CHIMERA INVESTMENT CORPCIM
CHIMERA INVESTMENT CORP Income Taxes Disclosure
Income Taxes
For the year ended December 31, 2025, the Company qualified to be taxed as a REIT under Code Sections 856 through 860. As a REIT, the Company is not subject to U.S. federal income tax to the extent that it makes qualifying distributions of taxable income to its stockholders. To maintain qualification as a REIT, the Company must distribute at least 90% of its annual REIT taxable income (subject to certain adjustments) to its shareholders and meet certain other requirements such as assets it may hold, income it may generate and its shareholder composition. It is generally the Company’s policy to distribute to its shareholders all of the Company’s taxable income.
The state and local tax jurisdictions in which the Company is subject to tax-filing obligations recognize the Company’s status as a REIT and, therefore, the Company generally does not pay income tax in such jurisdictions. The Company may, however, be subject to certain minimum state and local tax filing fees and its TRSs are subject to U.S. federal, state, and local taxes.
The components of income (loss) before income taxes were attributable to the following regions:
| December 31, 2025 | December 31, 2024 | |||||||
| (dollars in thousands) | ||||||||
| Current Expense (Benefit): | ||||||||
| U.S. Federal | $ | 1,550 | $ | 60 | ||||
| U.S. State and Local | 863 | (11) | ||||||
| Total Current Income Tax (Benefit) Provision | 2,413 | 49 | ||||||
| Deferred Expense (Benefit): | ||||||||
| U.S. Federal | (3,705) | — | ||||||
| U.S. State and Local | 3,560 | — | ||||||
| Total Deferred Income Tax (Benefit) Provision | (145) | — | ||||||
| Total Expense (Benefit): | ||||||||
| U.S. Federal | (2,155) | 60 | ||||||
| U.S. State and Local | 4,423 | (11) | ||||||
| Total Income Tax (Benefit) Provision | $ | 2,268 | $ | 49 | ||||
Income tax expense relates solely to the activities of the Company’s TRSs.
Significant components of the Company’s deferred tax assets and liabilities at December 31, 2025 and December 31, 2024 are as follows:
| December 31, 2025 | December 31, 2024 | |||||||
| (dollars in thousands) | ||||||||
| Deferred Tax Assets | ||||||||
| Reserves | $ | 1,546 | $ | — | ||||
| Accrued Expenses | 336 | — | ||||||
| Property and Equipment | 109 | — | ||||||
| Lease Liability | 293 | — | ||||||
| Nondeductible Interest Expense | 4,649 | 3,604 | ||||||
| Net Operating Losses ("NOLs") | 97,255 | 107,089 | ||||||
| State Taxes | 245 | — | ||||||
| Other | 135 | — | ||||||
| Deferred Tax Assets, Gross | 104,568 | 110,693 | ||||||
| Valuation Allowance | (102,182) | (110,693) | ||||||
| Total Deferred Tax Assets, Net | 2,386 | — | ||||||
| Deferred Tax Liabilities | ||||||||
| Right-Of-Use Asset | (293) | — | ||||||
| Intangibles | (24,808) | — | ||||||
| Total Deferred Tax Liabilities | (25,101) | — | ||||||
| Total Deferred Tax Asset (Liability) | $ | (22,715) | $ | — | ||||
A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. As of December 31, 2025, the Company has recorded a valuation allowance of $102 million related to certain deferred tax assets of its TRSs. The NOLs and interest disallowed under Code Section 163(j) are subject to an indefinite carryforward period to the extent not utilized.
The following table reconciles the federal statutory income tax rate to the Company’s effective income tax rate for the years ended December 31, 2025 and December 31, 2024:
| December 31, 2025 | December 31, 2024 | |||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Amount | Percent | Amount | Percent | |||||||||||||||||
| US Federal Statutory Income Tax Rate | $ | 48,881 | 21.00 | % | $ | 36,984 | 21.00 | % | ||||||||||||
| Domestic Federal Reconciling Items: | ||||||||||||||||||||
| Non-Taxable and Nondeductible Items: | ||||||||||||||||||||
| Non-Taxable REIT Income | (49,497) | (21.27) | % | (40,571) | (23.03) | % | ||||||||||||||
| Unrealized Gain/(Losses) | 2,960 | 1.27 | % | — | — | |||||||||||||||
| Transaction Costs | 2,108 | 0.91 | % | — | — | |||||||||||||||
| Changes in Valuation Allowance | (7,302) | (3.14) | % | 3,435 | 1.95 | % | ||||||||||||||
| Other | 1,164 | 0.50 | % | 201 | 0.11 | % | ||||||||||||||
| State and Local Taxes, Net of Federal Benefit | 3,954 | 1.70 | % | — | — | |||||||||||||||
| Total | $ | 2,268 | 0.97 | % | $ | 49 | 0.03 | % | ||||||||||||
The effective tax rate for the year ended December 31, 2025 was 0.97%, compared with 0.03% for the year ended December 31, 2024. The effective tax rate for the years ended December 31, 2025 differed from the U.S. federal statutory rate of 21.0% primarily due to the deduction of dividend distributions under Code Section 857(a) and the change in valuation allowance. The effective tax rates for the year ended December 31, 2024 differed from the U.S. federal statutory rate of 21.0% primarily due to the deduction of dividend distributions under Code Section 857(a) and the change in valuation allowance related to the remeasurement of NOLs and non-deductible interest expense carryforwards.
The Company and its TRSs file income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. The Company does not expect have any unrecognized tax benefits and does not expect any changes within the next twelve months. The Company’s U.S. federal, state and local tax returns for the tax years ending on or after December 31, 2022, remain open for examination.
Net cash paid (refunds received) for income taxes consisted of the following:
| December 31, 2025 | |||||
| (dollars in thousands) | |||||
| US Federal | $ | 2,287 | |||
| State and Local Jurisdictions: | |||||
| California | 1,000 | ||||
| Other* | 243 | ||||
| Subtotal | 1,243 | ||||
| Total | $ | 3,530 | |||
*The amount of income taxes paid during the year does not meet the five percent disaggregation threshold.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 18, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 17, 2023 | |
| 2021 | Feb 17, 2022 | |
| 2020 | Feb 18, 2021 | |
| 2019 | Feb 24, 2020 | |
| 2018 | Feb 21, 2019 | |
| 2017 | Feb 20, 2018 | |
| 2016 | Feb 21, 2017 | |
| 2015 | Feb 25, 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.