MARTIN MARIETTA MATERIALS INC Income Taxes Disclosure
Note I: Income Taxes
The components of the Company’s income tax expense from continuing operations are as follows:
years ended December 31 |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Federal income taxes: |
|
|
|
|
|
|
|
|
|
|||
Current |
|
$ |
138 |
|
|
$ |
539 |
|
|
$ |
209 |
|
Deferred |
|
|
56 |
|
|
|
(60 |
) |
|
|
(9 |
) |
Total federal income taxes |
|
|
194 |
|
|
|
479 |
|
|
|
200 |
|
State income taxes: |
|
|
|
|
|
|
|
|
|
|||
Current |
|
|
31 |
|
|
|
77 |
|
|
|
37 |
|
Deferred |
|
|
8 |
|
|
|
(6 |
) |
|
|
(3 |
) |
Total state income taxes |
|
|
39 |
|
|
|
71 |
|
|
|
34 |
|
Foreign income taxes: |
|
|
|
|
|
|
|
|
|
|||
Current |
|
|
2 |
|
|
|
— |
|
|
|
— |
|
Deferred |
|
|
1 |
|
|
|
— |
|
|
|
— |
|
Total current foreign income taxes |
|
|
3 |
|
|
|
— |
|
|
|
— |
|
Income tax expense |
|
$ |
236 |
|
|
$ |
550 |
|
|
$ |
234 |
|
The domestic and foreign components of pretax earnings from continuing operations for the years ended December 31, 2025, 2024 and 2023 are as follows:
years ended December 31 |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Domestic |
|
$ |
1,207 |
|
|
$ |
2,353 |
|
|
$ |
1,218 |
|
Foreign |
|
|
19 |
|
|
|
13 |
|
|
|
8 |
|
Earnings from continuing operations before income tax expense |
|
$ |
1,226 |
|
|
$ |
2,366 |
|
|
$ |
1,226 |
|
The Company’s effective income tax rate on continuing operations varied from the statutory United States income tax rate due to the following tax differences:
years ended December 31 |
|
2025 |
|
|
2024 |
|
|
2023 |
|
||||||||||||
(in millions, except percentages) |
|
Amount |
|
Percent |
|
|
Amount |
|
Percent |
|
|
Amount |
|
Percent |
|
||||||
U.S. federal statutory tax rate |
|
$ |
258 |
|
|
21.0 |
% |
|
$ |
497 |
|
|
21.0 |
% |
|
$ |
257 |
|
|
21.0 |
% |
State and local income taxes, net of federal income |
|
|
30 |
|
|
2.4 |
|
|
|
57 |
|
|
2.4 |
|
|
|
27 |
|
|
2.2 |
|
Foreign tax effects |
|
|
(1 |
) |
|
(0.1 |
) |
|
|
(2 |
) |
|
(0.1 |
) |
|
|
(5 |
) |
|
(0.4 |
) |
Tax credits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Railroad maintenance credits |
|
|
(13 |
) |
|
(1.0 |
) |
|
|
(10 |
) |
|
(0.4 |
) |
|
|
(9 |
) |
|
(0.7 |
) |
Other |
|
|
(6 |
) |
|
(0.5 |
) |
|
|
(10 |
) |
|
(0.4 |
) |
|
|
(6 |
) |
|
(0.5 |
) |
Nontaxable or nondeductible items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Goodwill write-off for divestiture |
|
|
— |
|
|
— |
|
|
|
48 |
|
|
2.0 |
|
|
|
— |
|
|
— |
|
Other |
|
|
6 |
|
|
0.5 |
|
|
|
5 |
|
|
0.2 |
|
|
|
2 |
|
|
0.2 |
|
Other adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Effects of statutory depletion |
|
|
(38 |
) |
|
(3.1 |
) |
|
|
(35 |
) |
|
(1.5 |
) |
|
|
(32 |
) |
|
(2.7 |
) |
Effective income tax rate |
|
$ |
236 |
|
|
19.2 |
% |
|
$ |
550 |
|
|
23.2 |
% |
|
$ |
234 |
|
|
19.1 |
% |
a) State taxes in California, Minnesota, Colorado, Texas, Georgia, and Florida made up the majority (greater than 50 percent) of the tax effect in this category in 2025; state taxes in California, Texas, and Colorado made up the majority of the tax effect in this category in 2024; and state taxes in Texas, California, Colorado, and Minnesota made up the majority of the tax effect in this category in 2023.
The effect of changes in tax laws or rates enacted in the current period and changes in valuation allowances are immaterial.
The higher 2024 effective income tax rate versus 2025 and 2023 was driven by the impact of the February 2024 divestiture of the South Texas cement business and certain related ready mixed concrete operations, which included the write-off of certain nondeductible goodwill.
The statutory depletion deduction for all years is calculated as a percentage of revenues, subject to certain limitations. Due to these limitations, changes in the sales volumes and pretax earnings may not proportionately affect the Company’s statutory depletion deduction and the corresponding impact on the effective income tax rate.
The Company invests in renewable energy investment entities which qualify for tax credits and other tax benefits and are accounted for under the proportional amortization method. For the year ended December 31, 2025, amortization of these investments plus income recapture, which are included in the line item in the consolidated statements of earnings, were $128 million and $5 million, respectively, and offset by $125 million of tax credits and $15 million of other tax benefits. For the year ended December 31, 2024, amortization plus income recapture of similar investments were $148 million and $16 million, respectively, offset by $153 million of tax credits and $17 million of other tax benefits. For the year ended December 31, 2023, amortization plus income recapture of similar investments were $26 million and $1 million, respectively, offset by $24 million of tax credits and $2 million of other tax benefits. As of December 31, 2025, the Company has committed to additional equity contributions of $51 million for tax equity investments related to RETC projects, which are expected to be paid in 2026. As of December 31, 2024, the Company had committed to additional equity contributions of $44 million for tax equity investments related to RETC projects, which were paid in 2025. Unfunded commitments as of December 31, 2025 and 2024 are recorded in the line item Unpaid commitments to limited liability companies on the consolidated balance sheets.
The amounts of income taxes paid (refunded) by the Company are as follows:
years ended December 31 |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Federal |
|
$ |
141 |
|
|
$ |
319 |
|
|
$ |
249 |
|
State: |
|
|
|
|
|
|
|
|
|
|||
Texas |
|
|
14 |
|
|
* |
|
|
* |
|
||
Other |
|
|
37 |
|
|
|
64 |
|
|
|
41 |
|
Foreign |
|
|
— |
|
|
|
(1 |
) |
|
|
2 |
|
Income taxes paid, net of amounts refunded |
|
$ |
192 |
|
|
$ |
382 |
|
|
$ |
292 |
|
* Jurisdiction below the threshold for the period presented.
The Internal Revenue Service provided certain disaster tax relief for North Carolina businesses affected by Hurricanes Debby and Helene, which allowed the Company to defer estimated federal and certain state income, payroll and excise tax payments for the period from August 2024 through September 2025. The deferred obligation was paid on September 25, 2025.
On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA) that, among other provisions, makes 100% bonus depreciation permanent, restores the ability to expense domestic research expenditures, and modifies the taxation of foreign earnings. The OBBBA is not expected to have a material impact on the Company's annual estimated income tax rate, but results in a reclassification between current taxes payable and deferred tax liabilities which is reflected in the year ended December 31, 2025.
The principal components of the Company’s deferred tax assets and liabilities are as follows:
December 31 |
|
Deferred Assets (Liabilities) |
|
|||||
(in millions) |
|
2025 |
|
|
2024 |
|
||
Deferred tax assets related to: |
|
|
|
|
|
|
||
Inventories |
|
$ |
163 |
|
|
$ |
147 |
|
Valuation and other reserves |
|
|
65 |
|
|
|
65 |
|
Net operating loss carryforwards |
|
|
3 |
|
|
|
2 |
|
Accumulated other comprehensive loss |
|
|
18 |
|
|
|
41 |
|
Lease liabilities |
|
|
171 |
|
|
|
147 |
|
Other items, net |
|
|
2 |
|
|
|
13 |
|
Gross deferred tax assets |
|
|
422 |
|
|
|
415 |
|
Valuation allowance on deferred tax assets |
|
|
(1 |
) |
|
|
(2 |
) |
Total net deferred tax assets |
|
|
421 |
|
|
|
413 |
|
Deferred tax liabilities related to: |
|
|
|
|
|
|
||
Property, plant and equipment |
|
|
(1,203 |
) |
|
|
(1,158 |
) |
Goodwill and other intangibles |
|
|
(212 |
) |
|
|
(171 |
) |
Right-of-use assets |
|
|
(167 |
) |
|
|
(144 |
) |
Partnerships and joint ventures |
|
|
(51 |
) |
|
|
(47 |
) |
Employee benefits |
|
|
(54 |
) |
|
|
(62 |
) |
Total deferred tax liabilities |
|
|
(1,687 |
) |
|
|
(1,582 |
) |
Deferred income taxes, net |
|
$ |
(1,266 |
) |
|
$ |
(1,169 |
) |
The Company had immaterial gross domestic federal net operating loss (NOL) carryforwards at both December 31, 2025 and 2024. The Company had gross domestic state NOL carryforwards of $42 million and $24 million at December 31, 2025 and 2024, respectively. The domestic federal and state carryforwards have various expiration dates through 2045. The Company also had immaterial domestic state tax credit carryforwards at December 31, 2025 and 2024, which have various expiration dates through 2045.
The Company expects to reinvest the earnings from its wholly-owned Canadian and Bahamian subsidiaries indefinitely, and accordingly, has not provided deferred taxes on the subsidiaries’ undistributed net earnings or basis differences. The Company believes that the tax liability that would be incurred upon repatriation of the foreign earnings was immaterial at December 31, 2025 and 2024.
The Company’s unrecognized tax benefits are immaterial for the years ended December 31, 2025, 2024 and 2023. Unrecognized tax benefits are reversed as a discrete event if an examination of applicable tax returns is not initiated by a federal or state tax authority within the statute of limitations or upon effective settlement with federal or state tax authorities. Management believes its accrual for unrecognized tax benefits is sufficient to cover uncertain tax positions reviewed during audits by taxing authorities.
The Company’s tax years subject to federal, state or foreign examinations are .
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 22, 2022 | |
| 2020 | Feb 19, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 25, 2019 | |
| 2017 | Feb 23, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Feb 23, 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.