Note 6 - Income Taxes

12 Months Ended

Dec. 31, 2025

Notes to Financial Statements

Income Tax Disclosure [Text Block]

6. Income Taxes

Income before provision for income taxes was as follows:

	Years ended December 31,
	2025		2024		2023
United States	$	772,284	$	742,432	$	929,054
Foreign		21,828		17,084		5,833
Income before income taxes	$	794,112	$	759,516	$	934,887

Income tax expense attributable to earnings before income taxes consists of (in thousands):

	Years ended December 31,
	2025			2024			2023
Current:
Federal	$	170,563		$	244,770		$	106,004
State and local		7,384			25,328			35,030
Foreign		5,827			8,380			-
		183,774			278,478			141,034
Deferred:
Federal		(2,541	)		(88,016	)		66,000
State and local		14,597			(1,832	)		(434	)
		12,056			(89,848	)		65,566
Total tax expense/(benefit)	$	195,830		$	188,630		$	206,600

Income tax expense attributable to earnings before income taxes differed from the amounts computed using the statutory federal income tax rate of 21% for the following reasons (in thousands):

	Years ended December 31,
	2025						2024						2023
	Amount			%			Amount			%			Amount			%
U.S. federal statutory rate	$	166,764			21.0	%	$	159,498			21.0	%	$	196,326			21.0	%
State tax, net of federal effect*		32,159			4.1			31,114			4.1			37,594			4.0
Foreign tax Effects		-			-			5,895			0.8			(1,002	)		(0.1	)
Tax credits		(10,043	)		(1.3	)		(1,754	)		(0.2	)		(3,829	)		(0.4	)
Nontaxable or nondeductible items:
Federal 1341 claim		18,090			2.3
Other		6,276			0.8			9,956			1.3			2,476			0.3
Changes in unrecognized tax benefits:		(17,547	)		(2.2	)		(12,648	)		(1.7	)		(21,968	)		(2.4	)
Other, net		131			-			(3,431	)		(0.5	)		(2,997	)		(0.3	)
Effective Tax Rate	$	195,830			24.7	%	$	188,630			24.8	%	$	206,600			22.1	%

* State taxes for California, Illinois, Indiana, New York & Pennsylvania for 2025, and California, Illinois, New York & Pennsylvania for 2024 and 2023 made up the majority (greater than 50%) of the tax effect in this category.

Income taxes receivable was $34.9 million and $116.7 million at December 31, 2025 and 2024, respectively. These amounts have been included in other receivables in our Consolidated Balance Sheets. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2025 and 2024, are presented below (in thousands):

	December 31,
	2025			2024
Deferred tax assets:
Insurance accruals	$	83,380		$	69,168
Allowance for doubtful accounts		12,149			12,584
Compensation accrual		15,881			9,882
Deferred compensation accrual		24,484			26,805
Federal benefit of state uncertain tax positions		16,377			17,693
Lease liabilities		60,849			74,858
State NOL carry-forward		2,602			4,235
Other		1,112			3,815
Total gross deferred tax assets		216,834			219,040
Valuation allowance		(2,602	)		(4,235	)
Total deferred tax assets, net of valuation allowance		214,232			214,805
Deferred tax liabilities:
Plant and equipment, principally due to differences in depreciation		1,031,019			1,001,537
Prepaid permits and insurance, principally due to expensing for income tax purposes		31,721			35,592
Lease right-of-use assets		59,797			73,925
Total gross deferred tax liabilities		1,122,537			1,111,054
Net deferred tax liability	$	908,305		$	896,249

The amounts of cash income taxes paid by the Company were as follows:

	Years Ended December 31,
		2025		2024		2023
Federal		$	101,890	$	275,594	$	97,386
State and local:
California			1,903		2,068		7,037
Illinois			4,848		8,697		14,565
Other			9,099		14,289		14,549
Total State and local			15,850		25,054		36,151
Foreign			5,764		4,455		1,848
Income taxes, net of amounts refunded		$	123,504	$	305,103	$	135,385

On July 4, 2025, new U.S. tax legislation was signed into law which made permanent many of the tax provisions enacted in 2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of 2025. In addition, the legislation made changes to certain U.S. Corporate tax provisions. This new legislation did not have a material impact on our Consolidated Financial Statements.

Guidance on accounting for uncertainty in income taxes prescribes recognition and measurement criteria and requires that we assess whether the benefits of our tax positions taken are more likely than not of being sustained under tax audits.  We have made adjustments to the balance of unrecognized tax benefits, a component of other long-term liabilities on our Consolidated Balance Sheets, as follows (in millions):

	December 31,
	2025			2024			2023
Beginning balance	$	78.0		$	80.9		$	89.1
Additions based on tax positions related to the current year		11.5			13.3			16.2
Additions/(reductions) based on tax positions taken in prior years		(4.7	)		(2.9	)		0.5
Reductions due to settlements		(2.7	)		(1.4	)		(14.6	)
Reductions due to lapse of applicable statute of limitations		(14.4	)		(11.9	)		(10.3	)
Ending balance	$	67.7		$	78.0		$	80.9

At December 31, 2025 and 2024, we had a total of $67.7 million and $78.0 million, respectively, in gross unrecognized tax benefits.  Of these amounts, $54.8 million and $63.4 million represent the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate in 2025 and 2024, respectively.  Interest and penalties related to income taxes are classified as interest expense in our Consolidated Statements of Earnings.  The amount of accrued interest and penalties recognized during the years ended December 31, 2025, 2024, and 2023, was $7.2 million, $7.8 million, and $5.3 million, respectively. Future changes to unrecognized tax benefits will be recognized as income tax expense and interest expense, as appropriate.  The total amount of accrued interest and penalties for such unrecognized tax benefits at December 31, 2025 and 2024, was $13.6 million and $13.1 million, respectively. No material change in unrecognized tax benefits is expected in the next 12 months.

Tax years 2020 and forward remain subject to examination by federal tax jurisdictions, while tax years 2018 and forward remain open for state jurisdictions.