BROWN & BROWN, INC. Income Taxes Disclosure
NOTE 9 Income Taxes
Significant components of the provision for income taxes for the years ended December 31 are as follows:
(in millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Current: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
$ |
187 |
|
|
$ |
198 |
|
|
$ |
180 |
|
State |
|
|
68 |
|
|
|
70 |
|
|
|
57 |
|
Foreign |
|
|
37 |
|
|
|
19 |
|
|
|
23 |
|
Total current provision |
|
|
292 |
|
|
|
287 |
|
|
|
260 |
|
Deferred: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
|
38 |
|
|
|
14 |
|
|
|
26 |
|
State |
|
|
5 |
|
|
|
4 |
|
|
|
6 |
|
Foreign |
|
|
(31 |
) |
|
|
(4 |
) |
|
|
(17 |
) |
Total deferred provision |
|
|
12 |
|
|
|
14 |
|
|
|
15 |
|
Total tax provision |
|
$ |
304 |
|
|
$ |
301 |
|
|
$ |
275 |
|
The table below provides additional information as a result of our adoption of ASU 2023-09. A reconciliation of the differences between the effective tax rate and the federal statutory tax rate for the year ended December 31, 2025 is as follows:
(in millions) |
|
2025 |
|
|
2025 |
|
||
Provision for income taxes at U.S. federal statutory rate |
|
$ |
288 |
|
|
|
21.0 |
% |
Effect of cross-border tax laws |
|
|
4 |
|
|
|
0.2 |
|
Nontaxable or nondeductible items |
|
|
(14 |
) |
|
|
(1.0 |
) |
Other |
|
|
(3 |
) |
|
|
(0.2 |
) |
State and local income taxes, net of federal income tax effect |
|
|
54 |
|
|
|
3.9 |
|
Foreign tax effects |
|
|
|
|
|
|
||
Bermuda |
|
|
|
|
|
|
||
Effect of rates different than statutory |
|
|
(24 |
) |
|
|
(1.7 |
) |
Other |
|
|
1 |
|
|
|
0.1 |
|
Other foreign jurisdictions |
|
|
(7 |
) |
|
|
(0.5 |
) |
Worldwide changes in unrecognized tax benefits |
|
|
5 |
|
|
|
0.3 |
|
Total tax provision and effective tax rate |
|
$ |
304 |
|
|
|
22.1 |
% |
The individual state and local jurisdictions comprising the majority of state income taxes, net of federal income tax benefit, include: Florida, California, Minnesota, South Carolina, New York City and New Jersey.
As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, a reconciliation of the differences between the effective tax rate and the federal statutory tax rate is as follows:
|
|
2024 |
|
|
2023 |
|
||
Federal statutory tax rate |
|
|
21.0 |
% |
|
|
21.0 |
% |
State income taxes, net of federal income tax benefit |
|
|
4.6 |
|
|
|
4.5 |
|
Non-deductible employee stock purchase plan expense |
|
|
0.2 |
|
|
|
0.2 |
|
Non-deductible meals and entertainment |
|
|
0.2 |
|
|
|
0.2 |
|
Non-deductible officers’ compensation |
|
|
0.4 |
|
|
|
0.4 |
|
Tax benefit from stock-based compensation |
|
|
(1.9 |
) |
|
|
(1.6 |
) |
Effect of rates different than statutory |
|
|
(1.1 |
) |
|
|
— |
|
Other, net |
|
|
(0.3 |
) |
|
|
(0.6 |
) |
Effective tax rate |
|
|
23.1 |
% |
|
|
24.1 |
% |
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for income tax reporting purposes.
Significant components of the Company’s net deferred tax liabilities as of December 31 are as follows:
(in millions) |
|
2025 |
|
|
2024 |
|
||
Non-current deferred tax liabilities: |
|
|
|
|
|
|
||
Intangible assets |
|
$ |
1,355 |
|
|
$ |
808 |
|
Fixed assets |
|
|
27 |
|
|
|
22 |
|
Right-of-use assets |
|
|
61 |
|
|
|
41 |
|
Impact of adoption of ASC 606 revenue recognition |
|
|
34 |
|
|
|
31 |
|
Total non-current deferred tax liabilities |
|
|
1,477 |
|
|
|
902 |
|
Non-current deferred tax assets: |
|
|
|
|
|
|
||
Deferred compensation |
|
|
123 |
|
|
|
100 |
|
Accruals and reserves |
|
|
60 |
|
|
|
34 |
|
Lease liabilities |
|
|
70 |
|
|
|
49 |
|
Net operating loss carryforwards and other carryforwards |
|
|
411 |
|
|
|
9 |
|
Valuation allowance for deferred tax assets |
|
|
(2 |
) |
|
|
(1 |
) |
Total non-current deferred tax assets |
|
|
662 |
|
|
|
191 |
|
Net non-current deferred tax liability |
|
$ |
815 |
|
|
$ |
711 |
|
ASU 2023-09 also requires that the Company disclose the amount of income taxes paid, disaggregated by jurisdiction if the income taxes paid to that jurisdiction are greater than or equal to 5% of the total income taxes paid. Income taxes paid in 2025, 2024 and 2023 were $371 million, $304 million and $219 million, respectively. For 2025, the only jurisdiction with income taxes paid (net of refunds) in excess of the 5% reporting threshold was domestic federal income taxes of $284 million.
At December 31, 2025, for income tax reporting purposes, the Company had net operating loss carryforwards of $214 million for federal, $24 million net operating loss carryforwards for international jurisdictions and $4.8 billion net operating loss carryforwards for state, portions of which expire in the years 2026 and thereafter. The state carryforward amount is derived from the operating results of certain subsidiaries.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(in millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Unrecognized tax benefits balance at January 1 |
|
$ |
4 |
|
|
$ |
5 |
|
|
$ |
3 |
|
Gross increases for tax positions of prior years |
|
|
14 |
|
|
|
3 |
|
|
|
3 |
|
Gross decreases for tax positions of prior years |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Settlements |
|
|
— |
|
|
|
(4 |
) |
|
|
(1 |
) |
Unrecognized tax benefits balance at December 31 |
|
$ |
18 |
|
|
$ |
4 |
|
|
$ |
5 |
|
The total amount of unrecognized tax benefits that would affect the Company’s effective tax rate if recognized was $18 million as of December 31, 2025, $4 million as of December 31, 2024 and $5 million as of December 31, 2023. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months.
The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2025, 2024 and 2023, accrued interest and penalties related to uncertain tax positions were minimal.
The Company is subject to taxation in the United States and various state jurisdictions. The Company is also subject to taxation in various international jurisdictions throughout Europe and Asia. In the United States, federal returns for fiscal years remain open and subject to examination by the Internal Revenue Service. The Company files and remits state income taxes in various states where the Company has determined it is required to file state income taxes. The Company’s filings with those states remain open for audit for the fiscal years . The Company files and remits income taxes in various international jurisdictions where the Company has determined it is required to file income taxes. The Company's filings with those countries remain open for audit for the fiscal years . The Company also operates in Bermuda and the Cayman Islands. The Company is not subject to any income taxes in these countries.
During the third quarter of 2023, the Company was notified by the State of California Franchise Tax Board regarding an audit for the 2020-2021 tax years for Saferide Motor Club, Inc. No additional correspondence has been received, and we are not aware of any amounts to reserve for at this time.
During 2025, the Company was notified by the State of New York regarding an audit for the 2021-2023 tax years for Brown & Brown, Inc. We are currently gathering requested information and are not aware of any amounts to reserve for this time.
In general, it is our practice and intention to reinvest the earnings of our non-U.S. subsidiaries in those operations. The Company has determined it is not practical to determine the unrecognized deferred tax liabilities on the undistributed earnings from the Company’s international subsidiaries as such earnings are considered to be indefinitely reinvested.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 12, 2026 | Showing above |
| 2024 | Feb 13, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Feb 23, 2021 | |
| 2019 | Feb 24, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Feb 26, 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.