DHI GROUP, INC.DHX
DHI GROUP, INC. Income Taxes Disclosure
INCOME TAXES
Deferred tax assets (liabilities) included in the balance sheet as of December 31, 2025 and 2024 are as follows (in thousands):
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Capital loss carryforward | $ | 23,275 | $ | 22,824 | |||||||
| Allowance for credit losses | 362 | 430 | |||||||||
| Depreciation of fixed assets | 1,097 | 2,981 | |||||||||
| Provision for accrued expenses and other, net | 1,553 | 861 | |||||||||
| Investments | — | 710 | |||||||||
| Stock-based compensation | 851 | 1,294 | |||||||||
| Operating lease liabilities | 2,243 | 2,569 | |||||||||
| Tax credit carryforward | 272 | 279 | |||||||||
| 29,653 | 31,948 | ||||||||||
| Less valuation allowance | (23,523) | (23,774) | |||||||||
| Deferred tax asset, net of valuation allowance | 6,130 | 8,174 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Acquired intangibles | (3,800) | (6,313) | |||||||||
| Capitalized contract costs | (1,379) | (1,657) | |||||||||
| Operating lease assets | (1,067) | (1,573) | |||||||||
| Deferred tax liability | (6,246) | (9,543) | |||||||||
| Deferred tax liability, net | $ | (116) | $ | (1,369) | |||||||
The Company had deferred tax assets of $23.3 million and $22.8 million, respectively, at December 31, 2025 and 2024 related to capital loss carryforwards and $0.3 million at December 31, 2025 and 2024 related to tax credit carryforwards. The capital losses expire in 2027 through 2030, and the tax credits expire in 2026 through 2032. The Company has recorded valuation allowances of $23.5 million and $23.8 million, respectively, at December 31, 2025 and 2024 in order to measure only the portion of the deferred tax assets which are more likely than not to be realized.
Tax expense (benefit) for the years ended December 31, 2025, 2024 and 2023 is as follows (in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||
| Current income tax expense (benefit): | |||||||||||||||||
| Federal | $ | (147) | $ | 3,213 | $ | 2,631 | |||||||||||
| State | 222 | 329 | 801 | ||||||||||||||
| Current income tax expense | 75 | 3,542 | 3,432 | ||||||||||||||
| Deferred income tax expense (benefit): | |||||||||||||||||
| Federal | (895) | (972) | (2,648) | ||||||||||||||
| State | (358) | 127 | (653) | ||||||||||||||
| Deferred income tax expense (benefit) | (1,253) | (845) | (3,301) | ||||||||||||||
| Income tax expense (benefit) | $ | (1,178) | $ | 2,697 | $ | 131 | |||||||||||
The Company paid the following amounts (in thousands) for income taxes during the years ended December 31, 2025, 2024, and 2023:
| 2025 | 2024 | 2023 | |||||||||||||||
| Federal | $ | 135 | $ | 2,850 | $ | 2,390 | |||||||||||
| State | 341 | 680 | 1,060 | ||||||||||||||
| Total | $ | 476 | $ | 3,530 | $ | 3,450 | |||||||||||
Income taxes paid (net of refunds) exceeded 5 percent of total income taxes paid (net of refunds) in the following jurisdictions (in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||
| State: | |||||||||||||||||
| California | $ | 50 | * | * | |||||||||||||
| Georgia | $ | (41) | * | * | |||||||||||||
| Maryland | $ | 60 | * | * | |||||||||||||
| Massachusetts | $ | 50 | * | * | |||||||||||||
| New Jersey | * | $ | 240 | $ | 249 | ||||||||||||
* - The jurisdiction is below the 5 percent threshold for the period presented.
The differences between income taxes expected at the federal statutory rate and income taxes reported were as follows (in thousands):
The differences between income taxes expected at the federal statutory rate and income taxes reported were as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Amount | % | Amount | % | Amount | % | ||||||||||||||||||||||||||||||
| Income tax expense (benefit) at federal statutory rate | $ | (3,084) | 21.0 | % | $ | 620 | 21.0 | % | $ | 760 | 21.0 | % | |||||||||||||||||||||||
| State and local taxes, net of federal effect (1) | (87) | 0.6 | % | 419 | 14.2 | % | 80 | 2.2 | % | ||||||||||||||||||||||||||
| Tax credits: | |||||||||||||||||||||||||||||||||||
| Research and development | (125) | 0.9 | % | (683) | (23.1) | % | (1,651) | (45.6) | % | ||||||||||||||||||||||||||
| Paid family and medical leave | (15) | 0.1 | % | (35) | (1.2) | % | (37) | (1.0) | % | ||||||||||||||||||||||||||
| Changes in valuation allowance | (179) | 1.2 | % | (78) | (2.6) | % | 18,158 | 501.4 | % | ||||||||||||||||||||||||||
| Nontaxable or nondeductible items: | |||||||||||||||||||||||||||||||||||
| Loss on sale of business or investment | — | — | % | — | — | % | (22,881) | (631.8) | % | ||||||||||||||||||||||||||
| Capital loss carryforward | 179 | (1.2) | % | 113 | 3.8 | % | 4,680 | 129.2 | % | ||||||||||||||||||||||||||
| Stock-based compensation | 467 | (3.2) | % | 1,982 | 67.2 | % | (399) | (11.0) | % | ||||||||||||||||||||||||||
| Executive compensation | 219 | (1.5) | % | 308 | 10.5 | % | 1,214 | 33.5 | % | ||||||||||||||||||||||||||
| Income from equity method investment | (19) | 0.1 | % | (47) | (1.6) | % | (105) | (2.9) | % | ||||||||||||||||||||||||||
| Impairment | 1,813 | (12.3) | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
| Meals and entertainment | 38 | (0.3) | % | 54 | 1.8 | % | 58 | 1.6 | % | ||||||||||||||||||||||||||
| Other | 106 | (0.7) | % | 16 | 0.5 | % | (9) | (0.3) | % | ||||||||||||||||||||||||||
| Changes in unrecognized tax benefits | (491) | 3.3 | % | 28 | 0.9 | % | 263 | 7.3 | % | ||||||||||||||||||||||||||
| Income tax expense (benefit) at effective tax rate | $ | (1,178) | 8.0 | % | $ | 2,697 | 91.4 | % | $ | 131 | 3.6 | % | |||||||||||||||||||||||
(1) The state and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category include California, Maryland, New Jersey, and Pennsylvania during the year ended December 31, 2025; California, New Jersey, and Illinois during the year ended December 31, 2024; and California and New Jersey during the year ended December 31, 2023.
An uncertain tax position represents the Company’s expected treatment of a tax position taken in a filed tax return, or planned to be taken in a tax return not yet filed, that has not been reflected in measuring income tax expense for financial reporting purposes. At December 31, 2025 and 2024, the Company's accrual for unrecognized tax benefits consists of the following:
| 2025 | 2024 | ||||||||||
| Unrecognized tax benefits | $ | 526 | $ | 980 | |||||||
| Estimated accrued interest and penalties | 43 | 80 | |||||||||
| Accrual for unrecognized tax benefits, as recorded | $ | 569 | $ | 1,060 | |||||||
During the years ended December 31, 2025, 2024, and 2023, interest expense (income) and penalties recorded in the consolidated statements of operations were $(0.04) million, $0.03 million, and $0.02 million, respectively. Following is a reconciliation of the amounts of unrecognized tax benefits, net of tax and excluding interest and penalties, for the years ended December 31, 2025, 2024, and 2023 (in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||
| Unrecognized tax benefits—beginning of period | $ | 980 | $ | 979 | $ | 734 | |||||||||||
| Increases in tax positions related to current year | 33 | 204 | 282 | ||||||||||||||
| Increases (decreases) in tax positions related to prior year | (2) | (33) | 131 | ||||||||||||||
| Conclusion of examinations by tax authorities | (321) | — | — | ||||||||||||||
| Lapse of statute of limitations | (164) | (170) | (168) | ||||||||||||||
| Unrecognized tax benefits—end of period | $ | 526 | $ | 980 | $ | 979 | |||||||||||
The balance of gross unrecognized benefits was $0.5 million, $1.0 million, and $1.0 million at December 31, 2025, 2024, and 2023, respectively. If the unrecognized tax benefits at December 31, 2025, 2024, and 2023 were recognized in full, tax benefits of $0.5 million, $1.0 million, and $1.0 million, respectively, would affect the effective tax rate.
The Company has filed income tax returns in the U.S. and various states. The Company is generally no longer subject to examinations by U.S. federal tax authorities for tax years prior to 2022, or by U.S. state authorities for tax years prior to 2021.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 12, 2026 | Showing above |
| 2024 | Feb 12, 2025 | |
| 2019 | Feb 6, 2020 | |
| 2018 | Feb 8, 2019 | |
| 2017 | Feb 12, 2018 | |
| 2016 | Feb 9, 2017 | |
| 2015 | Feb 10, 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.