ProPetro Holding Corp.PUMP
ProPetro Holding Corp. Income Taxes Disclosure
INCOME TAXES
The components of the provision for income taxes are as follows:
| (in thousands) | |||||||||||||||||
Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Federal: | |||||||||||||||||
| Current | $ | 2,530 | $ | 836 | $ | — | |||||||||||
Deferred | 1,915 | (33,756) | 28,109 | ||||||||||||||
| 4,445 | (32,920) | 28,109 | |||||||||||||||
| State: | |||||||||||||||||
| Current | 804 | 1,115 | 2,028 | ||||||||||||||
Deferred | 1,748 | 420 | (269) | ||||||||||||||
| 2,552 | 1,535 | 1,759 | |||||||||||||||
Total income tax (benefit) expense | $ | 6,997 | $ | (31,385) | $ | 29,868 | |||||||||||
Reconciliation between the amounts determined by applying the federal statutory rate of 21% to income tax (benefit) expense is as follows:
| (in thousands) | |||||||||||
| Year Ended December 31, 2025 | |||||||||||
| U.S. federal statutory tax rate | $ | 1,642 | 21.0 | % | |||||||
State and local income tax, net of federal (national) income tax effect (1) | 2,044 | 26.2 | % | ||||||||
| Nontaxable or nondeductible items: | |||||||||||
| Stock-based compensation | 1,076 | 13.8 | % | ||||||||
| Nondeductible compensation | 1,721 | 22.0 | % | ||||||||
| Meals and entertainment | 427 | 5.5 | % | ||||||||
| Other | 87 | 1.1 | % | ||||||||
| Effective tax rate | $ | 6,997 | 89.6 | % | |||||||
____________________
(1)State taxes in Utah and New Mexico made up the majority (greater than 50 percent) of the tax effect in this category.
| (in thousands) | |||||||||||
Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Taxes at federal statutory rate | $ | (35,541) | $ | 24,256 | |||||||
| State taxes, net of federal benefit | 1,194 | 2,092 | |||||||||
| Section 162(m) limitation | 534 | 2,089 | |||||||||
| Stock-based compensation | 2,168 | 1,718 | |||||||||
| Valuation allowance | — | (780) | |||||||||
| Other | 260 | 493 | |||||||||
| Total income tax (benefit) expense | $ | (31,385) | $ | 29,868 | |||||||
Income taxes paid, net of refunds received, during the year ended December 31, 2025 were as follows:
| (in thousands) | |||||
| Year Ended December 31, 2025 | |||||
| Federal income taxes: | |||||
| United States | $ | 1,380 | |||
| State income taxes: | |||||
| New Mexico | 1,384 | ||||
| Texas | 678 | ||||
| Other state jurisdictions | 26 | ||||
| Total income taxes paid - net of refunds received | $ | 3,468 | |||
Deferred income tax assets and liabilities are recognized for estimated future tax effects of temporary differences between the tax basis of an asset or liability and its reported amount in the consolidated financial statements. The significant items giving rise to deferred tax assets (liabilities) are as follows:
| (in thousands) | |||||||||||
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred income tax assets: | |||||||||||
| Accrued liabilities | $ | 3,629 | $ | 3,291 | |||||||
| Allowance for credit losses | — | — | |||||||||
| Goodwill and other intangible assets | 5,894 | 6,718 | |||||||||
| Stock‑based compensation | 1,465 | 2,083 | |||||||||
| Net operating losses | 30,423 | 40,546 | |||||||||
| Lease liabilities | 17,019 | 20,940 | |||||||||
| Other | 21 | 877 | |||||||||
Total deferred income tax assets | 58,451 | 74,455 | |||||||||
| Valuation allowance | (1,450) | (577) | |||||||||
Total deferred income tax assets — net | $ | 57,001 | $ | 73,878 | |||||||
| Deferred income tax liabilities: | |||||||||||
| Property and equipment | (101,267) | (110,856) | |||||||||
| Prepaid expenses | (2,219) | (1,691) | |||||||||
| Right-of-use assets | (16,948) | (21,101) | |||||||||
Total deferred income tax liabilities | (120,434) | (133,648) | |||||||||
Net deferred income tax liabilities | $ | (63,433) | $ | (59,770) | |||||||
On July 4, 2025, “An Act to provide for reconciliation pursuant to title II of H. Con. Res. 14”, commonly referred to as the One Big Beautiful Bill Act (“OBBBA”), was enacted into law in the United States. The OBBBA contains several changes to corporate taxation including modifications to capitalization of research and development expenses, limitations on deductions for interest expense and accelerated fixed asset depreciation. These provisions did not have a material impact on the Company's effective tax rate for the year ended December 31, 2025.
As of December 31, 2025, the Company had approximately $138.0 million of U.S. federal NOLs, all of which will have an unlimited carryforward. As of December 31, 2025, the Company’s state NOLs were approximately $42.8 million and will begin to expire in 2030. The tax effected amount of state NOLs is $1.8 million, all of which is fully offset by valuation allowance. Utilization of NOLs may be limited under Section 382 of the Code due to future ownership changes.
The Company’s U.S. federal income tax returns for the year ended December 31, 2022, and through the most recent filing remain open to examination by the Internal Revenue Service under the applicable U.S. federal statute of limitations provisions.
The various states in which the Company is subject to income tax are generally open to examination for the tax years ended December 31, 2021, and through the most recent filing.
The Company records uncertain tax positions in accordance with FASB ASC 740, Income Taxes, on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. As of December 31, 2025, 2024 and 2023, no uncertain tax positions were recorded. The Company will continue to evaluate its tax positions in accordance with FASB ASC 740 and will recognize any future effect as either a benefit or charge to income in the applicable period.
Income tax penalties and interest assessments recognized under FASB ASC 740 are accrued as a tax expense in the period that the Company’s taxes are in an uncertain tax position. Any accrued tax penalties or interest assessments will remain until the uncertain tax position is resolved with the taxing authorities or until the applicable statute of limitations has expired.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Mar 13, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Mar 5, 2021 | |
| 2019 | Jun 22, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Mar 27, 2018 | |
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.