INCOME TAXES

3 Months Ended

Dec. 31, 2025

Income Tax Disclosure [Abstract]

INCOME TAXES

11. INCOME TAXES

ASC Topic 740, Income Taxes requires the use of an estimated annual effective tax rate for purposes of determining the income tax provision during interim reporting periods. In calculating its estimated annual effective tax rate, the Company considers forecasted annual pre-tax income and estimated permanent book versus tax differences. Adjustments to the effective tax rate and management's estimates will occur as information and assumptions change.

Changes in tax laws or tax rates are recognized in the financial reporting period that includes the enactment date, the date on which the act is signed into law. Similarly, the tax effect of unusual or infrequent events and transactions are recognized in the financial reporting period in which they occur. These items are excluded from the calculation of the estimated annual effective tax rate and are reported discretely in each interim reporting period.

NJR evaluates its tax positions to determine the appropriate accounting and recognition of potential future obligations associated with uncertain tax positions. A tax benefit claimed, or expected to be claimed, on a tax return may be recognized only if it is more likely than not that the tax position will be upheld upon examination by the applicable taxing authority and is measured based on the largest tax benefit that is more than 50% likely to be realized. Interest and penalties related to unrecognized tax benefits, if any, are recognized within income tax expense, and accrued interest and penalties are recognized within other noncurrent liabilities on the Unaudited Condensed Consolidated Balance Sheets.

Effective Tax Rate

The estimated annual effective tax rates were 22.5% and 23.2%, for the three months ended December 31, 2025 and 2024, respectively.

To the extent there are discrete tax items that are not included in the estimated annual effective tax rate, the actual reported effective tax rate may differ from the estimated annual effective tax rate. Discrete tax items primarily relate to the vesting of share-based awards during the three months ended December 31, 2025, and income tax effects associated with the sale of the Company’s residential solar energy projects and host customer contracts during the three months ended December 31, 2024. NJR’s effective tax rate was 21.8% and 22.2% during the three months ended December 31, 2025 and 2024, respectively.

Other Tax Items

As of December 31, 2025 and September 30, 2025, the Company has tax credit carryforwards of approximately $128.6M and $149.7M, respectively, which each have a life of 20 years. The Company expects to utilize this entire carryforward prior to expiration, which would begin in fiscal 2036.

As of December 31, 2025 and September 30, 2025, the Company has state income tax net operating losses of approximately $353.1M and $476.1M, respectively. These state net operating losses have varying carry-forward periods dictated by the state in which they were incurred; these state carry-forward periods range from seven to 20 years, with the majority expiring after 2037. The Company expects to utilize this entire carryforward prior to expiration, except for state income tax attributes for which the Company has a valuation allowance of approximately $0.4M as of both December 31, 2025 and September 30, 2025, for which the Company could not conclude were realizable on a more-likely-than-not basis.

In July 2025, the President of the U.S. signed OBBBA into law, which includes a broad range of tax reform provisions, including extending and modifying certain key provisions of the federal Tax Cuts and Jobs Act of 2017, as enacted on December 22, 2017, and expanding certain incentives under the federal Inflation Reduction Act. OBBBA also modified tax legislation affecting clean energy tax credits and accelerated the phase-out of ITCs. The Company evaluated the provisions of OBBBA and concluded it did not have a material impact on its Unaudited Condensed Consolidated Financial Statements.