STURM RUGER & CO INC Income Taxes Disclosure

13.	Income Taxes

 

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal and state income tax examinations by tax authorities for years before 2018.

 

Our (loss) income before income taxes is derived solely from within the United States.

 

The federal and state income tax provision consisted of the following:

 

Year ended December 31,		2025				2024				2023
Current
Federal		$	(49	)		$	10,310			$	14,763
State			(146	)			1,607				1,713
Total current tax expense			(195	)			11,917				16,476
Deferred
Federal			(2,150	)			(4,190	)			(5,285	)
State			(425	)			(515	)			(582	)
Total deferred tax expense			(2,575	)			(4,705	)			(5,867	)
Provision for income taxes		$	(2,770	)		$	7,212			$	10,609

 

The reconciliation of the U.S. federal income tax provision at the statutory federal income tax rate of 21% for the year ended December 31, 2025, to our provision for income taxes was as follows:

 

The table reflects the ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which was adopted prospectively for the year ended December 31, 2025. See “Note 1. Organization and Summary of Significant Accounting Policies — Recently

Adopted Accounting Pronouncements” for additional information on the adoption of ASU 2023-09.

 

Year ended December 31, 2025		Amount				Percent
Statutory federal income tax rate		$	(1,504	)			21.0	%
State and local income taxes, net of federal tax benefit			(570	)			8.0
Research and development tax credits			(1,027	)			14.3
Nontaxable or nondeductible items
Share based compensation			521				(7.3	)
Officers compensation – 162(M)			(204	)			2.9
Other nontaxable or nondeductible items			63				(0.9	)
Other			(49	)			0.7
Effective income tax rate			(2,770	)			38.7	%

 

State taxes in New Hampshire made up the majority (greater than 50%) of the tax effect in the state and local income taxes, net of federal income tax effect category for 2025.

  

The reconciliation of the U.S. federal income tax provision at the statutory federal income tax rate of 21% for each of the years ended December 31, 2024 and 2023, respectively, to our provision for income taxes, as previously disclosed, prior to the adoption of ASU 2023-09, were as follows:

 

Year ended December 31,		2024				2023
Statutory federal income tax rate			21.0	%			21.0	%
State income taxes, net of federal tax benefit			1.5				2.2
Research and development tax credits			(5.9	)			(2.7	)
Other			2.5				(2.5	)
Effective income tax rate			19.1	%			18.0	%

 

The Company made income tax payments of approximately $2.8 million, $10.6 million, and $26.0 million, during 2025, 2024, and 2023, respectively. The amounts of cash paid for income taxes, for the year ended December 31, 2025, were as follows:

  

Year ended December 31, 2025		Amount				Percent
Federal income taxes paid		$	3,000				106.0	%
State and local income taxes paid
New Hampshire			100				3.6	%
North Carolina			(200	)			(7.1	)%
Other immaterial state taxes paid			(69	)			(2.5	)%
Total cash paid for income taxes		$	2,831				100	%

 

Deferred tax assets and liabilities reflect the net tax effects of net operating loss and tax credit carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:

 

December 31,		2025				2024
Deferred tax assets
Net Operating Loss Carryforwards		$	5,461			$	—
Research and development tax credits			1,036				—
Capitalized research and development costs			7,361				12,566
Employee compensation and benefits			2,553				2,483
Allowances for doubtful accounts and discounts			434				452
Inventories			902				1,831
Stock-based compensation			2,989				1,876
ASC 842 lease liabilities			428				—
Other			850				1,537
Total deferred tax assets			22,014				20,745
Deferred tax liabilities:
ASC 842 right-of-use asset			428				—
Depreciation			997				2,868
Other			869				1,196
Total deferred tax liabilities			2,294				4,064
Net deferred tax assets		$	19,720			$	16,681

 

The Company expects to realize its deferred tax assets through tax deductions against future taxable income.

 

The Company does not believe it has included any “uncertain tax positions” in its federal income tax return or any of the state income tax returns it is currently filing. The Company has made an evaluation of the potential impact of additional state taxes being assessed by jurisdictions in which the Company does not currently consider itself liable. The Company does not anticipate that such additional taxes, if any, would result in a material change to its financial position.