12. INCOME TAXES

ProFrac Corp. is a taxable entity and is required to account for income taxes under the asset and liability method. In connection with the Redemption in April 2023, ProFrac LLC became wholly owned by ProFrac Corp. In 2024, we effectuated a legal entity reorganization that resulted in ProFrac LLC becoming a disregarded entity for U.S. federal income tax purposes. As a result, our accounting under the asset and liability method in 2024 and 2025 is based on the underlying assets and liabilities of ProFrac LLC. Flotek is not part of the Company’s consolidated group for income tax purposes. Therefore, we account for Flotek’s income taxes as a stand-alone income tax payor and present its balances combined with the Company’s balances in our disclosures.

The Company’s effective tax rate was generally lower than the federal corporate income tax rate of 21% due to changes in the valuation allowance against our deferred tax assets for all periods. Additionally, our effective tax rate was impacted in

2025 because of a permanent book-tax difference in the accounting for a sale-leaseback transaction with Flotek and in 2023 because income allocated to our Class B shareholders before the conversion of our Class B common stock to Class A common stock was not subject to tax on the Company’s tax returns.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. The OBBBA contains, among other provisions, certain changes to U.S. federal income tax laws related to 100% bonus depreciation and the calculation of interest expense deductions, which will reduce our taxable income in 2025 and future years. The accounting for changes in tax rates and tax laws is required to be recognized in the period in which the legislation is enacted. The effects of this tax law change have been incorporated into these consolidated financial statements.

As of December 31, 2025, the Company had approximately $553.0 million of federal net operating loss ("NOL") carryforwards, of which $5.3 million will expire in 2037 with the remaining losses carried forward indefinitely. Of the Company's federal NOLs, $401.6 million are subject to limitation under Section 382.

The Company also has $169.4 million of state NOLs, of which $20.9 million will expire on various dates between 2032 and 2045 with the remaining losses carried forward indefinitely. Of the Company's state NOLs, $119.5 million are subject to limitation under Section 382.

The Company also has $4.2 million of Canadian NOLs that will expire between 2043 and 2045.

We have established a valuation allowance for all deferred tax assets that will not be realized by future taxable income generated by our deferred tax liabilities. Deferred tax assets related to our U.S. federal and state tax net operating losses are still available to us to offset future taxable income, subject to limitations in the event of a change of control under Section 382 of the Internal Revenue Code. At December 31, 2025, we had not incurred such an ownership change.

At each reporting date, we consider all available positive and negative evidence to evaluate whether our deferred tax assets are more likely than not to be realized. A significant piece of negative evidence that we consider is cumulative losses (generally defined as losses before income taxes) incurred in recent years. Such evidence limits our ability to consider other subjective evidence such as our projections for future taxable income. We also concluded that this negative evidence was not overcome by considering other sources of taxable income, which included the reversal of taxable temporary differences and tax-planning strategies.

Flotek has historically maintained a valuation allowance on substantially all of its deferred tax assets. At each reporting date, Flotek considers all available positive and negative evidence to evaluate whether its deferred tax assets are more likely than not to be realized. A significant piece of positive evidence that Flotek considers is whether it has incurred cumulative income (generally defined as income before income taxes) in recent years. Flotek noted that for the three years ended December 31,

2025, it recorded a cumulative income before income taxes of more than $50 million. As a result of this positive evidence, Flotek concluded that a valuation allowance was no longer required for a portion of its deferred tax assets at December 31, 2025, because it is more likely than not that the deferred tax assets will be realized.

The Company’s net deferred tax assets of $17.2 million as of December 31, 2025 include $29.0 million of net deferred tax assets from Flotek. Because Flotek is not part of our consolidated group for income tax purposes, we do not offset Flotek’s net deferred tax assets from the Company’s net deferred tax liabilities in our consolidated balance sheets.

At December 31, 2025, we had no liability for uncertain tax positions. We recognize accrued interest and penalties related to any uncertain tax positions as part of income tax expense. At December 31, 2025, we had no accrued interest expense associated with unrecognized tax benefits. Interest expense associated with unrecognized tax benefits was zero for all periods presented.

ProFrac LLC was obligated to make cash distributions to the redeemable noncontrolling interest holders to fund their respective income tax liabilities relating to their share of the income of ProFrac LLC. In the fourth quarter of 2022, the Company paid a distribution of $8.0 million to the redeemable noncontrolling interest holders. The revised estimate for the full year liability to these shareholders was $2.8 million. As of December 31, 2022, we recorded the $5.3 million overpayment of the distribution in prepaid expenses and other current assets on our consolidated balance sheets to be offset against future tax distributions. In connection with the conversion of our Class B common stock to Class A common stock, ProFrac LLC will no longer be required to make tax distributions to our former Class B shareholders. As a result, we recorded the $5.3 million overpayment as an equity transaction as of December 31, 2023.

ProFrac Holding Corp and its U.S. subsidiaries join in the filing of a U.S. federal consolidated income tax return. Our income tax returns, along with income tax returns for our acquired subsidiaries, are currently subject to examination in federal and state jurisdictions primarily for tax years from 2021-2024.

Tax Receivable Agreement

In connection with our initial public offering, ProFrac Corp. entered into a tax receivable agreement (the “TRA”) with certain holders of limited liability company interests in ProFrac LLC (the “TRA Holders”). The TRA generally provides for payment by ProFrac Corp. to the TRA Holders of 85% of the net cash savings, if any, in U.S. federal, state and local income tax and franchise tax that ProFrac Corp. actually realizes (or is deemed to realize in certain circumstances) as a result of (i) certain increases in tax basis that occur as a result of ProFrac Corp.'s acquisition (or deemed acquisition for U.S. federal income tax purposes) of all or a portion of such TRA Holder’s ProFrac LLC units in connection with the initial public offering or the exercise of the Redemption Right (as defined in the TRA) or the Call Right (as defined in the TRA), and (ii) imputed interest deemed to be paid by ProFrac Corp. as a result of, and additional tax basis arising from, any payments ProFrac Corp. makes under the TRA. Payments will generally be made under the TRA as ProFrac Corp. realizes actual cash tax savings from the tax benefits covered by the TRA. As a result of our IPO and the conversion of all our Class B common stock to Class A common stock (see “Note 1. Organization and Description of Business”) and the tax effects of these transactions, we recorded a $82.9 million noncurrent TRA liability. The recognition of the TRA liability was recorded as an equity transaction because the holders of Class B common stock and their affiliates control us through their Class A common stock holdings. As of December 31, 2025, the current liability and noncurrent liability for our TRA obligation was $4.6 million and $82.0 million, respectively.