Green Brick Partners, Inc.GRBK
Green Brick Partners, Inc. Income Taxes Disclosure
INCOME TAXES
Income Tax Expense
The components of current and deferred income tax expense are as follows (in thousands):
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current income tax expense: | |||||||||||||||||
| Federal | $ | 82,763 | $ | 85,062 | $ | 73,299 | |||||||||||
| State | 7,583 | 8,342 | 10,197 | ||||||||||||||
| Total current income tax expense | 90,346 | 93,404 | 83,496 | ||||||||||||||
| Deferred income tax expense (benefit): | |||||||||||||||||
| Federal | 3,997 | 1,192 | 993 | ||||||||||||||
| State | 324 | 129 | 149 | ||||||||||||||
| Total deferred income tax expense (benefit) | 4,321 | 1,321 | 1,142 | ||||||||||||||
| Total income tax expense | $ | 94,667 | $ | 94,725 | $ | 84,638 | |||||||||||
Effective Income Tax Rate Reconciliation
The table below provides the updated requirements of ASU 2023-09 for 2024. See Note 1. Summary of Significant Accounting Policies—Recent accounting pronouncements for additional details on the adoption of ASU 2023-09.
The effective income tax rate for the year ended December 31, 2025 differs from the statutory federal income tax rate as follows (amounts in thousands, except percentages):
Year Ended December 31, 2025 | ||||||||||||||
United States statutory tax rate | $ | 92,008 | 21.0% | |||||||||||
State and local income taxes, net of federal income tax effect (1) | 5,939 | — | ||||||||||||
Foreign tax effects | — | — | ||||||||||||
Effect of cross-border tax laws | — | — | ||||||||||||
Changes in valuation allowances | — | — | ||||||||||||
Tax credits | ||||||||||||||
| Other | (1,510) | (0.6) | ||||||||||||
Nontaxable or nondeductible items | ||||||||||||||
Less: Non-controlled earnings | (6,360) | (1.5) | ||||||||||||
| Other | 2,456 | 0.6 | ||||||||||||
Changes in unrecognized tax benefits | 137 | — | ||||||||||||
Other adjustments | ||||||||||||||
| Other | 1,997 | 0.5 | ||||||||||||
Effective tax rate | $ | 94,667 | 21.6% | |||||||||||
(1)State taxes in Texas comprised the majority (greater than 50%) of the tax effect in this category.
As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows (in thousands):
| Years Ended December 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Tax on pre-tax book income (before reduction of noncontrolling interests) | $ | 107,494 | $ | 82,176 | ||||||||||
| Tax effect of non-controlled earnings | (7,470) | (4,630) | ||||||||||||
| State income tax expense, net of federal benefit | 8,286 | 8,220 | ||||||||||||
| Tax credits | (10,920) | (3,033) | ||||||||||||
| Other | (2,665) | 1,905 | ||||||||||||
| Total income tax expense | $ | 94,725 | $ | 84,638 | ||||||||||
| Effective income tax rate | 18.5 | % | 21.6 | % | ||||||||||
The change in the effective tax rate for year ended December 31, 2025 relates primarily to a decreased rate benefit in the Energy Efficient Homes Tax credit as compared to pre-tax book income.
On July 4, 2025, President Donald Trump signed the One Big Beautiful Bill Act (“OBBBA”) into law, which is considered the enactment date under U.S. GAAP. Key corporate tax provisions include the restoration of 100% bonus depreciation, immediate expensing for domestic research and experimental expenditures, changes to Section 163(j) interest limitations, amendments to energy credits, and expanded 162(m) aggregation requirements. In accordance with ASC 740, the effects of the new tax law were recognized in the period of enactment.
Deferred Income Taxes
The primary differences between the financial statement and tax bases of assets and liabilities are as follows (in thousands):
| December 31, 2025 | December 31, 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Basis in partnerships | $ | 1,462 | $ | 2,700 | |||||||
| Accrued expenses | 3,574 | 6,989 | |||||||||
| Inventory | 2,273 | 2,620 | |||||||||
| Change in fair value of contingent consideration | 743 | 872 | |||||||||
| Lease liabilities - operating leases | 1,719 | 1,676 | |||||||||
| Stock-based compensation | 1,575 | 603 | |||||||||
| Other | 2,015 | 381 | |||||||||
| Deferred tax assets, gross | 13,361 | 15,841 | |||||||||
| Valuation allowance | — | — | |||||||||
| Deferred tax assets, net | $ | 13,361 | $ | 15,841 | |||||||
| Deferred tax liabilities: | |||||||||||
| Right-of-use assets - operating leases | $ | (1,496) | $ | (1,479) | |||||||
| Prepaid insurance | (334) | (106) | |||||||||
| Other | (288) | (272) | |||||||||
| Deferred tax liabilities | $ | (2,118) | $ | (1,857) | |||||||
| Total deferred income tax assets, net | $ | 11,243 | $ | 13,984 | |||||||
Cash Paid For Income Taxes
In accordance with ASU 2023-09, the following is a supplemental schedule of cash paid for income taxes (in thousands):
| Year Ended December 31, 2025 | ||||||||
Cash paid during the period for income taxes, net of refunds: | ||||||||
U.S. Federal (1) | $ | 41,982 | ||||||
U.S. State and Local: | ||||||||
Georgia | 2,365 | |||||||
Texas | 4,521 | |||||||
Other | 1,243 | |||||||
U.S. State and Local subtotal | 8,129 | |||||||
Total cash paid for income taxes, net of refunds | $ | 50,111 | ||||||
(1)Includes amounts paid for transferable tax credits of $16.8 million during the year ended December 31, 2025.
Uncertain Tax Positions
The Company establishes accruals for uncertain tax positions that reflect management’s best estimate of deductions and credits that may not be sustained on a more-likely-than-not basis. In accordance with ASC 740, Income Taxes, the Company recognizes the effect of income tax positions only if those positions have a more-likely-than-not chance of being sustained by the Company. Recognized income tax positions are measured at the largest amount that is considered greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. A reconciliation of the uncertain tax position is as follows (in thousands):
| Year Ended December 31, 2025 | |||||
| Uncertain tax positions at beginning of year | $ | — | |||
Increase for new tax positions taken | 1,579 | ||||
| Uncertain tax positions at end of year | $ | 1,579 | |||
The Company incurred $0.1 million in interest and penalties related to uncertain tax positions for the year ended December 31, 2025. No interest and penalties related to uncertain tax positions were incurred for the years ended December 31, 2024, and 2023.
Statutes of Limitations
The U.S. federal statute of limitations remains open for our 2022 and subsequent tax years.
The Company and its subsidiaries file returns in Texas, Georgia, and Florida. The company and its subsidiaries previously also filed returns in Colorado.
The Texas statute of limitations remains open for the 2021 and subsequent tax years. Any adjustments relating to returns filed by the subsidiary partnerships would be borne by the subsidiary partnership entities.
The Georgia, Florida, and Colorado statute of limitations remains open for 2022 and subsequent tax years. Any adjustments relating to returns filed by the subsidiary partnerships would be borne by the partner.
The Company is not presently under examination by the Internal Revenue Service or state tax authority.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2018 | Mar 8, 2019 | |
| 2017 | Mar 12, 2018 | |
| 2016 | Mar 13, 2017 | |
| 2015 | Mar 30, 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.