PAR PACIFIC HOLDINGS, INC.PARR
PAR PACIFIC HOLDINGS, INC. Income Taxes Disclosure
Income Taxes
For the year ended December 31, 2025, we recorded an income tax expense of $110.8 million primarily driven by a non-cash deferred tax expense of $100.4 million and state income taxes of $11.8 million from an increase in our 2025 taxable income. For the year ended December 31, 2024, we recorded an income tax benefit of $5.7 million primarily driven by a non-cash deferred tax benefit of $5.5 million primarily from our 2024 taxable loss. For the year ended December 31, 2023, we recorded an income tax benefit of $115.3 million primarily driven by a non-cash deferred tax benefit of $277.7 million related to the release of majority of the valuation allowance against our net deferred tax assets, partially offset by state tax expense.
In connection with our emergence from bankruptcy on August 31, 2012, we experienced an ownership change as defined under Section 382 of the Code. Section 382 generally places a limit on the amount of NOL carryforwards and other tax attributes arising before an ownership change that may be used to offset taxable income after an ownership change. We believe that we have qualified for an exception to the general limitation rules under Code Section 382(l)(5) which provides for substantially less restrictive limitations on our NOL carryforwards. Our amended and restated certificate of incorporation places restrictions upon the ability of certain equity interest holders to transfer their ownership interest in us. These restrictions are designed to provide us with the maximum assurance that another ownership change does not occur that could adversely impact our NOL carryforwards.
Our net taxable income must be apportioned to various states based upon the income tax laws of the states in which we derive our revenue. Our NOL carryforwards will not always be available to offset taxable income apportioned to the various states. The states from which our refining, logistics, and retail revenues are derived are not the same states in which our NOLs were incurred; therefore, we expect to incur state tax liabilities in connection with our refining, logistics, and retail operations.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, which includes tax reform provisions that amend, eliminate, and extend tax rules under the Inflation Reduction Act and Tax Cuts and Jobs Act. We evaluated the impact of this legislation and determined that the OBBBA does not have a material impact on our 2025 financial statements.
In the fourth quarter of 2023, we analyzed projections for our future taxable income and the absence of objective negative evidence, such as a cumulative loss in recent years. As a result of this analysis we determined that we had sufficient positive evidence to release a majority of the valuation allowance against our federal net deferred tax assets and recognized a non-cash deferred tax benefit of $277.7 million for the year ended December 31, 2023. We retain a partial valuation allowance on a foreign tax credit and certain state deferred tax assets primarily as a result of apportionment factors from minimal activity in certain states impacting assessed likelihood of future realizability. We will continue to reassess whether the balance of the valuation allowance is appropriate on a periodic basis and, given the totality of the facts and circumstances, both positive and negative, will adjust the remaining valuation allowance in future periods if the evidence supports doing so. Should our assumptions change indicating the ability to realize these deferred tax assets, any tax benefits related to any reversal of the valuation allowance as of December 31, 2025, will be recognized as a reduction of income tax expense.
Income (loss) before income tax expense (benefit) was as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
U.S. | $ | 477,871 | $ | (39,018) | $ | 613,306 | |||||||||||
| Foreign | — | — | — | ||||||||||||||
Income (loss) before income tax expense | $ | 477,871 | $ | (39,018) | $ | 613,306 | |||||||||||
Income tax expense (benefit) consisted of the following (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| U.S.—Federal | $ | — | $ | — | $ | — | |||||||||||
| U.S.—State | 10,361 | (2,380) | 10,883 | ||||||||||||||
| Foreign | — | — | — | ||||||||||||||
Total current income tax expense (benefit) | 10,361 | (2,380) | 10,883 | ||||||||||||||
| Deferred: | |||||||||||||||||
| U.S.—Federal | 96,760 | (5,528) | (133,979) | ||||||||||||||
| U.S.—State | 3,662 | 2,212 | 7,760 | ||||||||||||||
| Foreign | — | — | — | ||||||||||||||
Total deferred income tax expense (benefit) | 100,422 | (3,316) | (126,219) | ||||||||||||||
Total income tax expense (benefit) | $ | 110,783 | $ | (5,696) | $ | (115,336) | |||||||||||
Under adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in “Note 2—Summary of Significant Accounting Policies”, the reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the year ended December 31, 2025, was as follows (in thousands, except for percentages):
| Year Ended December 31, | |||||||||||
| 2025 | |||||||||||
U.S federal statutory income tax rate | $ | 100,402 | 21.00 | % | |||||||
Domestic Federal | — | — | % | ||||||||
Tax credits | (2,097) | (0.44) | % | ||||||||
Nontaxable and nondeductible items, net | 681 | 0.14 | % | ||||||||
Other reconciling items | (50) | (0.01) | % | ||||||||
State and local income taxes, net of federal effect (1) | 11,847 | 2.48 | % | ||||||||
Total | $ | 110,783 | 23.2 | % | |||||||
______________________________________________________
(1)For the year ended December 31, 2025, the state and local jurisdiction that contributed to the majority of the tax effect is Hawaii.
Income tax expense was different from the amounts computed by applying U.S. Federal income tax rate to pretax income as a result of the following:
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Federal statutory rate | 21.0 | % | 21.0 | % | |||||||
| State income taxes, net of federal benefit | (0.9) | % | 2.9 | % | |||||||
| Change in valuation allowance related to current activity | — | % | (45.3) | % | |||||||
| Permanent items | 1.6 | % | 0.4 | % | |||||||
Equity Method Investment Recovery | 2.5 | % | — | % | |||||||
Non-deductible executive compensation | (9.8) | % | — | % | |||||||
Other | 0.7 | % | 2.2 | % | |||||||
| Actual income tax rate | 15.1 | % | (18.8) | % | |||||||
Under adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in “Note 2—Summary of Significant Accounting Policies”, (cash paid for income taxes), net of refunds received, during the year ended December 31, 2025, was as follows (in thousands):
| Year Ended December 31, | |||||
| 2025 | |||||
U.S. Federal | $ | — | |||
| U.S. State and local | — | ||||
| California | 312 | ||||
| Hawaii | 2,909 | ||||
| Montana | 1,552 | ||||
| Other | (283) | ||||
| Foreign | — | ||||
| Total cash (paid) received during the period for income taxes | $ | 4,490 | |||
Deferred tax assets (liabilities) are comprised of the following (in thousands):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss | $ | 193,083 | $ | 257,394 | |||||||
| Environmental credit obligations | 3,959 | 8,875 | |||||||||
ROU Liabilities | 101,091 | 109,436 | |||||||||
| Other | 13,441 | 21,567 | |||||||||
| Total deferred tax assets | 311,574 | 397,272 | |||||||||
| Valuation allowance | (52,741) | (52,741) | |||||||||
| Net deferred tax assets | 258,833 | 344,531 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Inventory | 7,482 | 3,480 | |||||||||
| Property and equipment | 122,520 | 105,612 | |||||||||
| Intangible assets | 5,413 | 2,223 | |||||||||
ROU Assets | 100,769 | 110,053 | |||||||||
| Total deferred tax liabilities | 236,184 | 221,368 | |||||||||
Total deferred tax assets, net (1) | $ | 22,649 | $ | 123,163 | |||||||
______________________________________________________
(1)As of December 31, 2025 and 2024, deferred tax assets, net, is included in Other long-term assets on our consolidated balance sheets.
We have NOL carryforwards as of December 31, 2025, of $0.7 billion for federal income tax purposes. If not utilized, approximately $0.5 billion of our NOL carryforwards will expire during 2031 through 2037. Approximately $0.2 billion of our NOL carryforwards do not expire. We do not have any unrecognized tax benefits as of December 31, 2025.
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.