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Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Domestic and foreign components of income before income taxes were as follows: 
 Year Ended December 31,
 202520242023
Domestic$238,457 $272,689 $241,084 
Foreign22,212 26,587 21,292 
Income before income taxes$260,669 $299,276 $262,376 
The provision for income taxes consisted of: 
 Year Ended December 31,
 202520242023
Current:      
Federal$13,156 $32,910 $18,354 
State2,484 5,183 4,040 
Foreign8,245 8,652 7,799 
Total current income taxes23,885 46,745 30,193 
Deferred:
Federal32,352 17,516 12,925 
State3,560 2,636 4,249 
Foreign(770)(379)169 
Total deferred income taxes35,142 19,773 17,343 
Total provision for income taxes$59,027 $66,518 $47,536 
     The effective income tax rate was different from the statutory U.S. federal income tax rate due to the following: 

Year Ended
 
December 31, 2025 (1)
 
Amount
Percent
U.S. federal statutory tax rate
$54,740 21.0 %
State and local income taxes, net of federal income tax effect (2)
4,725 1.8 
Foreign tax effects2,265 0.9 
Effect of cross-border tax laws4,146 1.6 
Tax credits
Foreign tax credits(6,043)(2.3)
Other tax credits(350)(0.1)
Changes in valuation allowances
Valuation allowance - foreign tax credits2,320 0.9 
Nontaxable or nondeductible items
Executive Compensation Limited2,622 1.0 
Other adjustments
Income allocable to non-controlling interest(7,739)(3.0)
Other2,341 0.8 
Total provision for income taxes and effective tax rate
$59,027 22.6 %

(1) Disaggregated in accordance with ASU 2023-09, which was adopted prospectively in 2025.
(2) For 2025, state taxes in New Mexico, Pennsylvania, and Texas make up majority (greater than 50%) of the tax effect of this category
 Year Ended December 31,
 
2024 (1)
2023 (1)
Income taxes at 21% statutory tax rate
$62,849 $55,094 
Net difference resulting from:
Profit of non-controlling interest not subject to U.S. federal tax(10,293)(9,951)
Foreign income taxes (net of foreign tax credit)2,646 1,918 
State income taxes (excluding rate change)6,113 3,999 
Impact of change in forecasted state income tax rate2,059 4,906 
Foreign withholding taxes1,535 1,419 
Change in valuation allowance— (12,067)
Adjustments of prior year taxes(1,757)480 
Stock compensation(661)(1,193)
Nondeductible expenses associated with acquisition2,036 3,951 
Other1,991 (1,020)
Total provision for income taxes$66,518 $47,536 
(1) As presented prior to adoption of ASU 2023-09, which was adopted prospectively in 2025.
Our effective tax rate was 22.6%, 22.2% and 18.1% for the years ended December 31, 2025, 2024 and 2023, respectively. Cactus Inc. is only subject to federal and state income tax on its share of income from Cactus Companies.
Income taxes paid (net of refunds) exceed 5% of total income taxes (net of refunds) in the following jurisdictions:
Year Ended
 December 31, 2025
Federal$36,750 
State3,080 
Foreign8,296 
Total income taxes paid (net of refunds)
$48,126 
Except for the U.S. federal income tax cash payments reflected above, the only jurisdictions in which the Company remitted cash taxes in excess of 5% of total 2025 cash tax outflows were China and Australia, where cash taxes totaled $5.0 million and $2.8 million, respectively.
The components of deferred tax assets and liabilities are as follows:
 December 31,
 20252024
Investment in Cactus Companies
$171,647 $194,015 
Imputed interest13,874 14,080 
Tax credits13,898 10,563 
Net operating loss and other carryforwards505 9,062 
Other347 356 
Deferred tax assets200,271 228,076 
Valuation allowance(12,726)(9,073)
Deferred tax asset, net187,545 219,003 
Foreign withholding taxes1,041 1,529 
Other1,745 1,339 
Deferred tax liability, net$2,786 $2,868 
As of December 31, 2025, our liability related to the TRA was $262.9 million, representing 85% of the calculated net cash savings in the United States federal, state and local and franchise tax that we anticipate realizing in future years from certain increases in tax basis and certain tax benefits attributed to imputed interest as a result of our acquisition of CC Units. We have determined it is more-likely-than-not that we will be able to utilize all of our tax basis subject to the TRA; therefore, we have recorded a liability related to the TRA for the tax savings we may realize from certain increases in tax basis and certain tax benefits attributable to imputed interest as a result of our acquisition (or deemed acquisition for United States federal income tax purposes) of CC Units. If we determine the utilization of this tax basis is not more-likely-than-not in the future, our estimate of amounts to be paid under the TRA would be reduced. In this scenario, the reduction of the liability under the TRA would result in a benefit to our pre-tax consolidated results of operations in conjunction with an increase to the valuation allowance and an offsetting adjustment to tax expense.
We record a deferred tax asset for the differences between our tax and book basis in the investment in Cactus Companies (Cactus LLC prior to the CC Reorganization) and imputed interest on the TRA. Based upon our cumulative earnings history and forecasted future sources of taxable income, we believe that we will be able to realize our U.S. deferred tax assets associated with our investment in Cactus Companies in the future. Subsequent to completion of the FlexSteel acquisition during 2023, we determined that we expect to generate sufficient taxable income of the appropriate type to allow for the realization of the deferred tax asset associated with our investment in Cactus Companies and recognized a $12.1 million tax benefit associated with the release of our valuation allowance previously provided. As such, as of December 31, 2023, we no longer have a valuation allowance against the deferred tax asset for the investment in Cactus Companies. During the fourth quarter of 2024, we recognized $2.1 million of tax expense associated with the revaluation of our deferred tax asset (the difference between our tax and book basis in the investment in Cactus Companies and imputed interest) as a result of a change in our forecasted state rate. We also record deferred tax assets for imputed interest, certain tax credits and net operating loss and other carryforwards. As of December 31, 2025, we have a valuation allowance of $12.7 million against these deferred tax assets, primarily associated with our portion of Cactus Companies’ accrued foreign taxes and state tax credits, due to uncertainty of realization.
As of December 31, 2025, we have deferred tax assets on U.S. federal net operating loss (“NOL”) carryforwards of approximately $0.5 million which can be used to offset U.S. federal and state taxes payable in future years. The U.S. federal NOL carryforwards have no expiration date whereas the U.S. state NOL carryforwards generally will expire in periods beginning in 2041.
As of December 31, 2025, the Company had $5.5 million of unrecognized tax benefits all of which would not impact the effective tax rate if recognized. The Company recognizes the interest related to uncertain tax benefits as a component of income tax expense. No penalties or interest were recognized during the year ended December 31, 2025.
The aggregate changes in the balance of the Company's unrecognized tax benefits were as follows for the periods presented (in thousands):
December 31,
202520242023
Balance, beginning of year
$5,474 $5,666 $— 
Gross increases based on tax positions related to current year
— — 5,666 
Gross decreases based on tax positions related to prior years
— (192)— 
Balance, end of year
$5,474 $5,474 $5,666 
As a result of the FlexSteel acquisition, we acquired certain carryforward tax attributes, which were accounted for as unrecognized tax benefits in the acquisition accounting. This remains the balance of our uncertain tax positions as of December 31, 2025. The unrecognized tax benefits have been offset by an indemnification receivable from the seller of $5.5 million.
None of federal or state income tax returns are currently under examination by state taxing authorities. Our federal and state income tax returns for the years ended December 31, 2022 through December 31, 2024 remain open for all purposes of examination by the IRS and applicable state taxing jurisdictions. However, certain earlier tax years remain open for adjustment to the extent of their net operating loss and deferred interest carryforwards available for future utilization.