Primoris Services Corp Income Taxes Disclosure

Note 16—Income Taxes

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Income before provision for income taxes consists of the following (in millions):

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The components of the provision for income taxes are as follows (in millions):

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A reconciliation of income tax expense compared to the amount of income tax expense that would result by applying the U.S. federal statutory income tax rate to pre-tax income is presented on both a dollar (in millions) and a percentage basis as follows:

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The total cash paid for income taxes (net of refunds) is composed of the following (in millions):

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The provision for income taxes has been determined based upon the tax laws and rates in the countries in which we operate. Our operations in the United States are subject to federal income tax rates of 21.0% and varying state income tax rates. Our principal international operations are in Canada. Our subsidiaries in Canada are subject to a corporate income tax rate of 23.0%. We did not have any non-taxable foreign earnings from tax holidays for taxable years 2023 through 2025.

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We purchased $45.0 million of transferable ITCs in 2025 at a purchase price of $41.9 million which we expect to fully utilize within our 2025 federal income tax return. We purchased $40.0 million of transferable ITCs in 2024 at a purchase price of $36.9 million which were fully utilized within our 2024 federal income tax return. We made an accounting policy election to use the flow through income statement method under which we recognized the benefit of the ITC in our 2025 and 2024 income tax expense.

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Deferred taxes are recognized for temporary differences between the financial reporting bases and tax bases of assets and liabilities and are measured using enacted tax rates expected to be in effect when such amounts are realized or settled. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based upon consideration of available evidence, including future reversals of existing taxable temporary differences, future projected taxable income, the length of the tax asset carryforward periods, and tax planning strategies.

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The tax effect of temporary differences that give rise to deferred income taxes are as follows (in millions):

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As of December 31, 2025, we have recorded a deferred tax asset of $30.3 million reflecting the tax benefit of approximately $484.1 million of federal and state income tax net operating loss carryforwards, some of which were acquired in the acquisitions of PLH and other companies. Our tax credits of $1.4 million generally expire between 10 and 20 years after they are generated. Our U.S. federal net operating losses expire beginning in 2032, and our state net operating losses generally expire 20 years after the period in which the losses were incurred. Capital losses expire if not utilized within 5 years.

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The valuation allowances for deferred income tax assets at December 31, 2025 and 2024, were $10.8 million and $10.3 million, respectively. The $0.5 million net increase in valuation allowances during 2025 was due to changes in the realizability of the state net operating losses, net of changes for capital losses. These valuation allowances relate to uncertainty in our outlook as to the amount of future taxable income required in particular tax jurisdictions in order to utilize certain tax losses, considering also the tax regulations which limit the annual utilization of acquired losses. We believe it is more likely than not that we will realize the benefit of our deferred tax assets net of existing valuation allowances.

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A reconciliation of the beginning, ending and aggregate changes in the gross balances of unrecognized tax benefits is as follows (in millions):

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We recognize accrued interest and penalties related to uncertain tax positions in income tax expense. We recognized interest expense related to uncertain tax positions of $0.5 million, $0.7 million, and $0.6 million for the years

ending December 31, 2025, 2024, and 2023, respectively. The effect on our tax rate if we were to recognize our gross unrecognized tax benefits as of December 31, 2025 approximates $16.8 million, including interest and penalties.

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Our federal income tax returns are generally no longer subject to examination for tax years before 2020. The statutes of limitation of state and foreign jurisdictions generally vary between 3 to 5 years. Accordingly, our state and foreign income tax returns are generally no longer subject to examination for tax years before 2020.