Addus HomeCare Corp Income Taxes Disclosure

10. Income Taxes

 

The current and deferred federal and state income tax provision from continuing operations, are comprised of the following:

 

		For the Years Ended December 31,
		(Amounts in Thousands)
		2025				2024				2023
Current
Federal		$	10,775			$	8,998			$	11,839
State			2,893				3,533				4,139
Deferred
Federal			14,732				11,258				2,306
State			3,135				1,966				526
Provision for income taxes		$	31,535			$	25,755			$	18,810

 

The tax effects of certain temporary differences between the Company’s book and tax bases of assets and liabilities give rise to significant portions of the deferred income tax assets (liabilities) at December 31, 2025 and 2024. The deferred tax assets (liabilities) consisted of the following:

 

		For the Years Ended December 31,
		(Amounts in Thousands)
		2025				2024
Deferred tax assets
Long-term
Accounts receivable allowances		$	14,343			$	20,843
Operating lease liabilities			12,802				14,917
Accrued compensation			5,901				5,683
Accrued workers’ compensation			3,355				3,253
Transaction costs			2,610				2,547
Stock-based compensation			1,698				1,400
Net operating loss			59				73
Restructuring costs			—				555
Other			2,865				2,517
Total long-term deferred tax assets			43,633				51,788
Deferred tax liabilities
Long-term
Goodwill and intangible assets			(72,059	)			(61,177	)
Operating lease assets, net			(10,562	)			(12,521	)
Property and equipment			(3,603	)			(2,796	)
Insurance premiums			(1,446	)			(1,079	)
Other			(28	)			(35	)
Total long-term deferred tax liabilities			(87,698	)			(77,608	)
Total net deferred tax (liabilities) assets		$	(44,065	)		$	(25,820	)

 

Management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers all available evidence in making this assessment.

 

A reconciliation for continuing operations of the statutory federal tax rate of 21.0% to the effective income tax rate is summarized as follows:

 

						For the Years Ended December 31,
						(Amounts in Thousands)
		2025								2024								2023
U.S. federal statutory tax rate		$	26,763				21.0	%		$	20,864				21.0	%		$	17,079				21.0	%
State and local taxes, net of federal income tax effect*			6,019				4.7				5,469				5.5				4,667				5.7
Tax credits
Work opportunity tax credits, net of federal taxable income add back			(2,923	)			(2.3	)			(2,844	)			(2.9	)			(2,765	)			(3.4	)
Other credit programs			(711	)			(0.6	)			(474	)			(0.4	)			(474	)			(0.6	)
Nontaxable or nondeductible items
162(m) compensation			4,830				3.8				1,992				2.0				1,409				1.7
Excess tax benefit			(2,433	)			(1.9	)			(408	)			(0.4	)			(320	)			(0.4	)
Stock acquisition cost			—				—				1,081				1.1				4				0.1
Other nondeductible items			181				0.2				130				0.1				176				0.2
Other adjustments
Federal RTP			(191	)			(0.2	)			(55	)			(0.1	)			(966	)			(1.2	)
Effective income tax rate		$	31,535				24.7	%		$	25,755				25.9	%		$	18,810				23.1	%

 

*	State taxes in Illinois for 2025, 2024, and 2023 made up the majority (greater than 50 percent) of the tax effect within this category.

 

Cash income taxes paid for continuing operations, disaggregated by federal and state jurisdictions, are summarized as follows:

 

		For the Years Ended December 31,
		(Amounts in Thousands)
		2025								2024								2023
Federal income tax paid		$	8,600				68.1	%		$	18,911				72.0	%		$	9,483				63.3	%
State income tax paid
Illinois			2,060				16.3				4,391				16.7				3,262				21.8
New York			—				—				—				—				836				5.6
Tennessee			713				5.6				—				—				—				—
Other states			1,247				10.0				2,949				11.3				1,404				9.3
Total income tax paid (net of refund)		$	12,620				100.0	%		$	26,251				100.0	%		$	14,985				100.0	%

 

The effective income tax rate was 24.7%, 25.9% and 23.1% for the years ended December 31, 2025, 2024 and 2023, respectively. The difference between our federal statutory and effective income tax rates was principally due to the inclusion of state taxes, non-deductible compensation, partially offset by the use of federal employment tax credits and an excess tax benefit.

 

The Company is subject to taxation in the jurisdictions in which it operates. The Company continues to remain subject to examination by U.S. federal authorities for the years 2022 through 2024 and for various state authorities for the years 2020 through 2024.