Main Street Capital Corporation Annual report [Section 13 and 15(d), not S-K Item 405]

Annual report [Section 13 and 15(d), not S-K Item 405]

DIVIDENDS, DISTRIBUTIONS AND TAXABLE INCOME

DIVIDENDS, DISTRIBUTIONS AND TAXABLE INCOME

12 Months Ended

Dec. 31, 2025

DIVIDENDS, DISTRIBUTIONS AND TAXABLE INCOME

Main Street currently pays regular monthly dividends to its stockholders and periodically pays supplemental dividends to its stockholders. Future dividends, if any, will be determined by its Board of Directors on a quarterly basis.

A summary of dividends paid for the years ended December 31, 2025, 2024 and 2023 is as follows:


	Year Ended December 31,
	2025		2024		2023

	(in thousands, except per share amounts)
Regular monthly dividends per share	$	3.03	$	2.91	$	2.745
Supplemental dividends per share	1.20		1.20		0.95
Total dividends per share	$	4.23	$	4.11	$	3.695

Total regular monthly dividends	$	270,657	$	252,331	$	224,279
Total supplemental dividends	107,353		104,513		78,608
Total dividends	$	378,010	$	356,844	$	302,887

For tax purposes, the 2025 dividends were comprised of (i) ordinary income totaling $3.89 per share and (ii) qualified dividend income totaling $0.34 per share. As of December 31, 2025, Main Street estimates that it has generated undistributed taxable income of $103.4 million, or $1.15 per share, that will be carried forward toward distributions to be paid in 2026.

MSCC has elected to be treated for U.S. federal income tax purposes as a RIC. MSCC’s taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the Funds and Structured Subsidiaries, which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that MSCC distributes to its stockholders. MSCC must generally distribute at least 90% of its “investment company taxable income” (which is generally its net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90% of its tax-exempt income to maintain its RIC status (pass-through tax treatment for amounts distributed). As part of maintaining RIC status, undistributed taxable income (subject to a 4% non-deductible U.S. federal excise tax) pertaining to a given fiscal year may be distributed up to twelve months subsequent to the end of that fiscal year, provided such dividends are declared on or prior to the later of (i) filing of the U.S. federal income tax return for the applicable fiscal year or (ii) the fifteenth day of the ninth month following the close of the year in which such taxable income was generated.

The determination of the tax attributes for Main Street’s distributions is made annually, based upon its taxable income for the full year and distributions paid for the full year. Therefore, a determination made on an interim basis may not be representative of the actual tax attributes of distributions for a full year. Ordinary dividend distributions from a RIC do not qualify for the 20% maximum tax rate (plus a 3.8% Medicare surtax, if applicable) on dividend income from domestic corporations and qualified foreign corporations, except to the extent that the RIC received the income in the form of qualifying dividends from domestic corporations and qualified foreign corporations. The tax attributes for distributions will generally include both ordinary income and qualified dividends, but may also include either one or both of capital gains and return of capital. The tax character of distributions paid for the years ended December 31, 2025, 2024 and 2023 was as follows:


	Year Ended December 31,
	2025		2024		2023

	(in thousands)
Ordinary income (1)	$	346,754	$	245,845	$	278,165
Qualified dividends	30,449		110,281		24,100

Distributions on tax basis	$	377,203	$	356,126	$	302,265

___________________________

(1)The years ended December 31, 2025, 2024 and 2023 include $4.3 million, $4.2 million and $3.3 million, respectively, that was reported for tax purposes as compensation for services in accordance with Section 83 of the Code.

As of December 31, 2025, 2024 and 2023, the components of distributable earnings on a tax basis, or “Undistributed ordinary income,” differ from the amount of “Total undistributed earnings” reflected in the Consolidated Balance Sheets by the temporary book or tax differences shown below:


	December 31,
	2025		2024		2023

	(in thousands)
Undistributed ordinary income	$	103,416	$	142,588	$	76,510
Net unrealized appreciation, net of tax	684,023		583,720		454,792
Cumulative book-tax differences on realized gain/loss, including capital loss carryforward	(212,730)		(189,782)		(187,218)
Accumulated net impact of Taxable Subsidiaries (1)	24,833		(83,246)		(72,442)
Other temporary differences (2)	(64,207)		(50,818)		(65,640)
Components of Total undistributed earnings	$	535,335	$	402,462	$	206,002

___________________________

(1)Accumulated net impact of earnings, intercompany dividends and book-tax differences of the Taxable Subsidiaries.

(2)Book income and tax income differences, including dividends, equity and deferred compensation, debt origination, structuring fees and changes in estimates.

A reconciliation of “Net increase in net assets resulting from operations” to taxable income and to total distributions declared to common stockholders for the years ended December 31, 2025, 2024 and 2023 is as follows:


	Year Ended December 31,
	2025		2024		2023

	(estimated, in thousands)
Net increase in net assets resulting from operations	$	493,398	$	508,080	$	428,447
Book-tax difference from share-based compensation expense	(5,119)		(317)		962
Net unrealized appreciation	(98,879)		(137,656)		(232,577)
Income tax provision	26,801		30,633		22,642
Pre-tax book income not consolidated for tax purposes	(148,072)		(105,122)		20,726
Book income and tax income differences, including debt origination, structuring fees, dividends, realized gains and changes in estimates	70,709		127,304		72,389
Estimated taxable income (1)	338,838		422,922		312,589
Taxable income earned in prior year and carried forward for distribution in current year	120,488		56,142		49,216
Taxable income earned prior to period end and carried forward for distribution next period	(103,416)		(142,588)		(76,510)
Dividend payable as of period end and paid in the following period	23,358		22,100		20,368
Total distributions accrued or paid to common stockholders	$	379,268	$	358,576	$	305,663

___________________________

(1)MSCC’s taxable income for each period is an estimate and will not be finally determined until MSCC files its tax return for each year. Therefore, the final taxable income, and the taxable income earned in each period and carried forward for distribution in the following period, may be different than this estimate.

The Taxable Subsidiaries primarily hold certain equity investments for Main Street. The Taxable Subsidiaries permit Main Street to hold equity investments in portfolio companies which are “pass-through” entities for tax purposes and to continue to comply with the “source-of-income” requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with MSCC for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in Main Street’s consolidated financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with MSCC for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from their book income, or loss, due to temporary book and tax timing differences and permanent differences. The Taxable Subsidiaries are each taxed at corporate income tax rates based on their taxable income. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the Taxable Subsidiaries are reflected in Main Street’s consolidated financial statements.

The income tax provision for Main Street is generally composed of (i) deferred tax expense, which is primarily the result of the net activity relating to the portfolio investments held in the Taxable Subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation or depreciation and other temporary book-tax differences, and (ii) current tax expense, which is primarily the result of current U.S. federal income and state taxes relating to net currently taxable activity relating to the portfolio investments held in the Taxable Subsidiaries and excise taxes on Main Street’s estimated undistributed taxable income. The income tax expense, or benefit, and the related tax assets and liabilities generated by the Taxable Subsidiaries, if any, are reflected in Main Street’s Consolidated Statements of Operations. Main Street’s provision for income taxes was comprised of the following for the years ended December 31, 2025, 2024 and 2023:


	Year Ended December 31,
	2025		2024		2023

	(in thousands)
Net investment income taxes
Current tax expense (benefit):
Federal	$	1,651	$	540	$	1,198
State and other	(1,469)		1,989		2,245
Excise	4,051		5,851		3,190
Total current tax expense	4,233		8,380		6,633

Deferred tax expense (benefit):
Federal	8,189		5,142		3,491
State and other	1,601		136		(1,847)
Total deferred tax expense	9,790		5,278		1,644

Total net investment income tax provision	$	14,023	$	13,658	$	8,277

Investment valuation related taxes
Current tax benefit:
Federal	$	(284)	$	—	$	—


Total current tax benefit	(284)		—		—

Deferred tax expense (benefit):
Federal	12,367		20,707		10,690
State and other	695		(3,732)		3,675
Total deferred tax expense	13,062		16,975		14,365

Total investment valuation related income tax provision	$	12,778	$	16,975	$	14,365

Total income tax provision	$	26,801	$	30,633	$	22,642

MSCC operates in a manner to maintain its RIC status and to eliminate corporate-level U.S. federal income tax (other than the 4% excise tax) by distributing sufficient investment company taxable income and long-term capital gains. As a result, MSCC will have an effective tax rate equal to 0% before the excise tax and income taxes incurred by the Taxable Subsidiaries. As such, a reconciliation of the differences between Main Street’s reported income tax expense and its tax expense at the federal statutory rate of 21% is not meaningful.

Main Street’s income taxes paid (net of refunds received) was comprised of the following for the years ended December 31, 2025, 2024 and 2023:


	Year Ended December 31,
	2025		2024		2023

	(in thousands)
Taxes Paid:
Federal and excise	$	17,656	$	5,605	$	6,459
State	2,961		2,659		1,985
Total taxes paid	$	20,617	$	8,264	$	8,444

No individual jurisdiction accounted for a significant amount of our state income taxes paid for the years ended December 31, 2025, 2024 and 2023.

As of December 31, 2025, the cost of investments for U.S. federal income tax purposes was $4,642.3 million, with such investments having an estimated net unrealized appreciation of $875.8 million, composed of gross unrealized appreciation of $1,300.0 million and gross unrealized depreciation of $424.2 million. As of December 31, 2024, the cost of investments for U.S. federal income tax purposes was $4,231.6 million, with such investments having an estimated net unrealized appreciation of $701.1 million, composed of gross unrealized appreciation of $1,082.8 million and gross unrealized depreciation of $381.7 million.

The significant components of net deferred tax assets and liabilities as of December 31, 2025 and 2024 are as follows:


	December 31,
	2025		2024

	(in thousands)
Deferred tax assets:
Net operating loss carryforwards	$	3,233	$	6,336
Interest expense carryforwards	27,167		19,920

Other	1,301		261
Total deferred tax assets	31,701		26,517
Deferred tax liabilities:
Net unrealized appreciation of portfolio investments	(98,284)		(99,708)
Net basis differences in portfolio investments	(42,380)		(12,920)
Total deferred tax liabilities	(140,664)		(112,628)
Total deferred tax liabilities, net	$	(108,963)	$	(86,111)

The net deferred tax liability as of December 31, 2025 and 2024 was $109.0 million and $86.1 million, respectively, with the change primarily related to changes in net unrealized appreciation or depreciation, changes in loss carryforwards and other temporary book-tax differences relating to portfolio investments held by the Taxable Subsidiaries. Management believes that the realization of the deferred tax assets is more likely than not based on expectations as to future taxable income and scheduled reversals of temporary differences. Accordingly, Main Street did not record a valuation allowance related to its deferred tax assets as of December 31, 2025 and 2024. As of December 31, 2025, for U.S. federal income tax purposes, the Taxable Subsidiaries had a net operating loss carryforward, which is not subject to expiration and will carryforward indefinitely until utilized. Additionally, the Taxable Subsidiaries have interest expense limitation carryforwards which have an indefinite carryforward period. In addition, as of December 31, 2025, for U.S. federal income tax purposes, MSCC had net capital loss carryforwards totaling $56.4 million available to offset future capital gains at the RIC level in any taxable year, to the extent available and permitted by U.S. federal income tax law, which are not subject to expiration as long as MSCC maintains its RIC status.