Goosehead Insurance, Inc.GSHD
Goosehead Insurance, Inc. Income Taxes Disclosure
Income taxes
As a result of the Reorganization Transactions and the Offering, GSHD became the sole managing member of GF, which is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, GF is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by GF is passed through to and included in the taxable income or loss of its members, including GSHD, on a pro rata basis. GSHD is subject to U.S. federal income taxes, in addition to state and local income taxes, with respect to GSHD's allocable share of income of GF.
Income tax expense
The components of income tax expense are as follows (in thousands):
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Current income taxes | ||||||||||||||||||||
| Federal | $ | (9) | $ | — | $ | — | ||||||||||||||
| State and local | 518 | 1,332 | 755 | |||||||||||||||||
| Total current income taxes | 509 | 1,332 | 755 | |||||||||||||||||
| Deferred income taxes | ||||||||||||||||||||
| Federal | 6,531 | 5,973 | 3,169 | |||||||||||||||||
| State and local | (643) | (9,718) | (1,232) | |||||||||||||||||
| Total deferred income taxes | 5,888 | (3,745) | 1,937 | |||||||||||||||||
| Income tax | $ | 6,397 | $ | (2,413) | $ | 2,692 | ||||||||||||||
A reconciliation of income tax expense computed at the U.S. federal statutory income tax rate to the income tax expense recognized is as follows (in thousands):
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
$ | % | $ | % | $ | % | |||||||||||||||||||||||||||||||||
| Income before taxes | $ | 50,848 | $ | 46,700 | $ | 26,388 | ||||||||||||||||||||||||||||||||
| Income taxes at U.S. federal statutory rate | 10,678 | 21.0 | % | 9,807 | 21.0 | % | 5,541 | 21.0 | % | |||||||||||||||||||||||||||||
Tax effect of income not subject to entity level federal income tax | (3,547) | (7.0) | (3,929) | (8.5) | (2,034) | (7.8) | ||||||||||||||||||||||||||||||||
| Nontaxable or nondeductible items: | ||||||||||||||||||||||||||||||||||||||
| Excess tax (benefit) or deficiency on equity-based compensation | (2,146) | (4.2) | (3,060) | (6.6) | (1,760) | (6.7) | ||||||||||||||||||||||||||||||||
| Nondeductible equity-based compensation | 721 | 1.4 | 731 | 1.6 | 127 | 0.5 | ||||||||||||||||||||||||||||||||
| Nondeductible excess compensation | 691 | 1.4 | 313 | 0.7 | 1,028 | 3.9 | ||||||||||||||||||||||||||||||||
Meals and entertainment | 229 | 0.5 | 178 | 0.4 | 152 | 0.6 | ||||||||||||||||||||||||||||||||
State income tax expense (benefit), net of federal benefit(1) | (100) | (0.2) | (6,530) | (14.0) | (329) | (1.2) | ||||||||||||||||||||||||||||||||
| Other | (129) | (0.3) | 77 | 0.2 | (33) | (0.1) | ||||||||||||||||||||||||||||||||
| Income tax expense (benefit) | $ | 6,397 | 12.6 | % | $ | (2,413) | (5.2) | % | $ | 2,692 | 10.2 | % | ||||||||||||||||||||||||||
(1) State taxes in Texas made up the majority (greater than 50%) of the tax effect in this category for 2025..
Deferred tax assets and liabilities
The components of deferred tax assets are as follows (in thousands):
| December 31, 2025 | December 31, 2024 | ||||||||||
| Net operating loss carryforwards | $ | 22,705 | $ | 18,503 | |||||||
| Investment in flow-through entity | 193,666 | 174,975 | |||||||||
| Net deferred tax asset | $ | 216,371 | $ | 193,478 | |||||||
GSHD has deferred tax assets resulting from tax basis adjustments to the assets of GF arising from redemptions of LLC Units and corresponding exchanges of Class B common stock for shares of Class A common stock. These tax basis adjustments have reduced the amount of tax we are required to pay, and they are expected to reduce the amount of tax that GSHD would otherwise be required to pay in the future. See tax receivable agreement subsection below for additional details.
GSHD also has income tax net operating loss carryforwards for federal and state purposes of $103.0 million and $19.4 million (post apportionment pre-tax), respectively. The federal net operating loss carryforwards are carried
forward indefinitely and are limited to 80% of taxable income in a given year. The state net operating loss carryforwards begin to expire in 2033.
Uncertain tax positions
GSHD has determined there are no material uncertain tax positions as of December 31, 2025.
Cash paid for income taxes
The components of cash paid for income taxes are as follows (in thousands):
| Year Ended December 31, 2025 | |||||
| Federal | $ | 10 | |||
State and local | |||||
Texas | 900 | ||||
Other state and local | 19 | ||||
Total state and local | 919 | ||||
| Total | $ | 929 | |||
Tax receivable agreement
GF has made an election under Section 754 of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the “Code”) effective for each taxable year in which a redemption or exchange of LLC Units and corresponding Class B common stock for shares of Class A common stock occurs. Prior redemptions and exchanges have resulted, and future taxable redemptions or exchanges are expected to result in tax basis adjustments to the assets of GF that will be allocated to the Company and thus produce favorable tax attributes. These tax attributes would not be available to us in the absence of those transactions. These tax basis adjustments have reduced the amount of tax we are required to pay, and are expected to reduce the amount of tax that GSHD would otherwise be required to pay in the future.
GSHD entered into a tax receivable agreement with the Pre-IPO LLC Members on May 1, 2018 that provides for the payment by GSHD to the Pre-IPO LLC Members of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that GSHD actually realizes as a result of (i) any increase in tax basis in GSHD's assets and (ii) tax benefits related to imputed interest deemed arising as a result of payments made under the tax receivable agreement.
During the years ended December 31, 2025, 2024 and 2023, an aggregate of 0.7 million, 0.3 million and 1.5 million LLC Units, respectively, were redeemed by the Pre-IPO LLC Members for newly-issued shares of Class A common stock. In connection with these redemptions, we received 0.7 million, 0.3 million and 1.5 million LLC Units, which resulted in an increase in the tax basis of our investment in GF subject to the provisions of the TRA. We recognized a liability for the tax receivable agreement payments due to the Pre-IPO LLC Members, representing 85% of the aggregate tax benefits we expect to realize from the tax basis increases related to the redemptions of LLC Units, after concluding it was probable that such tax receivable agreement payments would be paid based on our estimates of future taxable income. As of December 31, 2025 and 2024, the total amount of payments due to the Pre-IPO LLC Members under the tax receivable agreement was $171.9 million and $160.1 million, respectively, of which $6.2 million and $0.0 million, respectively, was current and included in Liabilities under tax receivable agreement within Current liabilities on the Consolidated balance sheets.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2019 | Mar 16, 2020 | |
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.