ZoomInfo Technologies Inc.GTM
ZoomInfo Technologies Inc. Income Taxes Disclosure
Note 16 - Income Taxes
The components of income before provision for income taxes were as follows:
| Year Ended December 31, | |||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Domestic | $ | 175.4 | $ | 16.3 | $ | 378.0 | |||||||||||
| Foreign | 18.9 | 15.0 | 10.8 | ||||||||||||||
| Income before income taxes | $ | 194.3 | $ | 31.3 | $ | 388.8 | |||||||||||
The Provision for income taxes consisted of the following:
| Year Ended December 31, | |||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 0.3 | $ | 0.4 | $ | — | |||||||||||
| State | 0.3 | 0.6 | (0.3) | ||||||||||||||
| Foreign | 7.0 | 7.1 | 5.1 | ||||||||||||||
| Total current tax expense | $ | 7.6 | $ | 8.1 | $ | 4.8 | |||||||||||
| Deferred: | |||||||||||||||||
| Federal | $ | 41.5 | $ | 16.3 | $ | 58.3 | |||||||||||
| State | 22.0 | (21.0) | 218.6 | ||||||||||||||
| Foreign | (1.0) | (1.2) | (0.2) | ||||||||||||||
| Total deferred tax expense (benefit) | $ | 62.5 | $ | (5.9) | $ | 276.7 | |||||||||||
| Provision for income taxes | $ | 70.1 | $ | 2.2 | $ | 281.5 | |||||||||||
The following is a reconciliation between the U.S. federal statutory tax rate and our effective tax rate for the current year, expressed in millions and as a percentage of income before income taxes:
Year Ended December 31, 2025 | |||||||||||
Amount | Percent | ||||||||||
| Tax expense computed at U.S. federal statutory rate | $ | 40.8 | 21.0 | % | |||||||
State and local income taxes, net of federal income tax effect⁽¹⁾ | 16.8 | 8.6 | % | ||||||||
| Foreign tax effects: | |||||||||||
| Israel: | |||||||||||
Stock-based compensation⁽²⁾ | 2.5 | 1.3 | % | ||||||||
| Other | (1.0) | (0.5) | % | ||||||||
| Other foreign jurisdictions | 0.4 | 0.2 | % | ||||||||
| Effect of cross-border tax laws | (0.3) | (0.2) | % | ||||||||
| Tax credits: | |||||||||||
| Research and development tax credits | (4.1) | (2.1) | % | ||||||||
| Nontaxable or nondeductible items: | |||||||||||
Stock-based compensation⁽²⁾ | 10.3 | 5.3 | % | ||||||||
| Other nondeductible expenses | 2.3 | 1.2 | % | ||||||||
| Changes in unrecognized tax benefits | 1.7 | 0.9 | % | ||||||||
| Other Adjustments | 0.7 | 0.4 | % | ||||||||
| Effective income tax rate | $ | 70.1 | 36.1 | % | |||||||
__________________
(1)For the year ended December 31, 2025, state taxes in New York, California, and Arizona made up the majority of the tax effect in this category.
(2)Stock-based compensation includes nondeductible equity compensation and tax effects of shortfalls and windfalls.
The following is a reconciliation between the U.S. federal statutory tax rate and our effective tax rate, expressed as a percentage of income before taxes:
Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Tax expense computed at U.S. federal statutory rate | 21.0 | % | 21.0 | % | |||||||
| Effect of: | |||||||||||
| State taxes, net of federal tax benefit | 26.5 | % | 6.9 | % | |||||||
| Effects of changes in state tax law and apportionment | (96.1) | % | 35.6 | % | |||||||
| Effects of non-U.S. operations | 7.6 | % | 1.2 | % | |||||||
| Stock-based compensation | 53.1 | % | 5.5 | % | |||||||
| Non-deductible executive compensation | 2.9 | % | 0.5 | % | |||||||
| Tax credits | (35.1) | % | (1.4) | % | |||||||
| Changes in valuation allowance | 16.6 | % | 1.5 | % | |||||||
| Unrecognized tax benefits | 6.4 | % | 1.9 | % | |||||||
| Non-deductible TRA Remeasurement | 0.6 | % | (0.2) | % | |||||||
| Other non-deductible expenses | 3.7 | % | 0.1 | % | |||||||
| Other | — | % | (0.2) | % | |||||||
| Effective income tax rate | 7.2 | % | 72.4 | % | |||||||
The Company made income tax payments (net of refunds received) during the year ended December 31, 2025, as follows:
| (in millions) | Year Ended December 31, 2025 | ||||
| Federal | $ | (0.1) | |||
| State | 0.1 | ||||
| Foreign: | |||||
| Israel | 7.1 | ||||
| India | 0.9 | ||||
| Other foreign jurisdictions | 0.2 | ||||
| Foreign Subtotal | $ | 8.2 | |||
| Total cash paid for income taxes (net of refunds received) | $ | 8.2 | |||
Total cash paid for income taxes were $13.8 million and $12.2 million during the years ended December 31, 2024 and 2023, respectively.
Significant components of the Company’s deferred tax assets and liabilities were as follows:
| Year Ended December 31, | |||||||||||
| (in millions) | 2025 | 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Capitalized research expenditures | $ | 49.1 | $ | 92.5 | |||||||
| Operating lease liabilities | 64.8 | 35.9 | |||||||||
| Stock-based compensation | 14.2 | 14.9 | |||||||||
| Goodwill | 2,911.4 | 3,145.9 | |||||||||
| Interest expense carryforwards | 16.3 | 35.0 | |||||||||
| Net operating loss carryforwards | 657.1 | 443.7 | |||||||||
| Credit carryforwards | 28.5 | 23.6 | |||||||||
| Other | 11.9 | 13.6 | |||||||||
| Total deferred tax assets | $ | 3,753.3 | $ | 3,805.1 | |||||||
| Valuation allowance | (9.9) | (10.9) | |||||||||
| Deferred tax assets, net of valuation allowance | $ | 3,743.4 | $ | 3,794.2 | |||||||
| Deferred tax liabilities: | |||||||||||
| Deferred commissions | $ | 21.2 | $ | 17.0 | |||||||
| Operating lease right-of-use assets | 32.0 | 20.4 | |||||||||
| Acquired intangible assets | 22.0 | 33.1 | |||||||||
| Cash flow hedge - Accumulated Other Comprehensive Income | 0.3 | 5.1 | |||||||||
| Deferred tax on foreign earnings | 3.8 | 2.4 | |||||||||
| Other | 5.6 | 1.0 | |||||||||
| Total deferred tax liabilities | $ | 84.9 | $ | 79.0 | |||||||
| Net deferred tax assets | $ | 3,658.5 | $ | 3,715.2 | |||||||
As of December 31, 2025, the Company had gross U.S. federal net operating losses of $2,563.5 million, excess business interest expense carryforwards under IRC Sec. 163(j) of $67.7 million, and tax credit carryforwards of $32.0 million. As of December 31, 2024, the Company had gross U.S. federal net operating losses of $1,677.4 million, excess business interest expense carryforwards under IRC Sec. 163(j) of $148.6 million, and tax credit carryforwards of $27.9 million. The Company’s federal net operating losses and excess business interest expense carryforwards can be carried forward indefinitely, with the exception of $6.4 million of net operating losses generated before 2018 which expire between 2034 and 2037. Our federal tax credits will begin to expire in 2037. As of December 31, 2025, the Company had $2,145.6 million of gross state net operating losses, of which $77.6 million expires before 2035, $1,864.1 million expires between 2035 and 2055, and the remaining $203.9 million remains available to be carried forward indefinitely. The Company also had $3.7 million of state tax credits, which begin to expire in 2030.
After consideration of all positive and negative evidence, including scheduled reversals of deferred tax assets and liabilities, projected future taxable income, tax planning strategies, and results of recent operations, management determined that it is more likely than not that a portion of our deferred tax assets will not be realized. As a result, we recorded a valuation allowance of $9.9 million and $10.9 million as of December 31, 2025 and 2024, respectively. The decrease in the valuation allowance as of December 31, 2025 as compared to December 31, 2024 is primarily due to release of valuation allowances on certain state and local net operating losses that are more likely than not to be realized due to state-specific carryforward periods.
We regularly evaluate the positions taken, or expected to be taken on tax returns, to determine if they constitute uncertain tax positions. Unrecognized tax benefits are reflected in our Consolidated Balance Sheets as a reduction of Deferred tax assets. If recognized, all unrecognized tax benefits at December 31, 2025 would affect the effective tax rate.
A reconciliation of the Company’s beginning and ending amount of unrecognized tax benefits is as follows:
| Year Ended December 31, | |||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Beginning balance | $ | 14.6 | $ | 12.6 | $ | 5.1 | |||||||||||
| Gross increases in unrecognized tax benefits – prior year tax positions | 0.5 | 1.0 | 11.4 | ||||||||||||||
| Gross decreases in unrecognized tax benefits – prior year tax positions | — | (0.6) | (5.3) | ||||||||||||||
| Gross increases in unrecognized tax benefits – current year tax positions | 1.2 | 1.6 | 1.4 | ||||||||||||||
| Ending balance | $ | 16.3 | $ | 14.6 | $ | 12.6 | |||||||||||
Our policy is to record interest and penalties related to income taxes as a component of income tax expense. No interest or penalties have been accrued with respect to uncertain tax positions through December 31, 2025, as the Company has no tax due because of significant net operating loss carryforwards.
The OECD has issued administrative guidance providing transition and safe harbor rules around the implementation of the Pillar Two Model Rules, which call for a minimum tax of 15% on large corporations. A number of countries, including Israel and the United Kingdom, are currently proposing or have enacted legislation to implement core elements of the Pillar Two proposal. We are closely monitoring developments and evaluating their potential impact. Enactments effective in 2025 did not have a significant impact on our 2025 financial results, nor do we anticipate a significant impact on our financial results during the transition period due to safe harbor relief.
Our foreign earnings are available for repatriation to the United States, and we accrue a liability for the tax we expect to apply upon repatriation. As of December 31, 2025 and 2024, we accrued $3.8 million and $2.4 million, respectively, for foreign withholding tax, which were included in Deferred tax liabilities in our Consolidated Balance Sheets.
The Company files income tax returns in the United States and various foreign jurisdictions where the Company has operations. The Company remains open to examination in the United States from 2014, in Israel from 2021, and in the United Kingdom from 2024. We consider our major state jurisdictions to be California, New York, and Massachusetts, and remain subject to examination in these states from 2015, 2017, and 2021, respectively. One of the Company’s subsidiaries is undergoing a federal tax audit in the United States with respect to its 2021 tax year.
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.