BGC Group, Inc.BGC
BGC Group, Inc. Income Taxes Disclosure
Income Taxes
The Company’s Consolidated Financial Statements include U.S. federal, state and local income taxes on the Company’s allocable share of the U.S. results of operations, as well as taxes payable to jurisdictions outside the U.S. In addition, certain of the Company’s entities are taxed as U.S. partnerships and are primarily subject to the UBT in New York City. Therefore, the tax liability or benefit related to the partnership income or loss, except for UBT, rests with the partners rather than the partnership entity (see Note 2—“Limited Partnership Interests in BGC Holdings and Newmark Holdings” for discussion of partnership interests).
The provision for income taxes consisted of the following (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| U.S. federal | $ | 9,470 | $ | 19,459 | $ | 19,297 | |||||||||||
| U.S. state and local | (6,532) | 5,061 | 5,033 | ||||||||||||||
| Foreign | 79,309 | 95,149 | 54,787 | ||||||||||||||
| UBT | — | — | 373 | ||||||||||||||
| 82,247 | 119,669 | 79,490 | |||||||||||||||
| Deferred: | |||||||||||||||||
| U.S. federal | (39,015) | (58,127) | (41,491) | ||||||||||||||
| U.S. state and local | 25,974 | (9,568) | (14,989) | ||||||||||||||
| Foreign | (1,998) | (2,059) | (5,914) | ||||||||||||||
| UBT | — | — | 1,838 | ||||||||||||||
| (15,039) | (69,754) | (60,556) | |||||||||||||||
| Provision for income taxes | $ | 67,208 | $ | 49,915 | $ | 18,934 | |||||||||||
The Company had pre-tax income (loss) of $213.7 million, $173.1 million and $57.7 million for the years ended December 31, 2025, 2024 and 2023, respectively.
The Company had pre-tax income (loss) from domestic operations of $(476.4) million, $(143.2) million and $(383.9) million for the years ended December 31, 2025, 2024 and 2023, respectively. The Company had pre-tax income (loss) from foreign operations of $690.1 million, $316.3 million and $441.6 million for the years ended December 31, 2025, 2024 and 2023, respectively.
The following table reconciles the U.S. federal statutory income tax rate to the Company’s effective tax rate for the year ended December 31, 2025:
Year Ended December 31, 2025 | Amount | Rate | ||||||||||||
U.S. Federal statutory tax rate | $ | 44,923 | 21.0 | % | ||||||||||
Domestic state and local income taxes, net of federal income tax effect1 | 15,725 | 7.4 | ||||||||||||
Foreign tax effects | ||||||||||||||
| Australia | (2,867) | (1.3) | ||||||||||||
| Japan | 2,720 | 1.3 | ||||||||||||
| United Arab Emirates | ||||||||||||||
Rate differential | (4,721) | (2.2) | ||||||||||||
| Pillar 2 | 3,215 | 1.5 | ||||||||||||
| Other | (789) | (0.4) | ||||||||||||
| United Kingdom | ||||||||||||||
Rate differential | 11,088 | 5.2 | ||||||||||||
Meals and entertainment | 6,144 | 2.9 | ||||||||||||
Non-taxable gain | (8,085) | (3.8) | ||||||||||||
Partnership income/(loss) | (10,431) | (4.9) | ||||||||||||
Impact of RSU windfall | (3,534) | (1.7) | ||||||||||||
| Other | (1,187) | (0.6) | ||||||||||||
Other foreign jurisdictions | 3,236 | 1.5 | ||||||||||||
Effect of cross-border tax laws | ||||||||||||||
| Foreign branch taxes, net of tax credits | 13,010 | 6.1 | ||||||||||||
| GILTI, net of credits | 7,827 | 3.7 | ||||||||||||
Subpart F, net of credits - prior year | (12,659) | (5.9) | ||||||||||||
Tax credits | (1,442) | (0.7) | ||||||||||||
Nontaxable and nondeductible items | ||||||||||||||
| Non-controlling interest | 2,376 | 1.1 | ||||||||||||
Meals and entertainment | 4,358 | 2.0 | ||||||||||||
Section 162(m) | 2,911 | 1.4 | ||||||||||||
| Other | 1,743 | 0.8 | ||||||||||||
| Worldwide changes in unrecognized tax benefits | (2,801) | (1.3) | ||||||||||||
| Other | ||||||||||||||
Impact of RSU windfall | (3,552) | (1.7) | ||||||||||||
| Total | $ | 67,208 | 31.4 | % | ||||||||||
____________________________
1State and local income taxes in New York State and New York City made up the majority (greater than 50%) of the tax effect in this category.
Differences between the Company’s actual income tax expense and the amount calculated utilizing the U.S. federal statutory rates for the years ended December 31, 2024 and December 31, 2023, were as follows (in thousands):
Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Tax expense at federal statutory rate | $ | 36,360 | $ | 12,207 | |||||||
| Non-controlling interest | 1,295 | 1,982 | |||||||||
Incremental impact of foreign taxes compared to federal tax rate | 5,847 | 3,838 | |||||||||
| Other permanent differences | 7,001 | 3,054 | |||||||||
| U.S. state and local taxes, net of U.S. federal benefit | (4,408) | (4,778) | |||||||||
| New York City UBT | — | — | |||||||||
| Other rate changes | 1,503 | (862) | |||||||||
Impact of Corporate Conversion | — | (12,446) | |||||||||
| Uncertain tax positions | 304 | (797) | |||||||||
| U.S. tax on foreign earnings, net of tax credits | (4,413) | 12,388 | |||||||||
| Prior year adjustments | 5,811 | 4,078 | |||||||||
| Valuation allowance | (2,402) | (4,190) | |||||||||
| Meals and Entertainment | 7,450 | 6,182 | |||||||||
| Impact of RSU Windfall | (4,433) | (1,700) | |||||||||
| Other | — | (22) | |||||||||
| Provision for income taxes | $ | 49,915 | $ | 18,934 | |||||||
As of December 31, 2025, the Company’s intention is to permanently reinvest undistributed foreign pre-tax earnings in the Company’s foreign operations. While the one-time transition tax eliminated most of the income tax effects of repatriating the undistributed earnings, there could still be foreign and state and local tax effects on the distribution. Accordingly, no provision has been recorded on foreign and state and local taxes that would be applicable upon distribution of such earnings to the U.S. Further, determination of an estimate of deferred tax liability associated with the distribution of foreign earnings is not practicable.
The Company has elected to treat taxes associated with the GILTI provision using the Period Cost Method and thus has not recorded deferred taxes for basis differences under this regime as of December 31, 2025.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded against deferred tax assets if it is deemed more likely than not that those assets will not be realized.
Significant components of the Company’s deferred tax asset and liability consisted of the following (in thousands):
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax asset | |||||||||||
| Basis difference of investments | $ | 6,149 | $ | 10,403 | |||||||
| Deferred compensation | 123,191 | 114,680 | |||||||||
| Excess interest expense | 116,657 | 90,404 | |||||||||
| Other deferred and accrued expenses | — | 10,659 | |||||||||
Depreciation and amortization | — | 790 | |||||||||
| Net operating loss and credit carry-forwards | 89,452 | 58,084 | |||||||||
Total deferred tax asset1 | 335,449 | 285,020 | |||||||||
| Valuation allowance | (23,438) | (24,422) | |||||||||
| Deferred tax asset, net of valuation allowance | 312,011 | 260,598 | |||||||||
| Deferred tax liability | |||||||||||
| Depreciation and amortization | 51,921 | — | |||||||||
| Other deferred and accrued expenses | 13,247 | — | |||||||||
Total deferred tax liability1 | 65,168 | — | |||||||||
| Net deferred tax asset | $ | 246,843 | $ | 260,598 | |||||||
_______________________________________
1Before netting within tax jurisdictions.
The Company has deferred tax assets associated with net operating losses in U.S. federal, state and local, and non-U.S. jurisdictions of $21.6 million, $6.5 million and $28.1 million, respectively. These losses will begin to expire for state and local and non-U.S. jurisdictions in 2035 and 2026, respectively. The Company has deferred tax assets associated with tax credits in the U.S. of $47.0 million, which will begin to expire in 2030. Management continuously assesses the available positive and negative evidence to determine whether existing deferred tax assets will be realized. Accordingly, substantially all of the total valuation allowance of $23.4 million relates to non-US net operating losses and other deferred tax assets for the year ended December 31, 2025. The Company’s net deferred tax asset and liability are included in the Company’s Consolidated Statements of Financial Condition as components of “Other assets” and “Accounts payable, accrued and other liabilities,” respectively.
Pursuant to U.S. GAAP guidance, Accounting for Uncertainty in Income Taxes, the Company provides for uncertain tax positions as a component of income tax expense based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. The Company recognizes interest and penalties related to unrecognized tax benefits in “Provision (benefit) for income taxes” in the Company’s Consolidated Statements of Operations.
A reconciliation of the beginning to the ending amounts of gross unrecognized tax benefits for the years ended December 31, 2025 and 2024 is as follows (in thousands):
| Balance, December 31, 2023 | $ | 6,669 | |||
| Increases for prior year tax positions | — | ||||
| Decreases for prior year tax positions | — | ||||
| Increases for current year tax positions | — | ||||
| Decreases related to settlements with taxing authorities | — | ||||
| Decreases related to a lapse of applicable statute of limitations | (2,025) | ||||
| Balance, December 31, 2024 | $ | 4,644 | |||
| Increases for prior year tax positions | — | ||||
| Decreases for prior year tax positions | — | ||||
| Increases for current year tax positions | — | ||||
| Decreases related to settlements with taxing authorities | — | ||||
| Decreases related to a lapse of applicable statute of limitations | (1,134) | ||||
| Balance, December 31, 2025 | $ | 3,510 | |||
As of December 31, 2025, the Company’s unrecognized tax benefits, excluding related interest and penalties, were $3.5 million, of which $2.8 million, if recognized, would affect the effective tax rate. The Company is currently under income tax examination by tax authorities in U.S. federal, state and local jurisdictions and certain non-U.S. jurisdictions for tax years beginning 2016, 2015 and 2017, respectively. The Company does not believe that the amounts of unrecognized tax benefits will materially change over the next 12 months.
The Company recognizes interest and penalties related to unrecognized tax benefits in “Provision (benefit) for income taxes” in the Company’s Consolidated Statements of Operations. As of December 31, 2025, the Company had accrued $4.6 million for income tax-related interest and penalties of which $0.5 million was accrued during 2025.
Cash tax payments, net of refunds, for the year ended December 31, 2025, were as follows (in thousands):
| Year Ended December 31, | |||||
| 2025 | |||||
Federal | $ | 24,907 | |||
State | |||||
New York State | 5,462 | ||||
New York City | 3,386 | ||||
Other states | 2,004 | ||||
Total states | 10,852 | ||||
Foreign | |||||
United Kingdom | 82,387 | ||||
Other foreign | 29,991 | ||||
Total foreign | 112,378 | ||||
Total cash payments, net of refunds | $ | 148,137 | |||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 2, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Feb 22, 2018 | |
| 2016 | Feb 28, 2017 | |
| 2015 | Feb 29, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.