DAVITA INC.DVA
DAVITA INC. Income Taxes Disclosure
Income taxes
The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.
Income before income taxes from continuing operations consisted of the following:
| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Domestic | $ | 1,224,860 | $ | 1,374,571 | $ | 1,100,420 | |||||||||||
| International | 121,963 | 155,822 | 76,674 | ||||||||||||||
| $ | 1,346,823 | $ | 1,530,393 | $ | 1,177,094 | ||||||||||||
Income tax expense for continuing operations consisted of the following:
| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 134,287 | $ | 253,504 | $ | 200,070 | |||||||||||
| State | 26,913 | 52,410 | 38,370 | ||||||||||||||
| International | 45,338 | 31,532 | 21,008 | ||||||||||||||
| Total current income tax | 206,538 | 337,446 | 259,448 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | 76,506 | (47,715) | (40,234) | ||||||||||||||
| State | 11,225 | (2,855) | 367 | ||||||||||||||
| International | (1,162) | (7,220) | 535 | ||||||||||||||
| Total deferred income tax | 86,569 | (57,790) | (39,332) | ||||||||||||||
| $ | 293,107 | $ | 279,656 | $ | 220,116 | ||||||||||||
Income taxes are allocated between continuing and discontinued operations as follows:
| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Continuing operations | $ | 293,107 | $ | 279,656 | $ | 220,116 | |||||||||||
| Discontinued operations | — | — | — | ||||||||||||||
| $ | 293,107 | $ | 279,656 | $ | 220,116 | ||||||||||||
The reconciliation between the Company’s effective tax rate from continuing operations and the U.S. federal income tax rate is as follows:
| Year ended December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| U.S. Federal income tax | $ | 282,833 | 21.0 | % | $ | 321,383 | 21.0 | % | $ | 247,190 | 21.0 | % | |||||||||||||||||||||||
| Tax credits | (12,804) | (1.0) | (14,195) | (0.9) | (12,823) | (1.1) | |||||||||||||||||||||||||||||
| Nontaxable/Nondeductible items: | |||||||||||||||||||||||||||||||||||
| Impact of noncontrolling interests | (69,029) | (5.1) | (66,186) | (4.3) | (55,245) | (4.7) | |||||||||||||||||||||||||||||
| Nondeductible executive compensation | 15,703 | 1.2 | 6,738 | 0.4 | 9,112 | 0.8 | |||||||||||||||||||||||||||||
| Other | 954 | 0.1 | (8,210) | (0.6) | 634 | — | |||||||||||||||||||||||||||||
| Valuation allowances | 13,346 | 1.0 | 9,159 | 0.6 | 5,634 | 0.5 | |||||||||||||||||||||||||||||
| Cross-border tax impacts | 99 | — | 1,500 | 0.1 | (102) | — | |||||||||||||||||||||||||||||
State and local income taxes, net of federal benefit(1) | 32,895 | 2.4 | 44,218 | 2.9 | 29,072 | 2.5 | |||||||||||||||||||||||||||||
Foreign tax effects(2) | 19,706 | 1.5 | (4,836) | (0.3) | 9,114 | 0.8 | |||||||||||||||||||||||||||||
| Unrecognized tax benefits | 9,404 | 0.7 | (9,915) | (0.6) | (12,470) | (1.1) | |||||||||||||||||||||||||||||
| Effective tax rate | $ | 293,107 | 21.8 | % | $ | 279,656 | 18.3 | % | $ | 220,116 | 18.7 | % | |||||||||||||||||||||||
(1)The majority (greater than 50%) of state tax expense comprises income taxes in California, Illinois, Pennsylvania, New York and New Jersey for the years presented.
(2)The majority (greater than 50%) of foreign tax expense comprises income taxes in Saudi Arabia, Ecuador, Colombia, Netherlands, Poland and Brazil for the years presented.
Deferred tax assets and liabilities arising from temporary differences for continuing operations were as follows:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Receivables | $ | 25,685 | $ | 37,630 | |||||||
| Accrued liabilities | 81,112 | 74,419 | |||||||||
| Operating lease liabilities | 490,562 | 508,729 | |||||||||
| Net operating loss carryforwards | 163,156 | 161,371 | |||||||||
| Investments in partnerships | — | 4,108 | |||||||||
| Other | 61,972 | 54,600 | |||||||||
| Deferred tax assets | 822,487 | 840,857 | |||||||||
| Valuation allowance | (124,013) | (107,952) | |||||||||
| Net deferred tax assets | 698,474 | 732,905 | |||||||||
| Intangible assets | (770,691) | (757,797) | |||||||||
| Property and equipment | (105,338) | (63,726) | |||||||||
| Operating lease assets | (444,515) | (464,455) | |||||||||
| Investments in partnerships | (5,080) | — | |||||||||
| Other | (59,977) | (66,035) | |||||||||
| Deferred tax liabilities | (1,385,601) | (1,352,013) | |||||||||
| Net deferred tax liabilities | $ | (687,127) | $ | (619,108) | |||||||
| Reported as: | |||||||||||
| Deferred tax liabilities | $ | (756,869) | $ | (665,361) | |||||||
| Deferred tax assets (included in other long-term assets) | 69,742 | 46,253 | |||||||||
| $ | (687,127) | $ | (619,108) | ||||||||
At December 31, 2025, the Company had federal net operating loss carryforwards of approximately $30,848 that expire through 2036, although a substantial amount expire by 2030. The Company also had state net operating loss carryforwards of $511,886, some of which have an indefinite life, while a substantial amount expire by 2044. Additionally, the Company had international net operating loss carryforwards of $430,286, some of which will begin to expire in 2026, though the majority have an indefinite life. The utilization of a portion of these losses may be limited in future years based on the profitability of certain entities and, as such, the related deferred tax assets have been offset with a valuation allowance in the table above. The net increase of $16,061 in the valuation allowance is primarily from losses generated by equity investments that the Company does not anticipate being able to benefit from.
The Company remains indefinitely reinvested in several of the foreign jurisdictions in which it operates as of December 31, 2025. As a result of the passage of the Tax Cuts and Jobs Act (2017 Tax Act), the Company does not expect any significant taxes to be incurred if such earnings were remitted.
Unrecognized tax benefits
A reconciliation of the beginning and ending liability for unrecognized tax benefits that do not meet the more-likely-than-not threshold is as follows:
| Year ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Beginning balance | $ | 41,484 | $ | 47,379 | |||||||
| Additions for tax positions related to current year | 3,029 | 3,866 | |||||||||
| Adjustments for tax positions related to prior years | (12,183) | (1,452) | |||||||||
| Reductions related to lapse of applicable statute | (4,803) | (8,309) | |||||||||
| Reductions related to settlements with taxing authorities | (10,000) | — | |||||||||
| Ending balance | $ | 17,527 | $ | 41,484 | |||||||
Of the 2025 ending balance, $16,720 would impact the Company’s effective tax rate if recognized. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in its income tax expense. As of December 31,
2025 and 2024, the Company had approximately $2,994 and $5,846, respectively, accrued for interest and penalties related to unrecognized tax benefits, net of federal tax benefit.
The Company and its subsidiaries are under examination in various state, local and foreign tax jurisdictions. In certain jurisdictions we have statutes open as of 2014 but the majority are no longer subject to examination for periods before 2022. For federal tax purposes the Company is no longer subject to examinations for periods prior to 2022.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 11, 2026 | Showing above |
| 2024 | Feb 13, 2025 | |
| 2023 | Feb 14, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2021 | Feb 11, 2022 | |
| 2020 | Feb 12, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 22, 2019 | |
| 2017 | Feb 23, 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.