Westrock Coffee Co Income Taxes Disclosure

Note 18. Income Taxes

U.S. and international components of income (loss) before income taxes is as follows:

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Income tax expense (benefit) consisted of the following:

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A reconciliation of income tax expense (benefit) to the federal statutory rate is as follows:

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1 - State taxes in California made up the majority (greater than 50 percent) of the tax effect in this category in both 2025 and 2023, while state taxes in Virginia and Illinois made up the majority in 2024.

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Income taxes paid, net of refunds, by jurisdiction consisted of the following:

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The Company paid income taxes, net of refunds of $1.2 million, $0.4 million and $1.4 million for years ended December 31, 2025, 2024 and 2023, respectively. For the years ended December 31, 2025 and 2023, the Company paid income taxes, net of refunds in the United Kingdom of $0.6 million and $0.9 million respectively. As the remaining amounts of income taxes paid, net of refunds are considered immaterial to the consolidated financial statements, further disaggregation by federal, state and foreign jurisdictions has not been provided.

Deferred income tax assets and liabilities were recognized on temporary differences between the financial and tax basis of existing assets and liabilities as follows:

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We establish a valuation allowance to reduce deferred tax assets if, based on the weight of the available evidence, both positive and negative, for each respective tax jurisdiction, it is more likely than not that some portion or all of the deferred tax assets will not be realized. A valuation allowance related to domestic deferred tax assets of $54.2 million was recorded as of December 31, 2025, of which $44.0 million and $8.9 million were against the Company’s federal and state net operating loss carryforwards, respectively, and $1.1 million was against an equity method investment. A valuation allowance related to domestic deferred tax assets of $26.7 million was recorded as of December 31, 2024, of which $21.0 million and $5.7 million were against the Company’s federal and state net operating loss carryforwards, respectively. A valuation allowance related to foreign deferred tax assets of $1.6 million and $3.8 million was recorded against certain foreign net operating losses as of December 31, 2025 and 2024, respectively. The amount of deferred tax assets considered realizable could be adjusted in the near term, resulting in an increase to the valuation allowance, if estimates of future taxable income during the carryforward period are reduced.

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Activity in the valuation allowance is as follows:

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During the year ended December 31, 2025, the valuation allowance increased $25.2 million, which was comprised of additional income tax expense of $16.3 million that is reflected as a component of the effective tax rate against continuing operations, and $6.9 million reflected as a component of other comprehensive income.

As of December 31, 2025, the Company had federal net operating loss carryforwards of approximately $319.0 million which do not expire. As of December 31, 2025, the Company had post-apportionment state net operating loss carryforwards of approximately $220.2 million which begin to expire in 2030. As of December 31, 2025, the Company had foreign net operating loss carryforwards of approximately $6.6 million which begin to expire in 2030.

As of December 31, 2025 and 2024, the Company’s reserve for uncertain tax positions was $6.7 million and $5.0 million, respectively. Of the total reserve for uncertain tax positions as of December 31, 2025 and 2024, only $0.1 million and $0.1 million, respectively, would impact the effective tax rate if released. As indicated in Note 3, the Company re-revaluates uncertain tax positions on a quarterly basis. The Company recognizes potential interest and penalties relating to unrecognized tax positions as a component of income tax expense (benefit). A reconciliation of the beginning and ending balances of the reserve for uncertain tax positions is as follows:

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As of December 31, 2025, undistributed earnings of certain foreign subsidiaries are intended to be permanently reinvested outside the U.S. Accordingly, no provision for foreign withholding tax, foreign exchange gains/losses or state income taxes associated with a distribution of these earnings has been made. The amount of the unrecognized deferred tax liability on these unremitted earnings is not material.

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We are subject to taxation in the United States and various states and foreign jurisdictions, including the United Kingdom. As of December 31, 2025, we have no tax years under examination by the IRS, and there are currently no state or foreign income tax examinations in process. The Company is subject to United States federal income tax examinations for years after 2020 and to state and foreign income tax examinations for years after 2020.