Note 10 - Income Taxes

9 Months Ended

Sep. 30, 2025

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note 10. Income Taxes

During the three months ended September 30, 2025, net income attributable to Avalon Holdings Corporation shareholders was $1.9 million compared to net income attributable to Avalon Holdings Corporation shareholders of $1.8 million during the three months ending September 30, 2024. During the nine months ended September 30, 2025, net income attributable to Avalon Holdings Corporation shareholders was $0.7 million compared to a net income attributable to Avalon Holdings Corporation shareholders of $1.8 million during the nine months ended September 30, 2024. Avalon recorded a state income tax provision in both the three and nine month periods ended September 30, 2025 and 2024, which was related entirely to the waste management and brokerage operations. Due to the recording of a full valuation allowance against the Company’s federal and state net deferred tax assets, the overall effective tax rate in both periods reflects taxes owed in certain U.S state jurisdictions. Avalon’s income tax on the income before taxes was offset by a change in the valuation allowance. A valuation allowance is provided when it is more likely than not that deferred tax assets relating to certain federal and state loss carryforwards will not be realized. Avalon continues to maintain a valuation allowance against the majority of its deferred tax amounts until it is evident that the deferred tax asset will be utilized in the future.

The One Big Beautiful Bill Act (the “OBBBA”) was signed into law on July 4, 2025.  The OBBBA contains significant tax law changes with various effective dates after its enactment date.  The Company accounted for the tax effects of the change in tax law in the period of enactment, which is the third quarter of calendar year 2025. The net impact of these tax law changes was not material to the consolidated financial statements.