Income Tax Matters (Tables)

12 Months Ended

Dec. 31, 2025

Income Before Income Taxes by Geographic Area

The following table presents Income before income taxes by geographic area (in millions of dollars):


	Year Ended December 31,
	2025		2024 As Adjusted1		2023 As Adjusted1
Domestic	$	139.7	$	78.0	$	74.7
Foreign		10.3		10.0		8.3
Income before income taxes	$	150.0	$	88.0	$	83.0

Adjusted to reflect the retrospective change in inventory valuation methodology from LIFO to WAC. See Note 18 for further discussion.

Income Tax (Provision) Benefit

The following table presents the components of Income tax (provision) benefit (in millions of dollars):


	Federal			Foreign			State			Total
Year Ended December 31, 2025
Current	$	1.4		$	(2.7	)	$	(2.9	)	$	(4.2	)
Deferred		(30.3	)		(1.0	)		(3.9	)		(35.2	)
Benefit applied to decrease AOCI		0.8			1.0			0.1			1.9
Income tax provision	$	(28.1	)	$	(2.7	)	$	(6.7	)	$	(37.5	)
Year Ended December 31, 20241
Current	$	(3.5	)	$	(3.1	)	$	(3.3	)	$	(9.9	)
Deferred		(15.9	)		0.6			0.7			(14.6	)
Benefit applied to decrease AOCI		1.9			—			0.3			2.2
Income tax provision	$	(17.5	)	$	(2.5	)	$	(2.3	)		(22.3	)
Year Ended December 31, 20231
Current	$	—		$	(2.2	)	$	0.6		$	(1.6	)
Deferred		(16.9	)		0.1			0.2			(16.6	)
Benefit applied to decrease AOCI		2.5			0.1			0.4			3.0
Income tax (provision) benefit	$	(14.4	)	$	(2.0	)	$	1.2			(15.2	)

Adjusted to reflect the retrospective change in inventory valuation methodology from LIFO to WAC. See Note 18 for further discussion.

Reconciliation of Income Tax (Provision) Benefit based on Effective Income Tax Rate and Statutory Tax Rate

The following table presents a reconciliation between the (provision) benefit for income taxes and the amount computed by applying the federal statutory income tax rate to Income before income taxes (in millions of dollars):


	Year Ended December 31,
	2025						2024 As Adjusted1						2023 As Adjusted1
	Amount ($)			Percent (%)			Amount ($)			Percent (%)			Amount ($)			Percent (%)
U.S. federal statutory income tax	$	(31.5	)		21.0	%	$	(18.4	)		21.0	%	$	(17.3	)		21.0	%
State and local income (tax) benefit, net of federal (national) income tax effect2		(5.2	)		3.5			(1.8	)		2.0			1.0			(1.2	)
Foreign tax effects
Canada
Income tax expense		(0.7	)		0.4			(0.4	)		0.5			(0.4	)		0.4
Undistributed earnings		(1.8	)		1.2			(0.4	)		0.4			(0.3	)		0.3
Nontaxable or nondeductible items
Nondeductible compensation		(2.4	)		1.6			(2.2	)		2.5			(1.6	)		1.9
Other items		(0.7	)		0.4			(0.3	)		0.3			0.2			(0.2	)
Tax credits
R&D credits		6.8			(4.5	)		1.7			(1.9	)		4.5			(5.5	)
R&D ASC 740 reserve		(2.0	)		1.4			(0.5	)		0.6			(1.3	)		1.6
Income tax provision	$	(37.5	)		25.0	%	$	(22.3	)		25.4	%	$	(15.2	)		18.3	%

Adjusted to reflect the retrospective change in inventory valuation methodology from LIFO to WAC. See Note 18 for further discussion.

For the year ended December 31, 2025, the state that contributed the majority (greater than 50%) of the tax effect in this category was California. The reconciling items primarily relate to current state tax expense, state NOL and rate true‑ups, and valuation allowance changes. For 2024 and 2023, the states that contributed the majority (greater than 50%) of the tax effect in this category was driven by California, Indiana, and South Carolina.

Schedule of Cash Income Taxes Paid

The following table presents the amounts of cash income taxes paid (in millions of dollars):


	Year Ended December 31,
	2025		2024		2023
Federal	$	2.1	$	—	$	—
State
California		0.8		0.5	*
Michigan	*			0.2	*
New York	*		*			0.1
Oregon	*			0.1		0.1
Texas	*		*			0.1
All Other States		0.3		0.5	*
Foreign
Canada		2.6		1.8		0.1
Ontario		1.8		1.3		0.1
Income taxes, net of amounts refunded	$	7.6	$	4.4	$	0.5

* The amount of income taxes paid during the year does not meet the 5.0 percent disaggregation threshold.

Deferred Tax Assets and Liabilities

The following table presents the components of our net deferred income tax assets and liabilities (in millions of dollars):


	As of December 31,
	2025			2024 As Adjusted1
Deferred income tax assets:
Loss and credit carryforwards	$	47.4		$	19.0
Defined benefit plans		6.6			3.1
Other assets		34.3			35.7
Lease assets		6.0			7.2
Inventories		17.5			14.5
Excess interest carryforward		—			10.8
Research & development capitalization		9.8			19.1
Valuation allowances		(1.7	)		(5.6	)
Total deferred income tax assets		119.9			103.8
Deferred income tax liabilities:
Property, plant and equipment		(183.9	)		(133.3	)
Lease liabilities		(6.0	)		(7.2	)
Undistributed foreign earnings		(5.2	)		(3.4	)
Total deferred income tax liabilities		(195.1	)		(143.9	)
Net deferred income tax liabilities	$	(75.2	)	$	(40.1	)

Reconciliation of Changes in Gross Unrecognized Tax Benefits

We have gross unrecognized benefits relating to uncertain tax positions. The following table presents a reconciliation of changes in the gross unrecognized tax benefits (in millions of dollars):


	Year Ended December 31,
	2025			2024 As Adjusted1			2023 As Adjusted1
Gross unrecognized tax benefits at beginning of period	$	6.9		$	6.5		$	5.0
Gross increases for tax positions of current year		2.0			0.5			1.3
Gross increases for tax positions of prior years		0.2			—			0.2
Gross decreases for tax positions of prior years		—			(0.1	)		—
Settlements		(1.7	)		—			—
Gross unrecognized tax benefits at end of period	$	7.4		$	6.9		$	6.5

KAISER ALUMINUM CORP 10-K