Hilton Grand Vacations Inc.HGV
Hilton Grand Vacations Inc. Income Taxes Disclosure
INCOME TAXES
Our tax provision includes federal, state and foreign income taxes payable. The domestic and foreign components of our income before taxes and noncontrolling interests were as follows:
Year Ended December 31, | |||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2023 | ||||||||||||||
U.S. income (loss) before tax | $ | 90 | $ | (61) | $ | 335 | |||||||||||
| Foreign income before tax | 85 | 197 | 114 | ||||||||||||||
| Total income before taxes | $ | 175 | $ | 136 | $ | 449 | |||||||||||
The components of our provision for income taxes were as follows:
Year Ended December 31, | |||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 86 | $ | 23 | $ | 105 | |||||||||||
| State | 18 | 4 | 18 | ||||||||||||||
| Foreign | 28 | 78 | 36 | ||||||||||||||
| Total current | 132 | 105 | 159 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | (56) | (18) | (22) | ||||||||||||||
| State | 2 | (3) | (1) | ||||||||||||||
| Foreign | (2) | (8) | — | ||||||||||||||
| Total deferred | (56) | (29) | (23) | ||||||||||||||
| Total provision for income taxes | $ | 76 | $ | 76 | $ | 136 | |||||||||||
Reconciliations of our tax provision at the U.S. statutory rate to the provision for income taxes were as follows:
Year Ended December 31, | |||||||||||
| 2025 | |||||||||||
| ($ in millions) | $ | % | |||||||||
| Statutory U.S. federal income tax provision | 37 | 21 | % | ||||||||
State and local income taxes, net of federal tax effect(1) | 20 | 12 | % | ||||||||
Foreign tax effects | (1) | (1) | % | ||||||||
Effects of cross-border taxes | |||||||||||
Foreign derived intangible income | (2) | (1) | % | ||||||||
Foreign branch taxes, net of related credits | 4 | 2 | % | ||||||||
Tax credits | |||||||||||
Research and development tax credit(2) | (8) | (5) | % | ||||||||
Foreign tax credits | (8) | (5) | % | ||||||||
Change in valuation allowances | 4 | 2 | % | ||||||||
Nontaxable or nondeductible items | |||||||||||
Share-based payment awards, net of IRC §162(m) limitation | 5 | 3 | % | ||||||||
Non-controlling interest | (4) | (2) | % | ||||||||
Other | 2 | 1 | % | ||||||||
Changes in unrecognized tax benefits | 7 | 4 | % | ||||||||
Other adjustments | |||||||||||
Interest on installment sales, net of federal tax effect | 8 | 5 | % | ||||||||
Bluegreen deferred adjustment | 5 | 3 | % | ||||||||
Expired domestic loss carryforwards | 5 | 3 | % | ||||||||
Other | 2 | 1 | % | ||||||||
Provision for income taxes | 76 | 43 | % | ||||||||
(1)Florida, Hawaii and New York comprise the majority of state taxes (greater than 50%) of the tax effect in this category.
(2)The research and development tax credit includes revised estimates upon finalization of prior year tax returns.
Year Ended December 31, | |||||||||||
| ($ in millions) | 2024 | 2023 | |||||||||
| Statutory U.S. federal income tax provision | $ | 29 | $ | 94 | |||||||
| State and local income taxes, net of U.S. federal tax benefit | 1 | 17 | |||||||||
Taxes attributable to noncontrolling interest | (3) | — | |||||||||
| Impact of foreign operations | 27 | 10 | |||||||||
| Interest on installment sales, net of U.S. federal tax benefit | 4 | 3 | |||||||||
Uncertain tax positions | 1 | 5 | |||||||||
US permanent differences | 12 | 2 | |||||||||
Share-based compensation, net of IRC §162(m) limitation | 3 | 2 | |||||||||
| Other | 2 | 3 | |||||||||
| Provision for income taxes | $ | 76 | $ | 136 | |||||||
Deferred income taxes represent the tax effect of the differences between the book and tax bases of assets and liabilities plus carryforward items.
The compositions of net deferred tax balances were as follows:
| December 31, | |||||||||||
| ($ in millions) | 2025 | 2024 | |||||||||
| Deferred tax assets | $ | 13 | $ | 12 | |||||||
| Deferred tax liabilities | (864) | (925) | |||||||||
| Net deferred tax liability | $ | (851) | $ | (913) | |||||||
The tax effects of the temporary differences and carryforwards that give rise to our net deferred tax liability were as follows:
| December 31, | |||||||||||
| ($ in millions) | 2025 | 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Compensation | $ | 38 | $ | 30 | |||||||
| Domestic tax loss and credit carryforwards | 99 | 130 | |||||||||
| Foreign tax loss carryforwards | 46 | 44 | |||||||||
| Other reserves | 375 | 261 | |||||||||
| 558 | 465 | ||||||||||
| Valuation allowance | (150) | (174) | |||||||||
| Deferred tax assets | 408 | 291 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Property and equipment | (263) | (144) | |||||||||
| Amortizable intangible assets | (380) | (419) | |||||||||
| Deferred income | (616) | (641) | |||||||||
| Deferred tax liabilities | (1,259) | (1,204) | |||||||||
| Net deferred tax liability | $ | (851) | $ | (913) | |||||||
As of December 31, 2025, we have $254 million of federal net operating loss carryforwards, $29 million of federal credit carryforwards, $220 million of state tax net operating loss carryforwards, $6 million of state tax credits, and $175 million foreign net operating loss carryforwards. Most of these tax attributes are fully valued. The majority of our federal and state tax attributes will expire through 2034, while most of our foreign tax losses can be carried forward indefinitely.
We establish valuation allowances for financial reporting purposes to offset certain deferred tax assets due to uncertainty regarding our ability to realize them in the future. The valuation allowance decreased from $174 million as of December 31, 2024, to $150 million as of December 31, 2025, primarily due to the expiration and write-off of domestic tax attributes.
Reconciliations of the amounts of unrecognized tax benefits were as follows:
| December 31, | |||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Unrecognized tax benefits at beginning of year | $ | 24 | $ | 25 | $ | 23 | |||||||||||
| Current period tax position increases | — | 3 | 2 | ||||||||||||||
| Prior period tax position increases | — | — | 3 | ||||||||||||||
| Decreases due to lapse in applicable statute of limitations | — | (4) | (3) | ||||||||||||||
| Unrecognized tax benefits at end of year | $ | 24 | $ | 24 | $ | 25 | |||||||||||
We recorded $24 million as of both December 31, 2025 and 2024 excluding interest and penalties, which would have favorably impacted the annual effective tax rate if recognized. We record these liabilities in Accounts payable, accrued expenses and other in the consolidated balance sheet. The total liability accrued for interest and penalties was $46 million and $36 million as of December 31, 2025, and 2024.
We file federal, state and foreign income tax returns in jurisdictions with varying statute of limitations. We are currently under audit in several tax jurisdictions. The open tax years for major tax jurisdictions are 2011 through 2025. While there is no assurance as to the results, we believe we are adequately reserved for these audits.
Although the Tax Act generally eliminates U.S. federal income tax on dividends from foreign subsidiaries, foreign withholding taxes may be incurred if these profits are distributed. No income or deferred taxes have been accrued on foreign earnings or other outside basis differences, as we intend to indefinitely reinvest these amounts in our foreign operations. An estimate of these amounts is not practicable due to the inherent complexity of the multi-jurisdictional tax environment in which we operate.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Mar 1, 2018 | |
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.