TREDEGAR CORPTG
TREDEGAR CORP Income Taxes Disclosure
11. INCOME TAXES
Income (loss) from continuing operations before income taxes is as follows:
| (In thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Income (loss) from continuing operations before income taxes: | |||||||||||||||||
| Domestic | $ | 29,745 | $ | (523) | $ | (151,488) | |||||||||||
| Foreign | 924 | 1,403 | 1,023 | ||||||||||||||
| Total | $ | 30,669 | $ | 880 | $ | (150,465) | |||||||||||
Income tax expense (benefit) from continuing operations is as follows:
| (In thousands) | 2025 | 2024 | 2023 | ||||||||||||||
Current income tax expense (benefit): | |||||||||||||||||
| Federal | $ | (563) | $ | (106) | $ | (39,929) | |||||||||||
| State | 691 | 704 | (39) | ||||||||||||||
| Foreign | 279 | 123 | 241 | ||||||||||||||
| Total | 407 | 721 | (39,727) | ||||||||||||||
Deferred income tax expense (benefit): | |||||||||||||||||
| Federal | 6,104 | (470) | (11,758) | ||||||||||||||
| State | 137 | (517) | 198 | ||||||||||||||
| Foreign | (64) | 101 | (13) | ||||||||||||||
| Total | 6,177 | (886) | (11,573) | ||||||||||||||
| Total income tax expense (benefit) for continuing operations | |||||||||||||||||
| Federal | 5,541 | (576) | (51,687) | ||||||||||||||
| State | 828 | 187 | 159 | ||||||||||||||
| Foreign | 215 | 224 | 228 | ||||||||||||||
| Total | 6,584 | (165) | (51,300) | ||||||||||||||
Below is a tabular rate reconciliation pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025.
| 2025 | ||||||||
| (In thousands, except percentages) | Amount | % | ||||||
| U.S. federal statutory tax rate | $ | 6,441 | 21.0 | |||||
| U.S. domestic federal | ||||||||
| Tax credits | ||||||||
| Research and development tax credit | (930) | (3.0) | ||||||
| Changes in valuation allowances | 192 | 0.6 | ||||||
| Nontaxable or nondeductible items | ||||||||
| Stock based compensation | 493 | 1.6 | ||||||
| Executive compensation | 384 | 1.3 | ||||||
| Other | 75 | 0.2 | ||||||
| Other adjustments | 112 | 0.4 | ||||||
State and local income tax, net of federal (national) income tax effect1 | 683 | 2.2 | ||||||
| Foreign tax effects | ||||||||
| Other foreign jurisdictions | 20 | 0.1 | ||||||
| Changes in unrecognized tax benefits | (886) | (2.9) | ||||||
| Effective tax rate | $ | 6,584 | 21.5 | |||||
1.State taxes in Pennsylvania and Georgia made up the majority (greater than 50 percent) of the tax effect in this category. | ||||||||
The significant differences between the U.S. federal statutory rate and the effective income tax rate related to continuing operations for the years ended December 31, 2024 and 2023 prior to the adoption of ASU 2023-09 are as follows:
| 2024 | 2023 | ||||||||||||||||
| (In thousands, except percentages) | Amount | % | Amount | % | |||||||||||||
| Income tax expense (benefit) at federal statutory rate | $ | 185 | 21.0 | $ | (31,598) | 21.0 | |||||||||||
| Stock-based compensation | 409 | 46.5 | 136 | (0.1) | |||||||||||||
| Changes in estimates related to prior year tax provision | 326 | 37.0 | 559 | (0.4) | |||||||||||||
| Non-deductible other | 282 | 32.0 | 144 | (0.1) | |||||||||||||
| Foreign rate differences | 57 | 6.5 | 39 | — | |||||||||||||
| State taxes, net of federal income tax benefit | 28 | 3.2 | 168 | (0.1) | |||||||||||||
| U.S. tax on foreign branch income | — | — | 1,693 | (1.1) | |||||||||||||
| Stranded taxes released with termination of pension | — | — | (21,913) | 14.6 | |||||||||||||
| Tax contingency accruals and tax settlements | (1) | (0.1) | 1 | — | |||||||||||||
| Changes in federal valuation allowance | (654) | (74.3) | 237 | (0.2) | |||||||||||||
| Research and development tax credit | (797) | (90.6) | (766) | 0.5 | |||||||||||||
| Income tax expense (benefit) at effective income tax rate | $ | (165) | (18.8) | $ | (51,300) | 34.1 | |||||||||||
Provision (benefit) for income taxes for the year ended December 31, 2025 was $6.6 million compared to $(0.2) million for the year ended December 31, 2024. The effective tax rates for the years ended December 31, 2025 and 2024 were 21.5% and (18.8)%, respectively. The change in effective tax rate was primarily due to higher pre-tax income from continuing operations in 2025 than in 2024. The tax rate in 2024 was impacted by the release of valuation allowance on deferred taxes. The tax rate in 2023 was impacted by a pre-tax loss and tax benefits previously recorded in other comprehensive income (loss) that were released in 2023 as a result of the pension plan termination. The stranded taxes released with the termination of the pension plan represent the effect of the change in federal and state tax rates on pension-related deferred tax items initially recorded in other comprehensive income. The related stranded taxes were released in full in 2023.
Disclosed below is a summary of income taxes paid (refunded) by jurisdiction for continuing operations pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025.
| (In thousands) | Year Ended December 31, 2025 | ||||
| Federal | |||||
| United States | $ | (222) | |||
| State | |||||
| Georgia | 85 | ||||
| Michigan | 53 | ||||
| Pennsylvania | 305 | ||||
| Texas | 51 | ||||
| Other state jurisdictions | (13) | ||||
| Foreign | |||||
| China | 466 | ||||
| Total cash taxes paid for continuing operations | $ | 725 | |||
Deferred income tax assets and deferred income tax liabilities for continuing operations at December 31, 2025 and 2024, are as follows:
| (In thousands) | 2025 | 2024 | |||||||||
| Deferred income tax assets: | |||||||||||
| Employee benefits | $ | 4,511 | $ | 6,381 | |||||||
| Basis difference in capital assets | 430 | 430 | |||||||||
| Inventory | 1,754 | 956 | |||||||||
| Asset write-offs, divestitures and environmental accruals | 857 | 3,656 | |||||||||
| U.S. federal and state NOL and credit carryforwards | 35,000 | 38,706 | |||||||||
| Capitalized R&D expenditures | 8,672 | 8,169 | |||||||||
| Other | 633 | 815 | |||||||||
| Lease liabilities | 2,933 | 3,419 | |||||||||
| Interest expense limitation carryforward | — | 471 | |||||||||
| Deferred income tax assets before valuation allowance | 54,790 | 63,003 | |||||||||
| Less: Valuation allowance | 14,623 | 15,220 | |||||||||
| Total deferred income tax assets | $ | 40,167 | $ | 47,783 | |||||||
| Deferred income tax liabilities: | |||||||||||
| Goodwill and identifiable intangibles | $ | 1,704 | $ | 1,019 | |||||||
| Property, plant and equipment | 7,502 | 9,086 | |||||||||
| Right-of-use leased assets | 2,806 | 3,210 | |||||||||
| Other | 1,878 | 2,020 | |||||||||
| Total deferred income tax liabilities | 13,890 | 15,335 | |||||||||
| Net deferred income tax assets (liabilities) | $ | 26,277 | $ | 32,448 | |||||||
| Amounts recognized in the consolidated balance sheets: | |||||||||||
| Deferred income tax assets (noncurrent) | $ | 26,277 | $ | 32,517 | |||||||
| Deferred income tax liabilities (noncurrent) | — | 69 | |||||||||
| Net deferred income tax assets (liabilities) | $ | 26,277 | $ | 32,448 | |||||||
Except as noted below, the Company believes that it is more likely than not that future taxable income will exceed future tax-deductible amounts thereby resulting in the realization of deferred income tax assets. The Company had U.S. federal and state tax credits of $21.2 million and state net operating loss carryforwards of $13.8 million at December 31, 2025. The Company had U.S. federal and state tax credits of $25.2 million and state net operating loss carryforwards of $13.5 million and a deferred interest limitation of $0.5 million at December 31, 2024. The U.S. federal foreign tax credits will expire between 2026-2035 and the U.S. federal research and development tax credits will expire between 2039-2045. The U.S. state carryforwards expire at different points over the next 20 years.
Valuation allowances of $13.7 million and $14.0 million at December 31, 2025 and 2024, respectively, are recorded against the tax benefit on state tax credits and net operating loss carryforwards generated by domestic subsidiaries that may not be recoverable in the carryforward period. The valuation allowance for unrealized capital losses from investments and other related items was $0.4 million and $0.2 million at December 31, 2025 and 2024, respectively. Valuation allowances of $0.5 million and $1.1 million at December 31, 2025 and 2024, respectively, were recorded against certain other deferred state tax assets. As circumstances and events warrant, allowances will be reversed when it is more likely than not that future taxable income will exceed deductible amounts, thereby resulting in the realization of deferred income tax assets.
A reconciliation of the Company’s unrecognized uncertain tax positions since January 1, 2023, is shown below:
| Years Ended December 31, | |||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Balance at beginning of period | $ | 840 | $ | 659 | $ | 628 | |||||||||||
| Increase (decrease) due to tax positions taken in: | |||||||||||||||||
| Current period | — | 25 | 25 | ||||||||||||||
| Prior period | — | 158 | 23 | ||||||||||||||
| Reductions due to lapse of statute of limitations | (840) | (2) | (17) | ||||||||||||||
| Balance at end of period | $ | — | $ | 840 | $ | 659 | |||||||||||
At December 31, 2025, the Company had no unrecognized uncertain tax positions. The Company records interest expense related to uncertain tax positions in income tax expense on the Consolidated Statements of Income (Loss) with the balance of accrued interest in other noncurrent liabilities on the Consolidated Balance Sheet. The Company accrued immaterial interest expense related to uncertain tax positions for all periods presented.
Tredegar, or one of its subsidiaries, files income tax returns in the U.S. federal jurisdiction, various states and jurisdictions outside the U.S. With few exceptions, Tredegar is no longer subject to U.S. federal, state or non-U.S. income tax examinations by tax authorities for years before 2022.
On July 4, 2025, new U.S. tax legislation was signed into law (known as the “One Big Beautiful Bill Act” or “OBBBA”), which makes permanent many of the tax provisions enacted in 2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of 2025. In addition, the OBBBA makes changes to certain U.S. corporate tax provisions, which have various effective dates. OBBBA did not have a material impact on the Company’s tax provision and effective rate for 2025.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 11, 2026 | Showing above |
| 2024 | Mar 12, 2025 | |
| 2023 | Mar 15, 2024 | |
| 2022 | Mar 16, 2023 | |
| 2021 | Mar 11, 2022 | |
| 2020 | Mar 16, 2021 | |
| 2019 | Mar 16, 2020 | |
| 2018 | Mar 18, 2019 | |
| 2017 | Feb 22, 2018 | |
| 2016 | Feb 22, 2017 | |
| 2015 | Feb 29, 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.