Dream Finders Homes, Inc.DFH

Dream Finders Homes, Inc. Income Taxes Disclosure

10-KFiled Feb 24, 20263 min read
Income Taxes
The Company is a corporation subject to U.S. federal income taxes, in addition to state and local income taxes.
Income tax expense for the years ended December 31, 2025, 2024 and 2023, consisted of the following (in thousands):
Year Ended December 31,
202520242023
Current: 
Federal$15,975 $32,870 $101,093 
State15,228 18,236 17,734 
Total current31,203 51,106 118,827 
Deferred:
Federal34,914 47,283 (19,471)
State581 (1,117)(2,873)
Total deferred35,495 46,166 (22,344)
Total income tax expense$66,698 $97,272 $96,483 
The following table reconciles the statutory federal income tax rate to the effective income tax rate for the years ended December 31, 2025, 2024 and 2023 (dollars presented in thousands):
Year Ended December 31,
 202520242023
AmountPercentAmountPercentAmountPercent
Income taxes at federal statutory rate
$59,661 21.0 %$91,952 21.0 %$84,932 21.0 %
State income taxes, net of federal income tax effect(1)
12,488 4.4 13,524 3.1 11,740 2.9 
Tax credits:
45L energy-efficiency(11,220)(3.9)(11,830)(2.7)(3,158)(0.8)
Other
(1,106)(0.4)(3,499)(0.8)(17)— 
Nontaxable or nondeductible items:
Executive compensation
3,383 1.2 4,985 1.1 3,996 1.0 
45L energy-efficiency tax credits
2,356 0.8 2,484 0.6 663 0.2 
Other
1,136 0.4 (344)(0.1)(1,673)(0.4)
Total income tax expense and effective tax rate
$66,698 23.5 %$97,272 22.2 %$96,483 23.9 %
(1)State taxes in Florida and Texas made up the majority (greater than 50.0%) of the tax effect in this category.
The One Big Beautiful Bill Act (the “OBBBA”) was enacted on July 4, 2025. Based on the Company’s current structure and operations, the OBBBA does not have a material impact as of December 31, 2025. However, the OBBBA will eliminate Section 45L tax credits after June 30, 2026, at which time the income tax expense and effective rate will not include the benefit from these tax credits. The Company will continue to monitor the impact of the OBBBA on its consolidated financial statements.
The significant components of deferred income tax assets and liabilities presented net within other assets on the Consolidated Balance Sheets as of December 31, 2025 and 2024, consisted of the following (in thousands):
As of
December 31,
20252024
Deferred tax assets:
Contingent consideration$16,456 $18,793 
Inventories
13,074 4,228 
Incentive compensation plans
8,805 10,335 
Lease liabilities6,508 4,311 
Warranty reserves
2,969 3,401 
Other1,130 4,050 
Total deferred tax asset48,942 45,118 
Deferred tax liabilities:
Intangibles
(11,604)(5,709)
Fixed assets
(9,132)(4,318)
Right-of-use assets(6,246)(3,945)
Other(3,683)(1,835)
Total deferred tax liabilities(30,665)(15,807)
Net deferred tax asset$18,277 $29,311 
Management believes that the Company will have sufficient future taxable income to make it more likely than not that the net deferred tax assets will be realized.
As of December 31, 2025 and 2024, the Company had no valuation allowance recorded against deferred tax assets, no uncertain tax positions that qualify for inclusion in the consolidated financial statements, and has not recognized or accrued for any interest or penalties.
Cash paid for income taxes, net of refunds, for the years ended December 31, 2025, 2024 and 2023 consisted of the following (in thousands):
Year Ended December 31,
202520242023
Federal$98,242 $104,785 $62,972 
State(1)
22,495 22,762 18,348 
Cash paid for income taxes, net of refunds(2)
$120,737 $127,547 $81,320 
(1)State taxes paid in Florida (net of refunds received) were $10.4 million, $11.7 million and $7.5 million for the years ended December 31, 2025, 2024 and 2023, respectively, and were equal to or greater than 5.0% of total income taxes paid (net of refunds received).
(2)Includes payments for purchased tax credits of $17.6 million and $36.6 million related to 2025 and 2024 income tax expense, respectively, during the year ended December 31, 2025. Includes payments for purchased tax credits of $12.0 million related to 2024 income tax expense during the year ended December 31, 2024.

Historical Timeline

Fiscal YearFiled
2025Feb 24, 2026Showing above
2023Feb 29, 2024
2021Mar 16, 2022

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.

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