Huron Consulting Group Inc.HURN
Huron Consulting Group Inc. Income Taxes Disclosure
Income Taxes
The income tax expense (benefit) for the years ended December 31, 2025, 2024, and 2023 consisted of the following:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current taxes: | |||||||||||||||||
| Federal | $ | 7,099 | $ | 18,345 | $ | 15,229 | |||||||||||
| State | 5,899 | 7,645 | 5,816 | ||||||||||||||
| Foreign | 6,162 | 8,787 | 6,553 | ||||||||||||||
Total current expense | 19,160 | 34,777 | 27,598 | ||||||||||||||
| Deferred taxes: | |||||||||||||||||
| Federal | 10,930 | 2,385 | (4,516) | ||||||||||||||
| State | 838 | 468 | (936) | ||||||||||||||
| Foreign | (888) | (240) | (730) | ||||||||||||||
Total deferred expense (benefit) | 10,880 | 2,613 | (6,182) | ||||||||||||||
| Income tax expense | $ | 30,040 | $ | 37,390 | $ | 21,416 | |||||||||||
The components of income before taxes were as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| U.S. | $ | 115,508 | $ | 122,080 | $ | 63,935 | |||||||||||
| Foreign | 19,572 | 31,936 | 19,960 | ||||||||||||||
| Total | $ | 135,080 | $ | 154,016 | $ | 83,895 | |||||||||||
A reconciliation of our U.S. statutory income tax expense and tax rate to our reported income tax expense and effective tax rate for the years ended December 31, 2025, 2024 and 2023 is as follows:
| Year Ended December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||||||
| At U.S. statutory tax rate | 28,367 | 21.0 | % | 32,343 | 21.0 | % | 17,618 | 21.0 | % | |||||||||||||||||
State and local income taxes, net of federal income tax effect(1) | 5,556 | 4.1 | % | 6,504 | 4.2 | % | 3,713 | 4.4 | % | |||||||||||||||||
Foreign tax effects: | ||||||||||||||||||||||||||
| Canada | ||||||||||||||||||||||||||
Provincial income taxes | 524 | 0.4 | % | 1,627 | 1.1 | % | 1,493 | 1.8 | % | |||||||||||||||||
| Other | 100 | 0.1 | % | (482) | (0.3) | % | (192) | (0.2) | % | |||||||||||||||||
| Other foreign jurisdictions | 850 | 0.6 | % | 910 | 0.6 | % | 873 | 1.0 | % | |||||||||||||||||
| Changes in valuation allowances | 1,252 | 0.9 | % | 705 | 0.5 | % | (205) | (0.2) | % | |||||||||||||||||
| Changes in unrecognized tax benefits | — | — | % | — | — | % | (634) | (0.8) | % | |||||||||||||||||
Nontaxable or nondeductible items: | ||||||||||||||||||||||||||
| Disallowed executive compensation | 3,045 | 2.3 | % | 2,619 | 1.7 | % | 3,106 | 3.7 | % | |||||||||||||||||
| Meals and entertainment | 988 | 0.7 | % | 863 | 0.6 | % | 744 | 0.9 | % | |||||||||||||||||
| Stock-based compensation | (8,754) | (6.5) | % | (4,368) | (2.8) | % | (1,957) | (2.3) | % | |||||||||||||||||
| Realized investment losses/gains | (1,192) | (0.9) | % | (962) | (0.6) | % | (1,015) | (1.2) | % | |||||||||||||||||
| Other | 218 | 0.2 | % | 296 | 0.2 | % | 88 | 0.1 | % | |||||||||||||||||
Tax credits: | ||||||||||||||||||||||||||
| Research and development tax credits | 56 | — | % | (1,205) | (0.8) | % | (1,480) | (1.8) | % | |||||||||||||||||
| Effect of cross-border tax laws | (1,035) | (0.8) | % | (1,218) | (0.8) | % | (862) | (1.0) | % | |||||||||||||||||
| Other | 65 | 0.1 | % | (242) | (0.3) | % | 126 | 0.1 | % | |||||||||||||||||
Total | $ | 30,040 | 22.2 | % | $ | 37,390 | 24.3 | % | $ | 21,416 | 25.5 | % | ||||||||||||||
(1)For 2025, the majority (greater than 50 percent) of the state and local income taxes related to New York, California, Maryland and Pennsylvania; for 2024, the majority (greater than 50 percent) of the state and local income taxes related to California, New York, Massachusetts, Minnesota and Illinois; and for 2023, the majority (greater than 50 percent) of the state and local income taxes related to Minnesota, Florida, Massachusetts, Illinois and New York.
On July 4, 2025, the President of the United States signed into law the One Big Beautiful Bill Act (“2025 Tax Reform”) that includes several U.S. corporate tax provisions, including the restoration of 100% bonus depreciation on qualified property and the current deductibility of domestic research expenditures. The provisions of the 2025 Tax Reform did not have a material impact on our 2025 income tax expense or effective tax rate.
Cash paid for income taxes (net of refunds received) for the years ended December 31, 2025, 2024 and 2023 were as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Federal | $ | 11,300 | $ | 14,713 | $ | 20,000 | |||||||||||
| State | 6,548 | 6,414 | 7,632 | ||||||||||||||
| Foreign | |||||||||||||||||
| India | 5,318 | 4,033 | 3,115 | ||||||||||||||
| Canada | 3,182 | 4,097 | 2,584 | ||||||||||||||
| Other foreign jurisdictions | 686 | 455 | 179 | ||||||||||||||
| Total | 27,034 | 29,712 | 33,510 | ||||||||||||||
The net deferred tax asset (liability) balance at December 31, 2025 and 2024 consisted of the following:
| As of December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Share-based compensation | $ | 13,929 | $ | 13,216 | |||||||
Deferred compensation liability | 12,551 | 10,944 | |||||||||
Operating lease liabilities | 11,535 | 11,687 | |||||||||
| Accrued payroll and payroll related liabilities | 11,040 | 10,086 | |||||||||
| Net operating loss carryforwards | 3,844 | 3,553 | |||||||||
| Tax credits | 2,617 | 2,164 | |||||||||
| Convertible debt investment | 1,776 | — | |||||||||
| Other | 4,779 | 3,954 | |||||||||
| Total deferred tax assets | 62,071 | 55,604 | |||||||||
| Valuation allowance | (9,782) | (6,561) | |||||||||
| Net deferred tax assets | 52,289 | 49,043 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Intangibles and goodwill | (59,662) | (51,526) | |||||||||
| Software development costs | (9,061) | — | |||||||||
| Operating lease right-of-use assets | (6,627) | (5,756) | |||||||||
| Prepaid expenses | (5,087) | (4,811) | |||||||||
| Property and equipment | (1,147) | (1,448) | |||||||||
| Convertible debt investment | — | (5,542) | |||||||||
| Other | (4,411) | (5,860) | |||||||||
| Total deferred tax liabilities | (85,995) | (74,943) | |||||||||
| Net deferred tax liabilities | $ | (33,706) | $ | (25,900) | |||||||
As of December 31, 2025 and 2024, we had valuation allowances of $9.8 million and $6.6 million, respectively, primarily due to uncertainties relating to the ability to utilize deferred tax assets recorded for foreign losses, capital losses and tax credits. The increase in valuation allowances in 2025 primarily attributable to deferred tax assets recorded as the result of a capital loss on our convertible debt investment in a third-party and a capital loss on our preferred stock investment in a hospital-at-home company, as well as valuation allowance increases attributable to higher foreign tax credit carryforwards.
As of December 31, 2025, we had U.S. and foreign net operating loss carryforwards of $3.8 million. Of this amount, $3.2 million have an indefinite carryforward period, and the remaining $0.6 million begin to expire in 2027. We have federal tax credit carryforwards of $2.6 million, which begin to expire in 2030.
We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution.
A reconciliation of our beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2025, 2024 and 2023 is as follows:
| Unrecognized Tax Benefits | ||||||||
Balance at January 1, 2023 | $ | 593 | ||||||
Decrease due to lapse of statute of limitations | (593) | |||||||
| Balance at December 31, 2023 | — | |||||||
| Balance at December 31, 2024 | — | |||||||
| Balance at December 31, 2025 | $ | — | ||||||
As of both December 31, 2025 and 2024, there was no unrecognized tax benefit which would affect the effective tax rate if recognized.
As of both December 31, 2025 and 2024, no potential payment of interest and penalties was accrued. Accrued interest and penalties are recorded as a component of provision for income taxes on our consolidated statement of earnings.
We file income tax returns with federal, state, local and foreign jurisdictions. Tax years 2022 through 2024 are subject to future examinations by federal tax authorities. Tax years 2019 through 2024 are subject to future examinations by state and local tax authorities. Our foreign income tax filings are subject to future examinations by the local foreign tax authorities for tax years 2020 through 2024. The Company is currently under audit by the states of Minnesota and Wisconsin, as well as by the governments of India and Canada. We do not expect the outcome of these audits to have a material adverse effect on our financial position or results of operations.
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.