DLH Holdings Corp.DLHC

DLH Holdings Corp. Income Taxes Disclosure

10-KFiled Dec 10, 20252 min read
Provision for Income Taxes
The significant components of provision for income taxes from continuing operations are summarized as follows for the years ending September 30, 2025 and 2024 (in thousands):
20252024
Current expense $2,095 $3,525 
Deferred benefit
(1,702)(3,175)
Provision for income taxes$393 $350 

The following table presents the significant differences between our income taxes at the federal statutory rate and the Company's effective tax rate for continuing operations for the years ending September 30, 2025 and 2024 (in thousands):

20252024
Income taxes at the federal statutory rate$387 $1,654 
State taxes, net(25)(200)
Permanent differences
152 (530)
Prior year tax provision adjustments
(260)(574)
State tax rate changes
139 — 
Provision for income taxes$393 $350 

An analysis of the Company's deferred tax assets and liabilities at September 30, 2025 and 2024 is as follows (in thousands):
20252024
Deferred tax assets:  
Net operating loss carry forwards, net$2,958 $1,903 
Stock-based compensation
894 732 
Accrued compensation2,184 2,204 
Capitalized transaction costs587 532 
Lease liability
3,830 1,682 
Interest limitation9,185 6,313 
Total deferred tax assets19,638 13,366 
   Less: valuation allowance(2,952)(1,894)
Total deferred tax assets, net$16,686 $11,472 
Deferred tax liabilities:
Depreciation on fixed assets$(302)$(402)
Amortization on identified intangibles and goodwill(5,321)(4,364)
Accrued expenses(723)(461)
Right-of-use asset
(2,393)— 
Total deferred tax liabilities(8,739)(5,227)
Net deferred tax assets
$7,947 $6,245 
As of September 30, 2025 the Company had gross state net operating loss carryforwards of approximately $51.2 million. The state net operating losses will not expire and can be carried forward indefinitely. The state net operating loss carryforwards have been reviewed and a net valuation allowance of $3.0 million has been recorded against those that are not likely to be utilized. The increase in the valuation allowance is attributable to additional state net operating losses generated during the year ended September 30, 2025.
The One Big Beautiful Bill Act that amended Section 163(j) of the Internal Revenue Code introduced a change to the calculation of Adjusted Taxable Income ("ATI") that generally allows for a larger deduction of business interest expense. The primary change that makes the deduction more favorable and is likely to increase the company's deductible interest expense is the permanent reinstatement of EBITDA-based ATI.

Historical Timeline

Fiscal YearFiled
2025Dec 10, 2025Showing above
2024Dec 4, 2024
2023Dec 6, 2023
2022Dec 5, 2022
2021Dec 6, 2021
2020Dec 7, 2020
2019Dec 11, 2019
2018Dec 12, 2018
2017Dec 12, 2017
2016Dec 9, 2016
2015Dec 16, 2015

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.

Other Available Disclosures

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