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Note 10 - Income Taxes | 12 Months Ended
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Dec. 31, 2025
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
10. | Income Taxes
President Trump signed into laws the One Big Beautiful Bill Act “OBBBA” on July 4, 2025. This bill included various tax provisions, many of which are applicable for most, if not all, of the 2025 tax year. Most impactful for the Company are changes related to section 174 for R&D expenditures and section 168 for bonus depreciation. The OBBBA enacted new Section 174A, which permanently allows taxpayers to fully expense domestic research or experimental expenditures paid or incurred in taxable years beginning after December 31, 2024. Foreign R&D expenditures must still be capitalized and amortized over 15 years. Additionally, the new rules provide options to account for any remaining unamortized domestic R&D expenditures paid or incurred in the taxable years beginning after December 31, 2021 and before January 1, 2025. Taxpayers may continue to amortize such unamortized amounts over the remaining five-year period; alternatively, they may elect to deduct any remaining unamortized domestic expenditures either entirely in the first tax year beginning after December 31, 2024, or ratably over two taxable years. The Company is electing to deduct these remaining unamortized costs entirely in 2025. The OBBBA also permanently restored 100% bonus depreciation under Section 168(k) for qualified property acquired and placed in service after January 19, 2025. This reverses the phasedown schedule enacted under the Tax Cuts and Jobs Act (“TCJA”), which would have reduced bonus depreciation to 40% for property placed into service in 2025 and eliminated it entirely by 2027. The Company is claiming 40% bonus on any 2025 assets placed in service before January 19 and 100% bonus on all remaining assets placed in service through the remainder of the year. The provision (benefit) for income taxes consisted of the following:
|  | For the Years Ended December 31, |
|  | 2025 |  |  | 2024 |
Current |  |  |  |  |  |  |  |
Federal |  | $ | 633,000 |  |  | $ | 748,000 |
State |  |  | 232,000 |  |  |  | 175,000 |
Foreign |  |  | 97,000 |  |  |  | 107,000 |
Deferred |  |  |  |  |  |  |  |
Federal |  |  | 127,000 |  |  |  | 40,000 |
State |  |  | 49,000 |  |  |  | 21,000 |
Provision for income taxes |  | $ | 1,138,000 |  |  | $ | 1,091,000 |
Deferred income tax assets (liabilities) consisted of the following:
|  | December 31, |
|  | 2025 |  |  | 2024 |
Temporary differences: |  |  |  |  |  |  |  |
Property and equipment |  | $ | (1,361,000 | ) |  | $ | (1,234,000 | )
Intangible assets |  |  | 24,000 |  |  |  | 158,000 |
Inventory reserve |  |  | 81,000 |  |  |  | 87,000 |
Accrued expenses and inventory |  |  | 475,000 |  |  |  | 392,000 |
Right of use of asset |  |  | (1,633,000 | ) |  |  | (1,872,000 | )
Foreign exchange |  |  | 25,000 |  |  |  | 29,000 |
Lease liability |  |  | 1,655,000 |  |  |  | 1,885,000 |
AMT/foreign tax credits |  |  | 233,000 |  |  |  | 188,000 |
State income taxes |  |  | (178,000 | ) |  |  | (136,000 | )
Net deferred income tax liabilities |  | $ | (679,000 | ) |  | $ | (503,000 | )
The provision for income taxes differs from the amount that would be obtained by applying the U.S. statutory rate to income before income taxes as a result of the following:
|  | For the Years Ended December 31, |
|  | 2025 |  |  | 2024 |
Income taxes based on U.S. |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
statutory rate of 21% |  | $ | 980,000 |  |  |  | 21.0 | % |  | $ | 1,054,000 |  |  |  | 21.0 | %
Non-deductible meals & entertainment |  |  | 10,000 |  |  |  | 0.2 |  |  |  | 9,000 |  |  |  | 0.2 |
FDII deduction |  |  | (4,000 | ) |  |  | -0.1 |  |  |  | (5,000 | ) |  |  | -0.1 |
Foreign taxes |  |  | (80,000 | ) |  |  | -1.7 |  |  |  | (136,000 | ) |  |  | -2.7 |
State taxes |  |  | 250,000 |  |  |  | 5.4 |  |  |  | 200,000 |  |  |  | 4.0 |
Stock compensation |  |  | 2,000 |  |  |  | 0.0 |  |  |  | (33,000 | ) |  |  | -0.7 |
Other |  |  | (20,000 | ) |  |  | -0.4 |  |  |  | 2,000 |  |  |  | 0.0 |
Provision for income taxes |  | $ | 1,138,000 |  |  |  | 24.4 | % |  | $ | 1,091,000 |  |  |  | 21.7 | %
Cash paid for taxes:
|  | For the Years Ended December 31, |
|  | 2025 |  |  | 2024 |
Federal |  | $ | 494,000 |  |  | $ | 1,119,000 |
State |  |  | 257,000 |  |  |  | 190,000 |
Foreign |  |  | 139,000 |  |  |  | 126,000 |
Total taxes paid, net of refunds |  | $ | 890,000 |  |  | $ | 1,435,000 |
Foreign taxes paid were all paid Canada. In 2025, taxes paid to Illinois was $79,000, which exceeded 5% of total income taxes paid.

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