Smart Sand, Inc.SND
Smart Sand, Inc. Income Taxes Disclosure
Income Taxes
The provision for income taxes consists of the following:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current | |||||||||||||||||
| Federal | $ | (1,845) | $ | (226) | $ | (181) | |||||||||||
| State and local | 42 | 32 | (969) | ||||||||||||||
| Foreign | — | 239 | 386 | ||||||||||||||
| Total current (benefit) expense | (1,803) | 45 | (764) | ||||||||||||||
| Deferred | |||||||||||||||||
| Federal | (4,634) | (2,650) | (4,869) | ||||||||||||||
| State and local | (494) | (135) | (1,268) | ||||||||||||||
| Foreign | — | — | — | ||||||||||||||
| Total deferred income tax benefit | (5,128) | (2,785) | (6,137) | ||||||||||||||
| Total income tax benefit | $ | (6,931) | $ | (2,740) | $ | (6,901) | |||||||||||
In December 2023, the FASB issued ASU 2023-09, Income Taxes, which updates various disclosures including enhancing the income tax rate reconciliation and income taxes paid disclosures by requiring greater disaggregation of information. The Company adopted ASU 2023-09 on a prospective basis for the year ended December 31, 2025. As this accounting standard only impacts disclosures, it did not have an impact on the Company’s consolidated financial results.
Income tax expense differs from the amounts computed by applying the statutory income tax rates to pretax income. The statutory income tax rates were 21% for the year ended December 31, 2025, 2024 and 2023. The reconciliation from the applicable statutory income tax rate to the income tax (benefit) expense is as follows:
| Year Ended December 31, 2025 | |||||||||||
| Amount | Percent of Pre-Tax Income | ||||||||||
| $ | (1,173) | 21 | % | ||||||||
| Tax credits | |||||||||||
| Fuel tax credits | (235) | 4 | % | ||||||||
| Other | (24) | — | % | ||||||||
| Nontaxable and nondeductible items | |||||||||||
| Depletion | (3,517) | 63 | % | ||||||||
| Share-based compensation | 123 | (2) | % | ||||||||
| Section 162(m) disallowance | 147 | (3) | % | ||||||||
| Other | 76 | (1) | % | ||||||||
| Change in valuation allowances | (279) | 5 | % | ||||||||
Domestic state and local income taxes, net of federal effect (1) | (462) | 8 | % | ||||||||
| Change in unrecognized tax benefits | (1,610) | 29 | % | ||||||||
| Other | |||||||||||
| Provision to return permanent difference | 23 | — | % | ||||||||
| Total income tax (benefit) expense | $ | (6,931) | 124 | % | |||||||
| (1) In 2025, state and local income taxes in Pennsylvania, North Dakota and West Virginia comprise the majority of the domestic state and local income taxes, net of the federal effect category. | |||||||||||
| 2024 | 2023 | ||||||||||
| At statutory rate | $ | 53 | $ | (473) | |||||||
| State taxes, net of U.S. federal benefit | (176) | (1,554) | |||||||||
| Foreign taxes | 189 | 305 | |||||||||
| Federal tax deductions | (3,507) | (3,231) | |||||||||
| Change in applicable tax rate | 8 | (436) | |||||||||
| Provision to return permanent difference | 4 | (810) | |||||||||
| R&D credits | (166) | (149) | |||||||||
| Fuel tax credit | (226) | (181) | |||||||||
| Unrecognized tax benefits | — | — | |||||||||
| NOL carryback/carryforward | 1,265 | (714) | |||||||||
| Nondeductible asset basis | (184) | 342 | |||||||||
| Compensation deduction limitation | — | — | |||||||||
| Total income tax benefit | $ | (2,740) | $ | (6,901) | |||||||
Deferred income taxes reflect the net tax effects of loss and credit carry-forwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company’s deferred tax assets for federal and state income taxes are as follows:
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Reserves and accruals | $ | 578 | $ | 1,858 | |||||||
| Prepaid expenses and other | 1,922 | 1,819 | |||||||||
| Federal net operating losses | 17,951 | 15,877 | |||||||||
| State net operating losses | 2,636 | 2,032 | |||||||||
| Operating lease liabilities | 5,498 | 5,925 | |||||||||
| Total gross deferred tax assets | 28,585 | 27,511 | |||||||||
| Less valuation allowance | (1,866) | (2,156) | |||||||||
| Total net deferred tax assets | 26,719 | 25,355 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Depreciation and amortization | (25,284) | (29,030) | |||||||||
| Foreign net operating losses | (50) | (50) | |||||||||
| Operating lease right-of-use assets | (5,573) | (5,591) | |||||||||
| Total deferred tax liabilities | (30,907) | (34,671) | |||||||||
| Deferred tax liabilities, long-term, net | $ | (4,188) | $ | (9,316) | |||||||
In assessing the realizability of deferred tax assets, the Company considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible. A valuation allowance should be recorded if, based on the weight of all positive and negative evidence, it is more likely than not that some portion or all of a deferred tax asset will not be related. At December 31, 2025 and December 31, 2024, the Company determined it was more likely than not that it will not be able to fully realize the benefits of certain existing deductible temporary differences and has recorded a partial valuation allowance against the gross deferred tax assets on its consolidated balance sheet in the amount of $1,886 and $2,156, respectively. As of December 31, 2024, the Company’s U.S. federal net operating loss carryforwards may be carried forward indefinitely and the majority or its state net operating loss carryforwards and federal tax credits will expire at various dates from December 31, 2032 through December 31, 2044 with the remaining being carried forward indirectly.
The Company has recorded a liability of $630 and $2,240 for unrecognized tax benefits for uncertain tax positions included on its consolidated balance sheet as of December 31, 2025 and 2024, respectively. The liability for unrecognized tax benefits would change the effective tax rate if recognized. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
| Unrecognized tax benefits | ||||||||
| Balance at December 31, 2023 | $ | 2,240 | ||||||
| Additions based on prior year positions | — | |||||||
| Decreases due to settlements and /or reduction in reserves | — | |||||||
| Balance at December 31, 2024 | $ | 2,240 | ||||||
| Additions based on prior year positions | — | |||||||
| Decreases due to settlements and /or reduction in reserves | (1,610) | |||||||
| Balance at December 31, 2025 | $ | 630 | ||||||
The Company has (received) income taxes for the year ended December 31, 2025 as follows:
| Year Ended December 31, | |||||
| 2025 | |||||
| Federal | $ | — | |||
| State and local | (310) | ||||
| Foreign | — | ||||
| Cash (received) for income taxes | $ | (310) | |||
On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (the “OBBBA”), which extends certain business tax provisions of the 2017 Tax Cuts and Jobs Act. These provisions include the reinstatement of 100% bonus depreciation for qualifying property, full and immediate expensing of domestic research and development expenditures, and the use of EBITDA, rather than EBIT, in calculating adjusted taxable income for purposes of the interest deduction limitation. The OBBBA did not have a material impact on the Company’s effective tax rate for the year ended December 31, 2025.
The Company’s federal income tax returns subsequent to 2021 remain open to audit by taxing authorities. The Company has not been informed that its tax returns are the subject of any audit or investigation by taxing authorities.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Mar 4, 2025 | |
| 2023 | Mar 11, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Mar 8, 2022 | |
| 2020 | Mar 3, 2021 | |
| 2019 | Feb 26, 2020 | |
| 2018 | Mar 14, 2019 | |
| 2017 | Mar 15, 2018 | |
| 2016 | Mar 16, 2017 | |
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.