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HOME BANCSHARES INC Income Taxes Disclosure
Income Taxes
In July 2025, the United States enacted the One Big Beautiful Bill Act, which extends certain provisions of the Tax Cuts and Jobs Act of 2017 in addition to other changes. The Company continues to evaluate the impact the new legislation will have on the Company’s consolidated financial statements.
The following is a summary of the components of the provision for income taxes for the years ended December 31, 2025, 2024 and 2023:
Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 105,085 | $ | 92,995 | $ | 99,938 | |||||||||||
| State | 20,921 | 18,802 | 23,093 | ||||||||||||||
| Total current | 126,006 | 111,797 | 123,031 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | 8,630 | 6,907 | (3,312) | ||||||||||||||
| State | 1,718 | 1,397 | (765) | ||||||||||||||
| Total deferred | 10,348 | 8,304 | (4,077) | ||||||||||||||
| Income tax expense | $ | 136,354 | $ | 120,101 | $ | 118,954 | |||||||||||
The reconciliation between the statutory federal income tax and effective income tax by dollar amount and percentage is as follows for the year ended December 31, 2025, 2024 and 2023:
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| (Dollars in thousands) | Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||||||||||||||
| Income tax at federal statutory rate | $ | 128,477 | 21.00 | % | $ | 109,692 | 21.00 | % | $ | 107,526 | 21.00 | % | |||||||||||||||||||||||
| Tax effect of: | |||||||||||||||||||||||||||||||||||
State income taxes, net of federal income taxes(1) | 14,762 | 2.41 | 16,038 | 3.07 | 14,906 | 2.92 | |||||||||||||||||||||||||||||
| Tax credits | |||||||||||||||||||||||||||||||||||
| Other tax credits | (242) | (0.04) | (250) | (0.05) | (289) | (0.06) | |||||||||||||||||||||||||||||
| Nontaxable or nondeductible items | |||||||||||||||||||||||||||||||||||
| Nontaxable income: | |||||||||||||||||||||||||||||||||||
| Interest on municipal securities | (6,845) | (1.12) | (6,874) | (1.32) | (7,157) | (1.40) | |||||||||||||||||||||||||||||
| Income on bank-owned life insurance | (1,575) | (0.26) | (1,073) | (0.21) | (1,044) | (0.20) | |||||||||||||||||||||||||||||
| Other nontaxable income | (1,807) | (0.30) | (1,797) | (0.33) | (1,081) | (0.21) | |||||||||||||||||||||||||||||
| Nondeductible expenses: | |||||||||||||||||||||||||||||||||||
| Municipal bond interest expense | 176 | 0.03 | 1,331 | 0.25 | 3,686 | 0.72 | |||||||||||||||||||||||||||||
| Executive compensation expense | 2,091 | 0.35 | 1,878 | 0.36 | 1,052 | 0.21 | |||||||||||||||||||||||||||||
| Other nondeductible expenses | 1,317 | 0.22 | 1,156 | 0.22 | 1,355 | 0.26 | |||||||||||||||||||||||||||||
| Other | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Total | $ | 136,354 | 22.29 | % | $ | 120,101 | 22.99 | % | $ | 118,954 | 23.24 | % | |||||||||||||||||||||||
(1) State taxes in Arkansas, Florida and New York made up the majority (greater than 50%) of the tax effect in this category.
The effective tax rate differs from the U.S. federal statutory rate primarily due to state income taxes, net of federal benefit, and stock compensation, which increased the rate. These increases were partially offset by the effect of non-taxable interest income and other, which lowered the rate.
Income taxes paid, net of refunds received for the year ended December 31, 2025 is as follows:
| 2025 | |||||
| (In thousands) | |||||
| Federal | $ | 99,500 | |||
| State and local | |||||
| New York | 6,454 | ||||
| All other states | 3,673 | ||||
| Total | $ | 109,627 | |||
The types of temporary differences between the tax basis of assets and liabilities and their financial reporting amounts that give rise to deferred income tax assets and liabilities, and their approximate tax effects, are as follows:
| December 31, 2025 | December 31, 2024 | ||||||||||
| (In thousands) | |||||||||||
| Deferred tax assets: | |||||||||||
| Allowance for credit losses | $ | 80,486 | $ | 76,221 | |||||||
| Deferred compensation | 7,048 | 6,783 | |||||||||
| Stock compensation | 3,671 | 4,981 | |||||||||
| Non-accrual interest income | 1,388 | 1,798 | |||||||||
| Real estate owned | 310 | 674 | |||||||||
| Unrealized loss on Securities AFS | 51,026 | 79,847 | |||||||||
| Loan discounts | 2,110 | 3,323 | |||||||||
| Investments | 22,619 | 26,042 | |||||||||
| Accelerated depreciation on premises and equipment | — | 664 | |||||||||
| Other | 12,882 | 14,634 | |||||||||
| Gross deferred tax assets | 181,540 | 214,967 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Accelerated depreciation on premises and equipment | 2,521 | — | |||||||||
| Core deposit intangible | 7,217 | 8,997 | |||||||||
| FHLB dividends | 2,003 | 1,919 | |||||||||
| Tax basis/premium on acquisitions | 10,645 | 7,439 | |||||||||
| Other | 11,132 | 9,915 | |||||||||
| Gross deferred tax liabilities | 33,518 | 28,270 | |||||||||
| Net deferred tax assets | $ | 148,022 | $ | 186,697 | |||||||
The Company files income tax returns in the U.S. federal jurisdiction. The Company is no longer subject to U.S. federal and state tax examinations by tax authorities for years before 2021. The Company’s income tax returns are open and subject to examinations from the 2022 tax year and forward.
The Company recognizes interest related to unrecognized tax benefits in interest expense and penalties in other non-interest expense. During the years ended December 31, 2025, 2024 and 2023, the Company did not recognize any significant interest or penalties.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 26, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 26, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 28, 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.