized approximately $30.8 million and $12.9 million of federal and state NOL carryforwards, respectively, to reduce tax liabilities. In 2023, we utilized approximately $76.7 million and $66.0 million of federal and state NOL carryforwards, respectively, to reduce tax liabilities. On December 31, 2025, we have remaining federal and state tax NOL carryforwards of $226.4 million and $321.2 million, respectively. The federal NOL carryforwards begin expiring in 2037 and the state NOL carryforwards begin expiring in 2026.

We considered both positive and negative evidence in our determination of the need for valuation allowances for the deferred tax assets associated with federal and state NOLs and federal credits and in conjunction with the IRC Section 382 limitation. Information evaluated includes our financial position and results of operations for the current and preceding years, the availability of deferred tax liabilities and tax carrybacks, as well as an evaluation of currently available information about future years. Valuation allowances are reflective of our quarterly analysis of the four sources of taxable income, including the calculation of the reversal of existing tax assets and liabilities, the impact of annual utilization limitations of interest expense and net operating losses and our results of operations. Based on our analysis, we believe that it is more-likely-than-not that all of our federal deferred tax assets will be utilized and a portion of our state deferred tax assets will not be able to be utilized. Information relating to our valuation allowance is included in the tables below. In 2025, the provision for income taxes includes a net increase of approximately $0.1 million of state valuation allowance, primarily due to an increase in valuation allowance on state tax credits carryforwards not expected to be utilized, partially offset by the write-off of valuation allowance on expired state tax credits. There is no federal valuation allowance remaining as of December 31, 2025 or 2024.

Deferred tax assets and liabilities include temporary differences and carryforwards as follows:

We expect that the amount of unrecognized tax benefits may change as the result of ongoing operations, the outcomes of audits, and the expiration of statute of limitations. This change is not expected to have a significant effect on our results of operations or financial condition. As of December 31, 2025, there is no remaining uncertain tax position.

We record interest related to unrecognized tax positions in interest expense and penalties in operating other expense. For 2025, 2024 and 2023, there were no accrued interest or penalties associated with unrecognized tax positions.

LSB and certain of its subsidiaries file income tax returns in the United States federal jurisdiction and various state jurisdictions. With few exceptions, the 2022–2025 years remain open for all purposes of examination by the United States Internal Revenue Service and

other major tax jurisdictions. Additionally, the 2015–2020 years remain subject to examination for determining the amount of NOL and other carryforwards.