Montauk Renewables, Inc. Income Taxes Disclosure
NOTE 14—INCOME TAXES
The Company is subject to income taxes in the U.S. federal jurisdiction and various state and local jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply.
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Year Ended December 31, |
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2025 |
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2024 |
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2023 |
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|||
(Loss) income before income taxes: |
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|
|
|
|
|
|
|
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|||
Domestic |
|
$ |
(2,444 |
) |
|
$ |
12,177 |
|
|
$ |
18,366 |
|
Foreign |
|
|
(43 |
) |
|
|
— |
|
|
|
— |
|
|
|
$ |
(2,487 |
) |
|
$ |
12,177 |
|
|
$ |
18,366 |
|
The following table details the components of the Company’s income tax provision for the years ended December 31, 2025, 2024 and 2023:
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Year Ended December 31, |
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2025 |
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|
2024 |
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2023 |
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|||
Current expense: |
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|
|
|
|
|
|
|
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|||
Federal |
|
$ |
— |
|
|
$ |
1,041 |
|
|
$ |
1,006 |
|
State |
|
|
44 |
|
|
|
597 |
|
|
|
536 |
|
|
|
$ |
44 |
|
|
$ |
1,638 |
|
|
$ |
1,542 |
|
|
|
|
|
|
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|
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|||
Deferred (benefit) expense: |
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|
|
|
|
|
|
|
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|||
Federal |
|
$ |
(4,348 |
) |
|
$ |
635 |
|
|
$ |
1,869 |
|
State |
|
|
69 |
|
|
|
170 |
|
|
|
7 |
|
|
|
$ |
(4,279 |
) |
|
$ |
805 |
|
|
$ |
1,876 |
|
|
|
|
|
|
|
|
|
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|||
Income tax (benefit) expense |
|
$ |
(4,235 |
) |
|
$ |
2,443 |
|
|
$ |
3,418 |
|
The following table illustrates the deferred tax assets and liabilities as of December 31, 2025 and December 31, 2024:
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December 31, 2025 |
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|
December 31, 2024 |
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Deferred tax assets: |
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|
|
|
|
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||
Net operating loss carry forwards |
|
$ |
4,147 |
|
|
$ |
4,100 |
|
Federal tax credits |
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|
17,339 |
|
|
|
12,274 |
|
Book reserves |
|
|
2,107 |
|
|
|
1,824 |
|
Intangible asset amortization |
|
|
4,693 |
|
|
|
5,297 |
|
Stock compensation |
|
|
1,360 |
|
|
|
1,657 |
|
Impairment |
|
|
990 |
|
|
|
387 |
|
Lease liabilities |
|
|
2,075 |
|
|
|
2,815 |
|
VIE Loss on investment |
|
|
565 |
|
|
|
565 |
|
Total deferred tax assets |
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|
33,276 |
|
|
|
28,919 |
|
Less: valuation analysis |
|
|
(4,542 |
) |
|
|
(4,542 |
) |
Net deferred tax assets |
|
$ |
28,734 |
|
|
$ |
24,377 |
|
|
|
|
|
|
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||
Deferred tax liabilities: |
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|
|
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Property depreciation |
|
$ |
(21,130 |
) |
|
$ |
(20,319 |
) |
Right of use assets |
|
|
(2,054 |
) |
|
|
(2,786 |
) |
Total deferred tax liabilities |
|
|
(23,184 |
) |
|
|
(23,105 |
) |
Net deferred tax assets |
|
|
5,550 |
|
|
|
1,272 |
|
As of December 31, 2025, the Company has $2,727 (tax affected) of federal net operating losses carryforwards that are not expected to be realizable due to restrictive loss limitation rules. As such a full valuation allowance has been recorded to offset the value of the related carryforward. As of December 31, 2025, the Company has $1,335 state net operating loss carryforwards. A partial valuation allowance has been recorded to recognize that some attributes may expire before utilization. Additionally, the Company has $17,339 of federal tax credit carryforwards that expire 20 years from the date earned. The credits available as of December 31, 2025 will begin to expire in 2039.
The following table details the components of the Company’s income tax provision for the years ended December 31, 2025, 2024 and 2023:
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Year Ended December 31, |
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2025 |
|
|
2024 |
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|
2023 |
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U.S. federal tax at statutory rate |
|
$ |
(522 |
) |
|
21 |
% |
|
$ |
2,557 |
|
|
21 |
% |
|
$ |
3,857 |
|
|
21 |
% |
State and local income taxes, net of federal income tax effect |
|
|
104 |
|
|
-4 |
% |
|
|
642 |
|
|
5 |
% |
|
|
430 |
|
|
2 |
% |
Tax credits: |
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|
|
|
|
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Energy-related tax credits |
|
|
(4,822 |
) |
|
194 |
% |
|
|
(2,381 |
) |
|
-20 |
% |
|
|
(2,324 |
) |
|
-13 |
% |
Changes in valuation allowances |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
Nontaxable or nondeductible items: |
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|
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|
|
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Share-based payment awards |
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|
1,322 |
|
|
-53 |
% |
|
|
1,298 |
|
|
11 |
% |
|
|
(175 |
) |
|
-1 |
% |
Limitation on executive compensation |
|
|
(343 |
) |
|
14 |
% |
|
|
184 |
|
|
2 |
% |
|
|
1,530 |
|
|
8 |
% |
Other |
|
|
18 |
|
|
-1 |
% |
|
|
143 |
|
|
1 |
% |
|
|
114 |
|
|
1 |
% |
Changes in unrecognized tax benefits |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
Other adjustments |
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|
8 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
(14 |
) |
|
0 |
% |
Total income tax (benefit) expense and effective rate |
|
$ |
(4,235 |
) |
|
170 |
% |
|
$ |
2,443 |
|
|
20 |
% |
|
$ |
3,418 |
|
|
19 |
% |
State taxes in Pennsylvania and Texas comprise the majority of the state and local income taxes, net of federal effect category in all presented years.
As of December 31, 2025, the tax years are open for examination by the IRS.
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Year Ended December 31, |
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|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Federal: |
|
$ |
250 |
|
|
$ |
1,560 |
|
|
$ |
1,111 |
|
|
|
|
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|
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State: |
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California |
|
|
114 |
|
|
|
78 |
|
|
|
20 |
|
Idaho |
|
|
68 |
|
|
|
— |
|
|
|
84 |
|
Pennsylvania |
|
|
107 |
|
|
|
118 |
|
|
|
372 |
|
Texas |
|
|
240 |
|
|
|
235 |
|
|
|
328 |
|
Other |
|
|
4 |
|
|
|
2 |
|
|
|
— |
|
Net cash paid for income taxes |
|
$ |
783 |
|
|
$ |
1,993 |
|
|
$ |
1,915 |
|
Valuation Allowance
The Company annually reviews its deferred tax assets for the possibility they will not be realized. A valuation allowance will be recorded if it is determined more than a 50% likelihood exists that a deferred tax asset will not be realized. A $4,542 valuation allowance exists as of December 31, 2025 and 2024, which represents the Company’s deferred tax assets that are not expected to be realized. $565 of the valuation allowance represents MNK's investment deferred tax assets that the Company does not expect to realize. Refer to Note 17, Related Party Transactions for further information regarding the consolidation of MNK on December 31, 2024.
Uncertain Tax Position
The calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in both federal and state jurisdictions. ASC 740 states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of each situation’s technical merits.
At this point in time the Company is not aware of any tax positions taken that would give rise to recording an uncertain tax position. As such, the Company has not recorded any liability for unrecognized tax benefits as of December 31, 2025 or 2024. The Company records interest and penalties as a component of income tax expense. However, as there are no unrecognized tax benefits for the years ended December 31, 2025 and December 31, 2024, the Company has no penalties or interest accrued at December 31, 2025 and 2024, respectively.Want the next Montauk Renewables, Inc. income taxes disclosure the moment it drops?
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 11, 2026 | Showing above |
| 2024 | Mar 14, 2025 | |
| 2023 | Mar 14, 2024 | |
| 2022 | Mar 16, 2023 | |
| 2021 | Mar 16, 2022 | |
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.