RELIANCE, INC. Income Taxes Disclosure
NOTE 12. INCOME TAXES
Reliance files a consolidated U.S. federal return and income tax returns in various state and foreign jurisdictions. We are no longer subject to U.S. federal tax examinations for years before 2022 and state and local tax examinations before 2021.
Provision for Income Taxes
The components of provision for income taxes were as follows (in millions):
Year Ended December 31, | 2025 | | 2024 | | 2023 | |||
Current: | ||||||||
Federal | $ | 136.6 | $ | 156.2 | $ | 277.0 | ||
State | 35.8 | 39.9 | 73.8 | |||||
Foreign | 18.1 | 29.4 | 33.6 | |||||
190.5 | 225.5 | 384.4 | ||||||
Deferred: | ||||||||
Federal | 38.0 | 31.7 | 18.0 | |||||
State | 3.8 | 5.9 | 0.3 | |||||
Foreign | (4.7) | (1.2) | (2.1) | |||||
37.1 | 36.4 | 16.2 | ||||||
Total: | ||||||||
Federal | 174.6 | 187.9 | 295.0 | |||||
State | 39.6 | 45.8 | 74.1 | |||||
Foreign | 13.4 | 28.2 | 31.5 | |||||
$ | 227.6 | $ | 261.9 | $ | 400.6 | |||
Income before income taxes was as follows (in millions):
Year Ended December 31, | 2025 | | 2024 | | 2023 | |||
U.S. | $ | 906.2 | $ | 1,021.3 | $ | 1,579.4 | ||
Foreign | 63.0 | 118.6 | 161.3 | |||||
Income before income taxes | $ | 969.2 | $ | 1,139.9 | $ | 1,740.7 | ||
Effective Tax Rate
We adopted accounting changes issued by the FASB, “Improvements to Income Tax Disclosures,” in 2025 on a prospective basis. A reconciliation of income tax at the U.S. federal statutory rate to our tax provision and effective tax rate is as follows (in millions, except percentages):
Year Ended December 31, | 2025 | ||||
Income tax at U.S. federal statutory tax rate | $ | 203.5 | 21.0 | % | |
Domestic state and local income tax, net of federal tax effect(1) | 31.3 | 3.2 | |||
Domestic federal reconciling items | |||||
Nontaxable or nondeductible items | |||||
Life insurance policies | (20.3) | (2.1) | |||
Other | 8.0 | 0.8 | |||
Cross-border taxes | (0.2) | — | |||
Other adjustments | 0.1 | — | |||
Foreign tax effects | 4.4 | 0.5 | |||
Changes in unrecognized tax benefits | 0.8 | 0.1 | |||
$ | 227.6 | 23.5 | % |
| (1) | State taxes in Illinois, Pennsylvania, California, Wisconsin, Alabama, Tennessee, Oregon, and Georgia make up the majority (greater than 50%) of the effect of the state and local income tax category. |
A reconciliation of income tax at the U.S. federal statutory tax rate to our effective tax rate for prior years is as follows:
Year Ended December 31, | 2024 | | 2023 | |||
Income tax at U.S. federal statutory tax rate | 21.0 | % | 21.0 | % | ||
State income tax, net of federal tax effect | 3.1 | 3.4 | ||||
Foreign earnings taxed at higher (lower) rates | 0.3 | (0.1) | ||||
Net effect of life insurance policies | (1.6) | (1.1) | ||||
Other, net | 0.2 | (0.2) | ||||
23.0 | % | 23.0 | % |
Deferred Taxes
The components of our deferred tax assets and liabilities are as follows (in millions):
December 31, | | 2025 | | 2024 | ||||
Deferred tax assets: |
| |||||||
Allowance for credit losses | $ | 6.1 | $ | 6.5 | ||||
Inventory costs capitalized for tax purposes | 14.1 | 13.1 | ||||||
Accrued expenses not currently deductible for tax | 36.0 | 33.0 | ||||||
Stock-based compensation | 10.3 | 10.4 | ||||||
Net operating loss carryforwards | 1.1 | 1.5 | ||||||
Tax credits carryforwards | 1.4 | 0.4 | ||||||
Total deferred tax assets | 69.0 | 64.9 | ||||||
Deferred tax liabilities: | ||||||||
Property, plant and equipment, net | (249.1) | (224.3) | ||||||
Goodwill and other intangible assets | (356.4) | (351.9) | ||||||
LIFO inventories | (35.0) | (20.7) | ||||||
Other | (4.1) | (5.5) | ||||||
Total deferred tax liabilities | (644.6) | (602.4) | ||||||
Net deferred tax liabilities | $ | (575.6) | $ | (537.5) | ||||
The Company believes it is more likely than not that it will generate sufficient future taxable income to realize its deferred tax assets.
We are under audit by various state jurisdictions for years 2021 through 2024, but do not anticipate any material adjustments from these examinations.
Uncertain Tax Positions
A reconciliation of the beginning and ending balances of the total amounts of unrecognized tax benefits is as follows (in millions):
Year Ended December 31, | 2025 | | 2024 | | 2023 | |||
Unrecognized tax benefits as of January 1 | $ | 0.9 | $ | 1.2 | $ | 1.4 | ||
Increases (decreases) in tax positions for prior years | 1.4 | 0.2 | (0.2) | |||||
Increases in tax positions for current year | — | — | 0.6 | |||||
Settlements | — | — | (0.2) | |||||
Lapse of statute of limitations | (0.6) | (0.5) | (0.4) | |||||
Unrecognized tax benefits as of December 31 | $ | 1.7 | $ | 0.9 | $ | 1.2 | ||
As of December 31, 2025, $1.7 million of unrecognized tax benefits would impact the effective tax rate if recognized. Accrued interest and penalties, net of applicable tax effect, related to uncertain tax positions were $0.5 million and $0.2 million as of December 31, 2025 and 2024, respectively.
Cash Paid for Income Taxes
Income taxes paid for 2025 were as follows (in millions):
Year Ended December 31, | 2025 | |
U.S. Federal | $ | 102.0 |
Domestic state and local | 30.5 | |
Mexico | 12.0 | |
Other Foreign | 19.2 | |
Income taxes paid, net of refunds received | $ | 163.7 |
Income taxes paid, net in 2024 and 2023 were $244.9 million and $386.3 million, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Feb 27, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Feb 26, 2016 | |
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.