INCOME TAXES

12 Months Ended

Dec. 31, 2025

INCOME TAXES

INCOME TAXES

NOTE 8: INCOME TAXES

For financial reporting purposes, income before income taxes included the following component:

(in thousands)
Years ended December 31,	2025		2024		2023
Income before income taxes - domestic	$	15,765	$	21,142	$	52,062

The following table lists the components of the provision (benefit) for income taxes:

(in thousands)
Years ended December 31,	2025		2024		2023
Current provision (benefit):
Federal	$	(86)	$	3,986	$	12,384
State		(44)		442		1,109
Deferred provision (benefit):
Federal		4,268		(1,101)		(3,047)
State		244		(38)		(79)
Total income tax provision	$	4,382	$	3,289	$	10,367

The Base Erosion and Profit Shifting framework 2.0 (Pillar Two) released by the Organization for Economic Co-operation and Development introduced a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds. The United States has not yet enacted legislation to adopt the provisions of Pillar Two. As of December 31, 2025, we have no recorded effects for Pillar Two due to our operational jurisdiction being wholly domestic. We will continue to monitor the impact of this legislation going forward.

A reconciliation between the federal statutory rate and Marine Products’ income tax provision and effective tax rate is as follows:

(in thousands)
Years ended December 31,		2025				2024				2023
Federal statutory rate	$	3,311	21.0	%	$	4,440	21.0	%	$	10,933	21.0	%
State income taxes, net of federal benefit (a)		241	1.5			314	1.5			694	1.3
Tax credits:
Research and development credit		(177)	(1.1)			(110)	(0.5)			(652)	(1.3)
Investment tax credit		—	—			(1,003)	(4.7)			—	—
Change in unrecognized tax benefits		(69)	(0.4)			49	0.2			241	0.5
Non-deductible expenses:
Long-term retirement plan		988	6.3			—	—			—	—
Other		(184)	(1.2)			(162)	(0.8)			(137)	(0.3)
Cross-border tax laws		—	—			(71)	(0.3)			(243)	(0.5)
Other		272	1.7			(168)	(0.8)			(469)	(0.8)
Income tax provision and effective tax rate	$	4,382	27.8	%	$	3,289	15.6	%	$	10,367	19.9	%

(a) State taxes in Florida and North Carolina made up the majority (greater than 50 percent) of the tax effect in this category.

Significant components of the Company’s deferred tax assets and liabilities are as follows:

(in thousands)
December 31,	2025		2024
Deferred tax assets:
Warranty costs	$	1,380	$	1,370
Sales incentives and discounts		224		436
Self-insurance		256		524
Stock-based compensation		1,059		908
Long-term retirement plan		—		4,767
Capitalized research and development		—		3,226
Federal net operating loss carryforwards		3,482		—
All others, net		344		331
Total deferred tax assets		6,745		11,562
Deferred tax liabilities:
Depreciation and amortization expense		(1,528)		(1,833)
Net deferred tax assets	$	5,217	$	9,729

Total net income tax payments were $1.8 million in 2025, $4.5 million in 2024, and $13.9 million in 2023. The following table lists the components of the payments for income taxes.

(in thousands)
Years ended December 31,	2025		2024		2023
Federal	$	1,500	$	4,000	$	12,999
State:
Florida		90		160		450
North Carolina		110		94		175
Other		54		222		287
Total net income tax payments	$	1,754	$	4,476	$	13,911

The Company’s policy is to record interest and penalties related to income tax matters, as part of income tax expense.

During 2025, the Company recognized a decrease in the estimated liability for unrecognized tax positions, which is recorded in other long-term liabilities on the Consolidated Balance Sheet. This liability, if released, would affect our effective rate. A reconciliation of the beginning and ending amount of unrecognized tax positions is as follows:

(in thousands)	2025		2024
Balance at January 1	$	1,411	$	1,349
Additions (reductions) based on tax positions related to the current year		(121)		21
Additions for tax positions of prior years		41		41
Balance at December 31	$	1,331	$	1,411

The Company and its subsidiaries are subject to U.S. federal and state income tax in multiple jurisdictions. In many cases, the estimated liability for uncertain tax positions are related to tax years that remain open and subject to examination by the relevant taxing authorities. In general, the Company’s 2022 through 2024 tax years remain open to examination. Additional years may be open to the extent attributes are being carried forward to an open year.