MDU RESOURCES GROUP INC

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Note 16 -Income Taxes

The components of income before income taxes from continuing operations for each of the years ended December 31 were as follows:

Income tax expense (benefit) from continuing operations for the years ended December 31 was as follows:

Components of deferred tax assets and deferred tax liabilities at December 31 were as follows:

As of December 31, 2023 and 2022, the Company had various state income tax net operating loss carryforwards of $816,000 and $785,000, respectively, and state income tax credit carryforwards, excluding alternative minimum tax credit carryforwards, of $33.7 million and $35.1 million, respectively. The state income tax credit carryforwards are due to expire between 2025 and 2037. Changes in tax regulations or assumptions regarding current and future taxable income could require additional valuation allowances in the future.

100 MDU Resources Group, Inc. Form 10-K

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The following table reconciles the change in the net deferred income tax liability from December 31, 2022, to December 31, 2023, to deferred income tax expense:

Total income tax expense differs from the amount computed by applying the statutory federal income tax rate to income before taxes. The reasons for this difference were as follows:

The Company's effective tax rate for 2023 differs from the U.S. federal statutory rate of 21 percent due primarily to the permanent difference on the gain on the Knife River retained shares due to the tax-free treatment of the disposition of the shares through the debt-for-equity exchange that was completed in November 2023, the impact of credits and deductions provided by law, and excess deferred income tax amortization. The debt-for equity exchange included an exchange of the approximately 10 percent of Knife River retained shares owned by the Company.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state and local jurisdictions. The Company is no longer subject to U.S. federal, non-U.S., state or local income tax examinations by tax authorities for years ending prior to 2020.

For the years ended December 31, 2023, 2022 and 2021, total reserves for uncertain tax positions were not material. The Company recognizes interest and penalties accrued relative to unrecognized tax benefits in income tax expense.