INCOME TAXES

12 Months Ended

Dec. 31, 2024

INCOME TAXES

INCOME TAXES

NOTE 8: INCOME TAXES

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

(in thousands)
Years ended December 31,	2024		2023		2022
Income before income taxes - Domestic	$	21,142	$	52,062	$	52,134

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

(in thousands)
Years ended December 31,	2024		2023		2022
Current provision:
Federal	$	3,986	$	12,384	$	12,225
State		442		1,109		1,360
Deferred (benefit):
Federal		(1,101)		(3,047)		(1,687)
State		(38)		(79)		(111)
Total income tax provision	$	3,289	$	10,367	$	11,787

The Organization for Economic Co-operation and Development (“OECD”) has released the Base Erosion and Profit Shifting framework 2.0 (“Pillar Two”) to introduce a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds. As of December 31, 2024, we have no recorded effects for Pillar Two due to our operational jurisdiction being wholly domestic. The United States has not yet enacted legislation to adopt Pillar Two. 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,		2024				2023				2022
Federal statutory rate	$	4,440	21.0	%	$	10,933	21.0	%	$	10,948	21.0	%
State income taxes, net of federal benefit (a)		275	1.3			647	1.2			652	1.3
Tax credits
Research and Development Credit		(110)	(0.5)			(652)	(1.3)			(353)	(0.7)
Investment Tax Credit		(1,003)	(4.7)			—	—			—	—
Change in unrecognized tax benefits		49	0.2			241	0.5			434	0.8
Non-deductible expenses		(162)	(0.8)			(137)	(0.2)			391	0.7
Cross-border tax laws		(71)	(0.3)			(243)	(0.5)			(232)	(0.4)
Other		(129)	(0.6)			(422)	(0.8)			(53)	(0.1)
Income tax provision and effective tax rate	$	3,289	15.6	%	$	10,367	19.9	%	$	11,787	22.6	%

(a) State taxes in Florida and Georgia 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,	2024		2023
Deferred tax assets:
Warranty costs	$	1,370	$	1,557
Sales incentives and discounts		436		570
Self-insurance		524		215
Stock-based compensation		908		824
Long-term retirement plan		4,767		3,960
Capitalized research and development		3,226		2,900
All others, net		331		250
Total deferred tax assets		11,562		10,276
Deferred tax liabilities:
Depreciation and amortization expense		(1,833)		(1,686)
Net deferred tax assets	$	9,729	$	8,590

Total net income tax payments were $4.5 million in 2024, $13.9 million in 2023, and $13.0 million in 2022. The following table lists the components of the payments for income taxes.

(in thousands)
Years ended December 31,	2024		2023		2022
Federal	$	4,000	$	12,999	$	12,100
State
Florida		160		450		375
North Carolina		94		175		90
Other		222		287		457
Total net payments	$	4,476	$	13,911	$	13,022

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

During 2024, the Company recognized an increase in its liability for unrecognized tax benefits related primarily to prior year positions and 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 benefits is as follows:

(in thousands)	2024		2023
Balance at January 1	$	1,349	$	1,058
Additions based on tax positions related to the current year		21		236
Additions for tax positions of prior years		41		55
Balance at December 31	$	1,411	$	1,349

The Company and its subsidiaries are subject to U.S. federal and state income tax in multiple jurisdictions. In many cases, the 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 2021 through 2023 tax years remain open to examination. Additional years may be open to the extent attributes are being carried forward to an open year.