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INCOME TAXES
 12 Months Ended
Mar. 31, 2026
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Income (loss) before income taxes as shown in the consolidated statements of income (loss) consists of the following:
Year Ended March 31,
20262025
Domestic$100,752 $(4,791)
Foreign(14,732)(197)
Total$86,020 $(4,988)
Income tax expense (benefit) attributable to pretax income (loss) consists of (in thousands):
Year Ended March 31,
20262025
Current:
Federal$153 $— 
State247 166 
Foreign1,617 557 
Total current2,017 723 
Deferred:
Federal(399)83 
State(53)(17)
Foreign(196)(366)
Total deferred(648)(300)
Total$1,369 $423 


Income tax expense attributable to pretax income (loss) differed from the amounts computed by applying the U.S. Federal income tax rate of 21.0% to pretax income (loss) as follows (in thousands):
Year Ended March 31, 2026
Rate Reconciliation CategoryTotal AmountRate (%)
Earnings Before Income Taxes$86,020 
U.S. Federal Statutory Tax Rate (21.0%)18,064 21.0 %
RECONCILING ITEMS:
1. State and Local Income Taxes, Net of Federal Effect1
112 0.1 %
2. Foreign Tax Effects
      Detail by Jurisdiction:
  Australia
    Rate Differential(1,472)-1.7 %
    Valuation allowance3,742 4.4 %
    Other993 1.2 %
Other Foreign Jurisdictions822 0.9 %
3. Effect of Changes in Tax Laws or Rates Enacted in Current Period— 0.0 %
4. Effect of Cross-Border Tax Laws
Branch Income430 0.5 %
5. Tax Credits
     Research & Development Credit(30)0.0 %
     Foreign Tax Credit(810)-1.0 %
6. Changes in Valuation Allowances3,204 3.7 %
7. Nontaxable or Nondeductible Items
Bargain Purchase Gain(23,350)-27.1 %
     Other Permanent Items(135)-0.2 %
8. Changes in Unrecognized Tax Benefits— 0.0 %
9. Other Adjustments
Other(201)-0.2 %
Total Income Tax Expense$1,369 1.6 %
1State taxes in Florida and Pennsylvania represent the majority (greater than 50%) of the tax effect in this category.

The Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, prospectively beginning with the fiscal year ended March 31, 2026. The rate reconciliations for the fiscal years ended March 31, 2025 and March 31, 2024 are presented below in the format applicable before adoption:

Year Ended March 31,
20252024
Expected Federal income tax benefit U.S. statutory rate$(1,048)21.0 %$(831)21.0 %
Foreign rate differential(101)2.0 %399 -10.1 %
State income taxes, net of federal benefit(165)3.3 %(125)3.2 %
Micro-captive insurance benefit— 0.0 %(306)7.7 %
Change in valuation allowance1,272 -25.5 %1,909 -48.3 %
Income attributable to minority interest - Contrail(140)2.8 %(217)5.5 %
Other differences, net605 -12.1 %(100)2.5 %
Income tax expense$423 -8.5 %$729 -18.5 %

During the fiscal year ended March 31, 2026, the Company paid approximately $0.9 million in income taxes, net of refunds received, consisting of $0.2 million to U.S. federal jurisdictions, $0.2 million to U.S. state jurisdictions, and $0.5 million to
foreign jurisdictions. Income taxes paid to individual jurisdictions equal to or exceeding 5% of total income taxes paid consisted of $0.5 million paid to the Netherlands and $0.1 million paid to the Commonwealth of Pennsylvania.

The Company did not record any liabilities for uncertain tax positions for the fiscal years ended March 31, 2026 and March 31, 2025.

On July 4, 2025, the U.S. signed into law the One Big Beautiful Bill Act, which included various provisions specific to businesses. The legislation has multiple effective dates, with certain provisions effective in Fiscal 2026 and others implemented in subsequent years. The Company has reflected the impact of the enacted provisions in its financial statements for the year ended March 31, 2026.

The Company (exclusive of Delphax which has a full valuation allowance) has federal gross operating losses of $1.2 million and state gross operating losses of $15.5 million, and foreign gross operating losses of $170.3 million at March 31, 2026. These net operating losses will begin to expire in tax year 2031. The Company has foreign tax credits of $1.2 million that will begin to expire in tax year 2029.

Deferred tax assets and liabilities were comprised of the following (in thousands):

Year Ended March 31,
20262025
Net operating loss & attribute carryforwards$64,728 $11,681 
Accrued expenses5,937 442 
Unrealized losses on investments1,839 1,540 
Inventory— 1,149 
Lease liabilities3,963 3,463 
Investment in partnerships1,455 — 
Other deferred tax assets4,847 1,753 
Total deferred tax assets82,769 20,028 
Property and equipment(14,697)(1,651)
Long-term debt(14,922)— 
Inventory(4,475)— 
Right-of-use assets(3,749)(3,236)
Outside basis on Rex Airlines Pty Ltd(18,345)— 
Capital gain deferment(1,773)(1,793)
Foreign intangible assets(2,532)(1,830)
Investment in partnerships— (2,159)
Other deferred tax liabilities(1,726)(403)
Total deferred tax liabilities(62,219)(11,072)
Net deferred tax assets20,550 8,956 
Less valuation allowance(22,048)(11,103)
Net deferred tax liabilities$(1,498)$(2,147)

The Company is not asserting indefinite reinvestment concerning foreign earnings in the Netherlands. The Company has not recorded deferred taxes associated with these undistributed earnings, as the impact of any future distribution will not have a material tax impact. The Company continues to assert that it will permanently reinvest all other foreign earnings, including basis differences of all the Company's foreign subsidiaries. As a result of its permanent reinvestment assertion, the Company has not recorded deferred taxes related to its foreign subsidiaries under the indefinite exception. The Company has not determined the deferred tax liability associated with these undistributed earnings and basis differences, as such a determination is not practicable.
Valuation Allowance

Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended March 31, 2026. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth.

On the basis of this evaluation, as of March 31, 2026, a valuation allowance of $22.0 million (inclusive of the Delphax entities’ valuation allowances that were discussed above) has been recorded to recognize only the portion of the deferred tax asset that is more likely than not to be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth.

The Organization for Economic Co-operation and Development ("OECD") has introduced a framework to implement a global minimum tax. Several jurisdictions in which the Company operates have enacted laws effective January 1, 2024, consistent with the OECD's framework. While details around the global minimum tax in each jurisdiction are uncertain, the Company has assessed the applicability of these rules and determined that it is not subject to the global minimum tax for the fiscal year ending March 31, 2026.
Delphax

Effective on November 24, 2015, Air T, Inc. purchased interests in Delphax. With an equity investment level by the Company of approximately 67%, Delphax is required to continue filing a separate U.S. corporate tax return.

Delphax maintains a September 30 fiscal year end, and the returns for the fiscal year ended September 30, 2025 has not been filed. The gross deferred tax balances related to Delphax includes federal and state loss carryforwards of $8.7 million and $1.8 million, respectively. The net operating losses expire in varying amounts beginning in the tax year 2027.

The provisions of ASC 740 require an assessment of both positive and negative evidence when determining whether it is more-likely-than-not that deferred tax assets will be recovered. In accounting for Delphax's tax attributes, the Company has established a full valuation allowance of $1.8 million as of March 31, 2026 and March 31, 2025, respectively. The cumulative tax losses incurred by Delphax in recent years was the primary basis for the Company’s determination that a full valuation allowance should be established against Delphax’s net deferred tax assets.