v3.26.1
Income Taxes
 3 Months Ended
Mar. 31, 2026
Income Tax Disclosure [Abstract]  
Income Taxes
8.Income Taxes

The table below presents a comparison of the Current Quarter and Prior Quarter’s income tax expense (benefit) and actual year-to-date effective tax rates.
Three Months Ended March 31,
20262025
Income (loss) before income taxes$1,489 $(319)
Current tax expense (benefit)11 0.7 %(33)10.3 %
Deferred tax expense (benefit)319 21.4 %(37)11.6 %
Income tax expense (benefit)$330 22.1 %$(70)21.9 %

An estimated annual effective tax rate (“EAETR”) is used in recording our interim year-to-date income tax provision. The EAETR is determined based on analysis of year-to-date and projected financial results of our operations. Our EAETR during the Current Quarter was 22.3%, compared to 21.8% in the Prior Quarter. The actual year-to-date effective tax rate and EAETR can differ as a result of certain discrete items, which are recorded in the period. Common examples of such items include, but are not limited to, certain equity-based compensation, true-ups resulting from differences between tax returns filed and estimated accruals, and tax effects of enacted laws.

As a result of projecting federal and state income taxes, a portion of our EAETR represents the estimated provision for current taxes. Due to the book income in the Current Quarter, a current tax expense of $11 million was recorded. Due to the book loss in the Prior Quarter, a current tax benefit of $33 million was recorded.

As of December 31, 2025, we were in a net deferred tax asset position and we anticipate being in a net deferred tax liability position as of December 31, 2026. Based on all available positive and negative evidence, including projections of future taxable income, we believe it is more likely than not that some of our deferred tax assets will not be realized. As such, a partial valuation allowance was recorded against our net deferred tax asset position for federal and state purposes as of March 31, 2026 and December 31, 2025.
On July 4, 2025, the current Presidential Administration signed into law the One Big Beautiful Bill Act (the “OBBBA”). This bill restores 100% bonus depreciation for property acquired and placed into service after January 19, 2025, restores the immediate expensing of research expenditures, and provides for parity between the treatment of intangible drilling costs and depreciation for purposes of the CAMT. The enactment of the OBBBA and
its provisions contributed to a reduction in the Company’s expected current tax expense with an offsetting increase to the Company’s expected deferred tax expense.