NATIONAL FUEL GAS CONFG

NATIONAL FUEL GAS CO Income Taxes Disclosure

10-KFiled Nov 21, 20254 min read
Income Taxes
The components of federal and state income taxes included in the Consolidated Statements of Income are as follows:
 Year Ended September 30
 202520242023
 (Thousands)
Current Income Taxes —
Federal$42,089 $6,453 $11,744 
State12,186 5,899 1,386 
Deferred Income Taxes —
Federal90,881 894 106,801 
State30,393 (3,504)44,602 
Total Income Taxes$175,549 $9,742 $164,533 
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation related to the Integrated Upstream and Gathering segment, domestic research cost expensing, and the business interest expense limitation. Additionally, the OBBBA permits the inclusion of intangible drilling cost deductions in the calculation of the Corporate Alternative Minimum Tax. The Company has evaluated the OBBBA. The results of such evaluations are reflected within the Company’s financial statements and the impacts were not material.
Total income taxes as reported differ from the amounts that were computed by applying the federal income tax rate to income before income taxes. The following is a reconciliation of this difference:
 Year Ended September 30
 202520242023
 (Thousands)
U.S. Income Before Income Taxes$694,053 $87,255 $641,399 
Income Tax Expense, Computed at
U.S. Federal Statutory Rate of 21%
$145,751 $18,324 $134,694 
State Income Taxes33,637 1,892 36,331 
Amortization of Excess Deferred Federal Income Taxes(4,617)(5,607)(6,053)
Plant Flow Through Items(5,070)(6,135)(2,856)
Stock Compensation2,245 1,758 957 
Miscellaneous3,603 (490)1,460 
Total Income Taxes$175,549 $9,742 $164,533 
Significant components of the Company’s deferred tax liabilities and assets were as follows:
 At September 30
 20252024
 (Thousands)
Deferred Tax Liabilities:
Unrealized Hedging Gains$9,036 $22,433 
Property, Plant and Equipment1,222,869 1,134,727 
Pension and Other Post-Retirement Benefit Costs72,691 59,877 
Other24,531 13,885 
Total Deferred Tax Liabilities1,329,127 1,230,922 
Deferred Tax Assets:
Tax Loss and Credit Carryforwards(28,364)(31,111)
Pension and Other Post-Retirement Benefit Costs(54,071)(49,622)
Other(21,430)(39,024)
Total Deferred Tax Assets(103,865)(119,757)
Total Net Deferred Income Taxes$1,225,262 $1,111,165 
A valuation allowance for deferred tax assets, including net operating losses and tax credits, is recognized when it is more likely than not that some or all of the benefit from the deferred tax assets will not be realized. The Company, at each reporting date, assesses the realizability of its deferred tax assets, including factors such as future taxable income, reversal of existing temporary differences, and tax planning strategies. The Company considers both positive and negative evidence related to the likelihood of the realization of the deferred tax assets. As of September 30, 2025, the Company has determined that there is sufficient positive evidence to conclude that it is more likely than not that the deferred tax assets will be realized.
Tax carryforwards available at September 30, 2025, were as follows:
JurisdictionTax AttributeAmount
(Thousands)		Expires
PennsylvaniaNet Operating Loss$422,900 2031-2045
Regulatory liabilities representing the reduction of previously recorded deferred income taxes associated with rate-regulated activities that are expected to be refundable to customers amounted to $306.3 million and $305.6 million at September 30, 2025 and 2024, respectively. Also, regulatory assets representing future
amounts collectible from customers, corresponding to additional deferred income taxes not previously recorded because of ratemaking practices, amounted to $89.2 million and $80.1 million at September 30, 2025 and 2024, respectively.
The Company is in the Bridge Plus Phase of the IRS Compliance Assurance Process (“CAP”) for fiscal 2025. This phase requires the submission of supplemental documentation to the IRS and allows the IRS to conduct a pre-filing review of material tax positions and to provide preliminary feedback prior to the filing of the Company’s federal income tax return. The CAP program is intended for taxpayers with a low risk of non-compliance who are cooperative and transparent with few, if any, material issues that require resolution. The federal statute of limitations remains open for fiscal 2022 and later years. The Company is also subject to various routine state income tax examinations. The Company’s principal subsidiaries have state statutes of limitations that generally expire between three to four years from the date of filing of the income tax return. Net operating losses being carried forward from prior years remain subject to examination on a future return until they are utilized, upon which time the statute of limitation begins. The Company has no unrecognized tax benefits as of September 30, 2025, 2024, or 2023.
The IRS released guidance on April 14, 2023, providing a natural gas transmission and distribution property safe harbor method of accounting (“NGSH method”) that taxpayers may use to determine whether expenses to repair, maintain, replace, or improve natural gas transmission and distribution property must be capitalized or be allowable as deductions for repairs. The Company elected this change in tax accounting method for Distribution Corporation with its fiscal 2023 consolidated tax return filing. The Company elected this same change in tax accounting method for Supply Corporation with its fiscal 2024 consolidated tax return filing. The financial statements herein reflect the amounts of what is intended to be treated as a repair for tax purposes rather than being capitalized and have been recorded in Income Tax Expense.
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Historical Timeline

Fiscal YearFiled
2025Nov 21, 2025Showing above
2024Nov 22, 2024
2023Nov 17, 2023
2022Nov 18, 2022
2021Nov 19, 2021
2020Nov 20, 2020
2019Nov 15, 2019
2018Nov 16, 2018
2017Nov 17, 2017
2016Nov 18, 2016
2015Nov 20, 2015

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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