MARTIN MIDSTREAM PARTNERS L.P.MMLP
MARTIN MIDSTREAM PARTNERS L.P. Income Taxes Disclosure
INCOME TAXES
The components of pretax income (loss) and income tax expense (benefit) from operations for the years ended December 31, 2025, 2024 and 2023 are as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| Income (loss) from continuing operations before income tax expense (benefit) | |||||||||||||||||
| US | $ | (9,973) | $ | (1,010) | $ | 1,369 | |||||||||||
| Total | $ | (9,973) | -9973 | $ | (1,010) | $ | 1,369 | ||||||||||
| Income tax expense (benefit) from continuing operations | |||||||||||||||||
| Current tax expense (benefit) | |||||||||||||||||
| US federal | $ | 2,174 | $ | 2,318 | $ | 904 | |||||||||||
| US state and local | 1,678 | 1,625 | 828 | ||||||||||||||
| Total current tax expense (benefit) | 3,852 | 3,943 | 1,732 | ||||||||||||||
| Deferred tax expense (benefit) | |||||||||||||||||
| US federal | 708 | 595 | 3,051 | ||||||||||||||
| US state and local | 212 | (341) | 1,135 | ||||||||||||||
| Total deferred tax expense (benefit) | 920 | 254 | 4,186 | ||||||||||||||
| Total income tax expense (benefit) | |||||||||||||||||
| US federal | 2,882 | 2,913 | 3,955 | ||||||||||||||
| US state and local | 1,890 | 1,284 | 1,963 | ||||||||||||||
| Total income tax expense (benefit) | $ | 4,772 | $ | 4,197 | $ | 5,918 | |||||||||||
The operations of a partnership are generally not subject to income taxes, except for Texas margin tax, because its income is taxed directly to its partners. The Texas margin tax is considered a state income tax and is included in income tax expense on the Consolidated Statements of Operations. Since the tax base on the Texas margin tax is derived from an income-based measure, the margin tax is construed as income tax, and therefore, the recognition of deferred taxes applies to the margin tax. The impact on deferred taxes as a result of this provision is immaterial. State income taxes attributable to the Texas margin tax relating to the operation of the Partnership of $1,152, $925 and $440 were recorded in income tax expense for the years ended December 31, 2025, 2024 and 2023, respectively.
Total income tax expense relating to the operation of MTI, a wholly owned C-Corporation subsidiary of the Partnership (“Taxable Subsidiary”), of $3,620, $3,272 and $5,478 was recorded in income tax expense for the years ended December 31, 2025, 2024 and 2023, respectively.
The income tax expense from the Taxable Subsidiary operations for the years ended December 31, 2025, 2024, and 2023 differs from the "expected" tax expense (computed by applying the federal corporate rate of 21% to income before income taxes of the Taxable Subsidiary) as follows:
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||||||
| US federal statutory income tax rate | $ | 2,175 | 21.00 | % | $ | 2,669 | 21.00 | % | $ | 3,880 | 21.00 | % | ||||||||||||||
| Domestic federal reconciling items | ||||||||||||||||||||||||||
| Nontaxable and nondeductible items, net: | ||||||||||||||||||||||||||
• Insurance premiums paid to non-insurance company | 875 | 8.45 | % | 265 | 2.08 | % | 280 | 1.52 | % | |||||||||||||||||
• Other | 36 | 0.35 | % | 34 | 0.27 | % | 26 | 0.15 | % | |||||||||||||||||
| Return to provision true-up | (64) | (0.62) | % | (45) | (0.36) | % | 45 | 0.24 | % | |||||||||||||||||
| Other domestic federal items | 16 | 0.15 | % | 65 | 0.51 | % | 44 | 0.24 | % | |||||||||||||||||
| Domestic state and local income taxes, net of federal effect** | 582 | 5.62 | % | 284 | 2.23 | % | 1,203 | 6.52 | % | |||||||||||||||||
| Effect of changes in tax laws or rates | — | — | % | — | — | % | — | — | % | |||||||||||||||||
| Total | $ | 3,620 | 34.95 | % | $ | 3,272 | 25.73 | % | $ | 5,478 | 29.67 | % | ||||||||||||||
**State taxes in Texas made up the majority (greater than 50 percent) of the tax effect in this category
Income taxes paid (net of refunds received) for the years ended December 31, 2025, 2024 and 2023, are as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| US federal | $ | 1,950 | $ | 2,340 | $ | 560 | |||||||||||
| Domestic state and local | |||||||||||||||||
| Florida | * | 63 | 61 | ||||||||||||||
| Louisiana | * | 56 | 64 | ||||||||||||||
| Tennessee | * | * | 59 | ||||||||||||||
| Texas | 1,349 | 766 | 510 | ||||||||||||||
| Other | 223 | 131 | 150 | ||||||||||||||
| Subtotal | 1,572 | 1,016 | 844 | ||||||||||||||
| Total | $ | 3,522 | $ | 3,356 | $ | 1,404 | |||||||||||
*Jurisdiction is below the five percent disaggregation threshold for the period presented
Deferred taxes are the result of differences between the bases of assets and liabilities for financial reporting and income tax purposes. Significant components of deferred tax assets and liabilities at December 31, 2025 and 2024 are as follows:
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Bad debt reserves | $ | 95 | $ | 130 | |||||||
| Goodwill and intangibles | 8,186 | 9,216 | |||||||||
| Employee benefits | 10 | 12 | |||||||||
| Operating leases | 54 | 30 | |||||||||
| Interest expense | 1,426 | 1,186 | |||||||||
| Tax loss carryforwards | 40 | 118 | |||||||||
| Other | 185 | 150 | |||||||||
| Subtotal | 9,996 | 10,842 | |||||||||
| Less: Valuation allowance | — | — | |||||||||
| Total net deferred tax assets | 9,996 | 10,842 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Property and equipment | (970) | (896) | |||||||||
| Operating leases | — | — | |||||||||
| Total deferred tax liabilities | (970) | (896) | |||||||||
| Net deferred tax assets | $ | 9,026 | $ | 9,946 | |||||||
Deferred tax assets are regularly reviewed for recoverability and a valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon future taxable income during the periods in which those temporary differences become deductible. In assessing the need for a valuation allowance, management considers all available positive and negative evidence, including the ability to carryback operating losses to prior periods and the expected future utilization of net operating loss carryforwards, the reversal of deferred tax liabilities, projected taxable income, and tax-planning strategies. On the basis of these considerations, as of December 31, 2025, management believes it is more likely than not that the Taxable Subsidiary will realize the benefit of the existing deferred tax assets.
Federal income taxes refundable related to the operation of the Taxable Subsidiary of $44 for the year ended December 31, 2024 are included in "Other current assets". "Income taxes payable" includes a state income tax liability related to the operation of the Partnership of $1,136 and $931 for the years ended December 31, 2025 and 2024, respectively. Also included in "Income taxes payable" is a federal income tax liability related to the operation of the Taxable Subsidiary of $182 for the year ended December 31, 2025 and state income tax liabilities related to the operation of the Taxable Subsidiary of $262 and $352 for the years ended December 31, 2025 and 2024, respectively.
At December 31, 2025, MTI had net operating loss carryforwards for income tax purposes of approximately $859 related to state taxes. Of these net operating loss carryforwards, approximately $854 will expire between 2031 and 2041 and approximately $5 may be carried forward indefinitely. The federal net operating loss carryforwards were fully utilized in 2024.
The operations of the Partnership are generally not subject to income taxes, except as discussed above, because its income is taxed directly to its partners. The net tax basis in the Partnership's assets and liabilities is greater (less) than the reported amounts on the financial statements by approximately $63,929 and $69,103 as of December 31, 2025 and 2024, respectively.
On July 4, 2025, OBBBA was enacted, which legislation included numerous revisions to U.S. federal tax law. The OBBBA legislation does not have a material impact on the Partnership’s financials.
As of December 31, 2025, the tax years that remain open to assessment are 2022, 2023 and 2024.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 23, 2026 | Showing above |
| 2024 | Feb 24, 2025 | |
| 2022 | Mar 2, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 3, 2021 | |
| 2019 | Feb 14, 2020 | |
| 2018 | Feb 19, 2019 | |
| 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.