Note 13 - Income Taxes

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

INCOME TAXES

NOTE 13—INCOME TAXES

Ramaco Resources, Inc. is organized as a corporation under the laws of Delaware. Ramaco Resources, Inc. files a consolidated U.S. federal tax return with its wholly owned subsidiaries. All our operations are wholly within the United States, but our products are sold to customers worldwide.

Income tax expense consisted of the following:

	Years ended December 31,
(In thousands)	2024		2023		2022
Current taxes:
Federal	$	2,018	$	2,817	$	517
State		35		819		407
Current taxes		2,053		3,636		924
Deferred taxes:
Federal		1,746		17,323		28,389
State		(71)		1,391		840
Deferred taxes		1,675		18,714		29,229
Provision for income tax expense (benefit), net	$	3,728	$	22,350	$	30,153

The items accounting for differences between income taxes computed at the federal statutory rate and the provision recorded for income taxes were as follows:

	Years ended December 31,
(In thousands)	2024		2023		2022
Income taxes computed at the federal statutory rate	$	3,134	$	21,938	$	30,701
Effect of:
State taxes, net of federal benefits		214		1,210		1,422
State tax rate changes, net of federal benefits		(166)		350		(546)
Percentage depletion		(2,410)		(1,717)		(3,314)
Stock-based compensation		(3,299)		(3,395)		(1,499)
162(m) compensation limitation		6,172		5,716		3,481
Foreign-derived intangible income deduction		—		(1,475)		—
Other, net		83		(277)		(92)
Total	$	3,728	$	22,350	$	30,153

There was a significant decrease in 2024 compared to 2023 in the foreign-derived intangible income deduction related to our worldwide sales, which was primarily due to the decrease in taxable income and other limitations.

During 2023, there was a significant increase in the foreign-derived intangible income deduction related to our worldwide sales compared to 2022. The amount of excess tax benefits for stock-based compensation and subsequently the impact of IRC Section 162(m) for covered employees also increased in 2023 compared to 2022 due to stock exercises.

Deferred tax assets and liabilities were as follows:

	December 31,
(In thousands)	2024		2023
Deferred tax assets:
Loss carryforwards U.S. - Federal/States	$	1,798	$	1,801
Asset retirement obligations		6,879		6,428
Accrued expenses		3,300		3,857
Section 163(j) business interest limitation		340		—
Stock-based compensation		3,294		2,916
Total deferred tax assets		15,611		15,002
Deferred tax liabilities:
Property, plant, and equipment		(71,638)		(69,354)
Net deferred tax liabilities	$	(56,027)	$	(54,352)

As of December 31, 2024, there were no federal net operating loss carryforwards remaining. Total state loss carryforwards were approximately $35 million. The Company’s net operating loss carryforwards are not subject to statutory expiration.

No valuation allowance was recognized by the Company for deferred tax assets as of December 31, 2024 or December 31, 2023.

We are subject to federal, state, and local income taxes in the United States. Significant judgment is required in evaluating tax positions taken and determining the provision for income taxes. As of December 31, 2024, we do not have any significant unrecognized tax benefits. The tax years 2021 through 2023 remain subject to examination by the taxing authorities. We are not currently under examination by any taxing authorities.

Cash paid for income taxes totaled $1.2 million, $0.8 million (before consideration of refunds received), and $15.5 million for 2024, 2023, and 2022, respectively. The Company received a refund of $11.8 million during 2023, which drove the decrease in prepaid expenses and other current assets during 2023.