Income Taxes

12 Months Ended

Dec. 31, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of income (loss) before income taxes for each of the three years ended December 31, 2025 and income tax expense (benefit) attributable thereto are as follows:

	Years Ended December 31,
(Millions of dollars)	2025		2024		2023
Income (loss) before income taxes	$	609.2	$	651.6	$	734.4
Income tax expense (benefit)
Federal - Current	$	70.1	$	115.5	$	141.5
Federal - Deferred	48.4		11.8		3.5
State - Current and deferred	20.1		21.8		32.6
Total income tax expense (benefit)	$	138.6	$	149.1	$	177.6

The following table reconciles the Company income tax expense (benefit) based on the U.S. statutory tax rate to the income tax expense (benefit) for the year ended December 31, 2025, after the adoption of ASU 2023-09.

(Millions of dollars)	Amount		Percent
Income tax expense (benefit) based on the U.S. statutory tax rate	$	127.9	21.0	%
Domestic federal
Tax Credits	(8.0)		(1.3)	%
Nontaxable and nondeductible items	2.0		0.3	%
Other reconciling items	0.2		—	%
Domestic state and local income taxes, net of federal effect	16.5		2.8	%
Total income tax expense (benefit)	$	138.6	22.8	%

In 2025, state and local income taxes in New Jersey, Florida, Alabama, Georgia and Tennessee comprised the majority of the domestic state and local income taxes, net of federal effect category.

The following table reconciles income taxes based on the U.S. statutory tax rate to the Company’s income tax expense (benefit) for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09.

	Years Ended December 31,
(Millions of dollars)	2024		2023
Income tax expense based on the U.S. statutory tax rate	$	136.8	$	154.2
State income taxes, net of federal benefit	17.3		25.0
Federal credits	(2.5)		(2.6)
Other, net	(2.5)		1.0
Total	$	149.1	$	177.6

Cash income taxes paid, net of refunds, for the year ended December, 31, 2025, was as follows:

(Millions of dollars)	Amount
US federal	$	86.0
US state and local	15.0
Total	$	101.0

Cash income taxes paid, net of refunds, were $109.5 million and $128.0 million for the years ended December 31, 2024 and 2023, respectively.

An analysis of the Company’s deferred tax assets and deferred tax liabilities at December 31, 2025 and 2024 showing the tax effects of significant temporary differences is as follows:

	December 31,
(Millions of dollars)	2025		2024
Deferred tax assets
Property costs and asset retirement obligations	$	8.1	$	7.3
Employee benefits	12.4		11.7
Operating leases liability	117.7		109.2
Other deferred tax assets	15.0		15.9
Total gross deferred tax assets	153.2		144.1
Deferred tax liabilities
Accumulated depreciation and amortization	(383.0)		(344.5)
State deferred taxes	(28.6)		(31.2)
Operating leases right-of-use assets	(110.5)		(103.5)
Other deferred tax liabilities	(19.6)		(8.3)
Total gross deferred tax liabilities	(541.7)		(487.5)
Net deferred tax liabilities	$	(388.5)	$	(343.4)

In management’s judgment, the deferred tax assets in the preceding table will more likely than not be realized as reductions of future taxable income or utilized by available tax planning strategies.

As of December 31, 2025, the earliest year remaining open for federal audits and/or settlement is 2022 and for state audits and/or settlement is 2020. Although the Company believes that recorded liabilities for unsettled issues are adequate, additional gains or losses could occur in future periods from resolution of outstanding unsettled matters.

The FASB’s rules for accounting for income tax uncertainties clarify the criteria for recognizing uncertain income tax benefits and require additional disclosures about uncertain tax positions.  Under U.S. GAAP the financial statement recognition of the benefit for a tax position is dependent upon the benefit being more likely than not to be sustainable upon audit by the applicable taxing authority. If this threshold is met, the tax benefit is then measured and recognized at the largest amount that is greater than 50 percent likely of being realized upon ultimate settlement. Liabilities associated with uncertain income tax positions are included in Deferred Credits and Other Liabilities in the Consolidated Balance Sheets. 

A reconciliation of the beginning and ending amount of the consolidated liability for unrecognized income tax benefits during the year ended December 31, 2025 and 2024 is shown in the following table:

	Years Ended December 31,
(Millions of dollars)	2025		2024
Balance at January 1	$	—	$	0.5
Additions for tax positions related to prior years	—		—
Expiration of statutes of limitation	—		(0.5)
Balance at December 31	$	—	$	—

All additions or reductions to the above liability affect the Company’s effective tax rate in the respective period of change.  The Company accounts for any applicable interest and penalties on uncertain tax positions as a component of income tax expense.  Income tax expense for the years ended December 31, 2025, 2024 and 2023 included immaterial amounts of interest and penalties, associated with uncertain tax positions.  Of these amounts shown in the table, there were no unrecognized tax benefits that, if recognized, would impact our effective tax rate for the years ended December 31, 2025 and 2024, respectively.

Total excess tax benefits for equity compensation recognized in the twelve months ended December 31, 2025, 2024 and 2023 were $2.9 million, $5.0 million and $2.9 million, respectively.