NVE CORP /NEW/ Income Taxes Disclosure
NOTE 8. INCOME TAXES
Income tax provisions for fiscal 2026 and 2025 consisted of the following:
|
| Year Ended March 31, |
| ||||||
|
| 2026 |
|
| 2025 |
| |||
Current taxes |
| ||||||||
Federal |
| $ | 385,336 |
|
| $ | 3,403,776 |
| |
State (Minnesota) |
|
| 126,669 |
|
|
| 182,414 |
| |
Deferred taxes |
| ||||||||
Federal |
|
| 2,074,509 |
|
|
| (587,356 | ) | |
State (Minnesota) |
|
| 30,612 |
|
|
| (24,613 | ) | |
Income tax provision |
| $ | 2,617,126 |
|
| $ | 2,974,221 |
| |
A reconciliation of the statutory tax rate to the effective tax rate for fiscal 2026 and 2025 is as follows:
|
| Year Ended March 31, |
| |||||||||||||
|
| 2026 |
|
|
| 2025 |
| |||||||||
|
| Amount |
|
|
| % of Pretax Income |
|
|
| Amount |
|
|
| % of Pretax Income |
| |
Income before income taxes |
| $ | 17,816,321 |
|
|
| 100.0% |
|
| $ | 18,038,737 |
|
|
| 100.0% |
|
Tax expense at U.S. statutory rate |
|
| 3,741,427 |
|
|
| 21.0% |
|
|
| 3,788,135 |
|
|
| 21.0% |
|
State income taxes, net of Federal benefit |
|
| 155,002 |
|
|
| 0.9% |
|
|
| 158,741 |
|
|
| 0.9% |
|
Tax credits (R&D and manufacturing credits) |
|
| (1,135,592 | ) |
|
| (6.4% | ) |
|
| (202,166 | ) |
|
| (1.1% | ) |
Effect of foreign-derived intangible income deductions |
|
| (359,326 | ) |
|
| (2.0% | ) |
|
| (816,143 | ) |
|
| (4.5% | ) |
Non-deductible items |
|
| 934 |
|
|
| 0.0% |
|
|
| 916 |
|
|
| 0.0% |
|
Other |
|
| 214,681 |
|
|
| 1.2% |
|
|
| 44,738 |
|
|
| 0.2% |
|
Provision for income taxes |
| $ | 2,617,126 |
|
|
| 14.7% |
|
| $ | 2,974,221 |
|
|
| 16.5% |
|
Income taxes paid for fiscal 2026 and 2025, disaggregated by federal and state, are as follow:
|
| Year Ended March 31, |
| |||||||
Income taxes paid: |
| 2026 |
|
| 2025 |
| ||||
Federal |
| $ | 1,793,539 |
|
| $ | 3,223,664 |
| ||
State (Minnesota) |
|
| 139,610 |
|
|
| 87,870 |
| ||
Total |
| $ | 1,933,149 |
|
| $ | 3,311,534 |
| ||
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and deferred tax liabilities as of March 31, 2026 and 2025 were as follows:
|
| As of March 31, 2026 |
|
| As of March 31, 2025 |
| ||||||||||||||||||
|
| Deferred Tax |
|
| Deferred |
|
| Net Deferred Tax Assets/ |
|
| Deferred Tax |
|
| Deferred |
|
| Net Deferred |
| ||||||
Paid time off accrual |
| $ | 67,884 |
|
| $ | - |
|
| $ | 67,884 |
|
| $ | 67,594 |
|
| $ | - |
|
| $ | 67,594 |
|
Reserve for obsolete inventory |
|
| 47,017 |
|
|
| - |
|
|
| 47,017 |
|
|
| 47,042 |
|
|
|
|
|
|
| 47,042 |
|
Depreciation and amortization |
|
| - |
|
|
| (734,113 | ) |
|
| (734,113 | ) |
|
| - |
|
|
| (118,314 | ) |
|
| (118,314 | ) |
Stock-based compensation deductions |
|
| 139,228 |
|
|
| - |
|
|
| 139,228 |
|
|
| 118,810 |
|
|
| - |
|
|
| 118,810 |
|
Unrealized loss on marketable securities |
|
| 8,961 |
|
|
| - |
|
|
| 8,961 |
|
|
| 19,198 |
|
|
| - |
|
|
| 19,198 |
|
Section 174 R&D expense |
|
| 65,273 |
|
|
| - |
|
|
| 65,273 |
|
|
| 1,417,015 |
|
|
| - |
|
|
| 1,417,015 |
|
Section 263A UNICAP inventory |
|
| 129,744 |
|
|
| - |
|
|
| 129,744 |
|
|
| 311,729 |
|
|
| - |
|
|
| 311,729 |
|
Other |
|
| 27,722 |
|
|
| - |
|
|
| 27,722 |
|
|
| 3,995 |
|
|
| - |
|
|
| 3,995 |
|
Deferred Tax |
| $ | 485,829 |
|
| $ | (734,113 | ) |
| $ | (248,284 | ) |
| $ | 1,985,383 |
|
| $ | (118,314 | ) |
| $ | 1,867,069 |
|
We had no unrecognized tax benefits as of March 31, 2026, and we do not expect any significant unrecognized tax benefits within 12 months of the reporting date. We recognize interest and penalties related to income tax matters in provision for income taxes. As of March 31, 2026 we had no accrued interest related to uncertain tax positions. Federal estimated tax overpayment was $1,261,822 and State taxes payable was $69,968 as of March 31, 2026. Federal and State taxes payable were $243,394 as of March 31, 2025. The tax years ended March 31, 2023 through March 31, 2026 remain open to examination by the major taxing jurisdictions to which we are subject.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | May 6, 2026 | Showing above |
| 2025 | May 7, 2025 | |
| 2024 | May 1, 2024 | |
| 2023 | May 3, 2023 | |
| 2022 | May 4, 2022 | |
| 2021 | May 5, 2021 | |
| 2020 | May 6, 2020 | |
| 2019 | May 1, 2019 | |
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.