Income Taxes |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes | 9. Income Taxes Income tax provisions for the three months ended March 31, 2026 and 2025 are as follows:
The Company files federal income tax returns in the United States and Canada, and various returns in state and local jurisdictions. The Company believes it has appropriate support for the income tax positions taken and to be taken on our tax returns and that the accruals for tax liabilities are adequate for all open years based on our assessment of various factors including past experience and interpretations of tax law applied to the facts of each matter. The Company's tax returns are open to audit under the statute of limitations for the years ending December 31, 2022 through December 31, 2025. To the extent we utilize net operating losses generated in earlier years, such earlier years may also be subject to audit.. From 2023-2025, distributions of Epsilon Energy USA Inc. earnings to Epsilon Energy Ltd. incurred a 5% U.S. dividend withholding tax, provided the Company was eligible for benefits under the U.S. / Canada income treaty. Our effective tax rate will typically differ from the statutory federal rate primarily as a result of state income taxes and the valuation allowance against the Canadian net operating loss. The effective tax rate for the three months ended March 31, 2026 was higher than the statutory federal rate as a result of state income taxes partially offset by the valuation allowance against the Canadian net operating loss.
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