Income Taxes |
3 Months Ended |
|---|---|
Mar. 31, 2026 | |
| Income Taxes [Abstract] | |
| Income Taxes |
13. Income Taxes
Under the Internal Revenue Service tangible property regulations, or TPR, the Company is permitted to deduct the costs of certain asset improvements that
were previously being capitalized and depreciated for tax purposes as an expense on its income tax return. This ongoing deduction results in a reduction in the effective income tax rate, a net reduction in income tax expense, and a reduction in the
amount of income taxes currently payable. It also results in increases to deferred tax liabilities and regulatory assets representing the appropriate book and tax basis difference on capital additions.
The Company’s effective tax rate was (21.3)% and 11.5% for the three months ended March 31, 2026 and 2025, respectively. The
lower effective tax rates are primarily due to higher deductions from the TPR. The effective tax rate will vary depending on income before income taxes and the level
of eligible asset improvements expensed for tax purposes under TPR each period.
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