MYR GROUP INC.MYRG

MYR GROUP INC. Income Taxes Disclosure

10-KFiled Feb 25, 20265 min read
Income Taxes
Income before income taxes by geographic area for the years ended December 31 was:
(in thousands)202520242023
Domestic$181,098 $64,068 $102,014 
Foreign(19,814)(17,575)22,990 
$161,284 $46,493 $125,004 
Income tax expense (benefit) consisted of the following for the years ended December 31:
(in thousands)202520242023
Current
Federal$35,237 $11,437 $21,337 
Foreign4,567 1,788 1,821 
State13,088 3,405 7,348 
52,892 16,630 30,506 
Deferred
Federal2,546 4,917 (159)
Foreign(9,496)(8,318)3,984 
State(3,074)3,001 (317)
(10,024)(400)3,508 
Income tax expense$42,868 $16,230 $34,014 
Income tax paid consisted of the following for the years ended December 31:
(in thousands)2025
Federal$21,600 
Foreign4,327 
State - California2,125 
State - All other states below 5% threshold4,081 
$32,133 
The differences between the U.S. federal statutory tax rate and the Company’s effective income tax rate were as follows for the years ended December 31:
2025
(dollars in thousands)AmountPercent
U.S. federal statutory tax rate33,870 21.0 
State and local income taxes (1)
9,603 6.0 
U.S. State net operating loss true up(2,099)(1.3)
U.S. State valuation allowance2,788 1.7 
U.S. State rate true up(2,713)(1.7)
Foreign tax effects
Canadian Federal Taxes1,716 1.1 
Canadian Provincial Taxes(2,206)(1.4)
Tax credits
United States
Other credits(725)(0.4)
Nontaxable or nondeductible items
United States
162(m) limitation1,853 1.1 
Other666 0.4 
Changes in unrecognized tax benefits
United States8 — 
Other Jurisdictions
Canada53 — 
Other Adjustments
United States54 — 
Total / effective rate$42,868 26.6 %
(1) State taxes in California, Colorado and Texas made up the majority (greater than 50%) of the tax effect in this category.
As previously disclosed prior to the adoption of ASU 2023-09, the differences between the U.S. federal statutory tax rate and the Company’s effective tax rate for operations were as follows for the years ended December 31:
20242023
U.S federal statutory rate21.0 %21.0 %
State income taxes, net of U.S. federal income tax expense10.3 4.4 
Change in valuation allowance0.1 — 
Tax differential on foreign earnings(2.0)0.7 
Non-deductible meals and entertainment1.6 0.5 
Stock compensation excess tax benefits(4.6)(2.6)
Uncertain tax positions(0.5)— 
Provision to return adjustments, net0.6 0.7 
Section 162(m) limitation10.6 2.5 
Tax credits(0.6)— 
Other income, net(1.6)— 
Effective rate34.9 %27.2 %
The net deferred tax assets and (liabilities) arising from temporary differences was as follows at December 31:
(in thousands)20252024
Deferred income tax assets:
Self insurance reserves$3,729 $1,498 
Contract loss reserves2,608 2,076 
Stock-based awards5,022 3,521 
Bonus9,726 10,128 
Accrued vacation2,878 2,653 
Accrued profit sharing3,092 161 
Operating lease liabilities10,093 11,126 
Non-U.S. operating loss18,987 13,166 
U.S. operating loss3,529 — 
Other non-U.S. deferred tax asset947 — 
Other U.S. deferred tax asset2,947 3,064 
Total deferred income tax assets before valuation allowances63,558 47,393 
Less: Non-U.S. valuation allowances(2,242)(2,247)
Less: U.S. valuation allowances(3,529)— 
Total deferred income tax assets57,787 45,146 
Deferred income tax liabilities:
Property and equipment — tax over book depreciation(53,727)(48,194)
Non-U.S. intangible assets — tax over book amortization(9,602)(9,601)
Intangible assets — tax over book amortization(5,730)(5,200)
Right-of-use operating lease assets(10,093)(11,129)
Contract revenue adjustment(15,545)(17,303)
Other non-U.S. deferred tax liabilities(158)— 
Other U.S. deferred tax liabilities(328)(483)
Total deferred income tax liabilities(95,183)(91,910)
Net deferred income taxes$(37,396)$(46,764)
The Company determined that it is more-likely-than-not that it will not realize certain deferred tax assets related to net operating loss carryforwards on certain subsidiaries and therefore recorded a valuation allowance against the deferred tax assets for those entities. The Company has net operating loss carryforwards in multiple jurisdictions that will begin to expire in 2031.
For the three-year period ended December 31, 2025, one of the Company’s subsidiaries incurred a cumulative pre-tax loss. In accordance with ASC 740, this prompted the Company to evaluate the realizability of deferred tax assets associated with this subsidiary. The cumulative pre-tax losses were primarily attributable to certain projects that have reached or are near completion and therefore are not expected to have significant negative impacts to future operating results. In assessing realizability of our net operating loss carryforwards the Company considered extensive positive and negative evidence including historical operating results, expected future operating results, backlog, current and expected deferred income taxes, and the expected utilization of the net operating loss carryforwards. Based on the Company’s evaluation, a valuation allowance associated with this subsidiary is not necessary as it is more-likely-than-not that the Company will realize its deferred tax assets, including its net operating loss carryforwards.
Earnings from the Company’s Canadian subsidiaries are indefinitely reinvested in Canada, therefore as of December 31, 2025, the Company had no undistributed earnings or withholding deferral associated with its Canadian subsidiaries.
The Company is subject to taxation in various jurisdictions. The Company’s 2021 through 2024 tax returns are subject to examination by U. S. federal authorities. The Company’s tax returns are subject to examination by various state authorities for the years 2020 through 2024.
The Company has recorded a liability for unrecognized tax benefits related to tax positions taken on its various income tax returns. Interest and penalties related to uncertain income tax positions are included as a component of income tax expense in the Financial Statements.
The following is a reconciliation of the beginning and ending liability for unrecognized tax benefits at December 31:
(in thousands)20252024
Balance at beginning of period$265 $417 
Gross increases (decreases) in current period tax positions69 (122)
Reductions in tax positions due to lapse of statutory limitations(13)(30)
Balance at end of period321 265 
Accrued interest and penalties at end of period59 24 
Total liability for unrecognized tax benefits$380 $289 
The liability for unrecognized tax benefits, including accrued interest and penalties, was included in other liabilities on the accompanying consolidated balance sheets. The amount of interest and penalties charged or credited to income tax expense as a result of the unrecognized tax benefits was not significant in the years ended December 31, 2025, 2024 and 2023.
On July 4, 2025, the “One Big Beautiful Bill Act” (the “Act”) was signed into law. The Act includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The Act has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Act did not have a material impact on the Company’s effective tax rate for the year ended December 31, 2025. While further evaluation is ongoing, the Act is not expected to have a material impact on the Company's financial position or results of operations.

Historical Timeline

Fiscal YearFiled
2025Feb 25, 2026Showing above
2024Feb 26, 2025
2023Feb 28, 2024
2022Feb 22, 2023
2021Feb 23, 2022
2020Mar 3, 2021
2019Mar 4, 2020
2018Mar 6, 2019
2017Mar 7, 2018
2016Mar 9, 2017
2015Mar 3, 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.

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