IES Holdings, Inc.IESC
IES Holdings, Inc. Income Taxes Disclosure
10. INCOME TAXES
Federal and state income tax provisions are as follows:
| Year Ended September 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Federal: | |||||||||||||||||
| Current | $ | 72,037 | $ | 53,318 | $ | 27,205 | |||||||||||
| Deferred | 6,184 | 2,672 | 4,300 | ||||||||||||||
| State: | |||||||||||||||||
| Current | 18,150 | 14,603 | 6,370 | ||||||||||||||
| Deferred | 434 | 1,572 | 886 | ||||||||||||||
| Total provision for income taxes | $ | 96,805 | $ | 72,165 | $ | 38,761 | |||||||||||
Actual income tax expense differs from income tax expense computed by applying the U.S. federal statutory corporate rate to income (loss) before income taxes as follows:
| Year Ended September 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Provision at the federal statutory rate, including equity method investments | $ | 85,817 | $ | 63,980 | $ | 33,295 | |||||||||||
| Increase resulting from: | |||||||||||||||||
| Non-deductible expenses | 2,952 | 2,235 | 1,634 | ||||||||||||||
| State income taxes, net of federal deduction | 14,325 | 11,952 | 6,338 | ||||||||||||||
| Executive compensation, including stock incentives | 4,518 | 2,050 | 383 | ||||||||||||||
Contingent tax liabilities | — | — | 396 | ||||||||||||||
| Change in valuation allowance | — | 138 | — | ||||||||||||||
| Other | 850 | 743 | — | ||||||||||||||
| Decrease resulting from: | |||||||||||||||||
| Share-based compensation | (682) | (601) | (332) | ||||||||||||||
Noncontrolling interest | (1,232) | (2,811) | (2,415) | ||||||||||||||
| Change in valuation allowance | (72) | — | (52) | ||||||||||||||
| Contingent tax liabilities | (9,671) | (5,521) | — | ||||||||||||||
| Other | — | — | (486) | ||||||||||||||
| Total provision for income taxes | $ | 96,805 | $ | 72,165 | $ | 38,761 | |||||||||||
Deferred income tax provisions result from temporary differences in the recognition of income and expenses for financial reporting purposes and for income tax purposes. The income tax effects of these temporary differences, representing deferred income tax assets and liabilities, result principally from the following:
| September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred income tax assets: | |||||||||||
| Allowance for credit losses | $ | 1,016 | $ | 371 | |||||||
| Accrued expenses | 21,213 | 19,415 | |||||||||
| Net operating loss carryforward | 2,439 | 2,701 | |||||||||
| Various reserves | 3,564 | 2,073 | |||||||||
| Intangible assets | 7,913 | 390 | |||||||||
Partnerships | 600 | 7,200 | |||||||||
| Share-based compensation | 1,570 | 1,364 | |||||||||
| Lease asset | 18,981 | 15,630 | |||||||||
| Other | 2,706 | 1,068 | |||||||||
| Subtotal | 60,002 | 50,212 | |||||||||
| Less valuation allowance | 889 | 961 | |||||||||
| Total deferred income tax assets | 59,113 | 49,251 | |||||||||
| Deferred income tax liabilities: | |||||||||||
| Property and equipment | 18,182 | 10,319 | |||||||||
| Lease liability | 18,832 | 15,475 | |||||||||
| Equity method investments | 3,275 | — | |||||||||
| Other | 2,769 | 999 | |||||||||
| Total deferred income tax liabilities | 43,058 | 26,793 | |||||||||
| Net deferred income tax assets | $ | 16,055 | $ | 22,458 | |||||||
In fiscal 2025 and 2024, the valuation allowance on our deferred tax assets decreased by $72 and increased by $138, respectively, which is included in “Provision for income taxes” in our Consolidated Statements of Comprehensive Income.
As of September 30, 2025, we had available approximately $3,785 of federal net tax operating loss carry forward for federal income tax purposes. This carry forward, which may provide future tax benefits, is subject to an annual limitation of $709 under Section 382 of the Internal Revenue Code and will begin to expire in 2029. As of September 30, 2025, we had available approximately $41,689 state net tax operating loss carry forwards, which will begin to expire in 2026. We have provided valuation allowances on all net operating losses where it is determined it is more likely than not that they will expire without being utilized.
A reconciliation of the beginning and ending balances of unrecognized tax benefit is as follows:
| Year Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Balance at beginning of period | $ | 16,881 | $ | 22,347 | |||||||
| Additions for positions of prior years | 560 | 1,655 | |||||||||
| Reduction resulting from the lapse of the applicable statutes of limitations | (11,466) | (7,121) | |||||||||
| Balance at end of period | $ | 5,975 | $ | 16,881 | |||||||
As of September 30, 2025 and 2024, there are $5,637 and $16,881, respectively, of unrecognized tax benefits that, if recognized, would affect the annual effective tax rate. We anticipate that approximately $2,855 in liabilities for unrecognized tax benefits, including accrued interest, may be reversed in the next twelve months. The reversal is predominantly due to the expiration of the statute of limitation for unrecognized tax benefits.
We had approximately $1,017 and $1,452 accrued for the payment of interest and penalties at September 30, 2025 and 2024, respectively. We recognize interest and penalties related to unrecognized tax benefits as part of the provision for income taxes.
The tax years ended September 30, 2022, and forward are subject to federal audit as are tax years prior to September 30, 2022, to the extent of unutilized net operating losses generated in those years. The tax years ended September 30, 2021, and forward are subject to state audits as are tax years prior to September 30, 2021, to the extent of unutilized net operating losses generated in those years.
On July 4, 2025, the U.S. enacted the One Big Beautiful Bill Act (the “Act”), a comprehensive legislative package that includes significant changes to federal tax policy. The Act, among other corporate provisions, includes the permanent extension of 100% bonus depreciation and the repeal of mandatory capitalization of domestic research and experimental expenditures. For the year ended September 30, 2025, there were no material impacts to earnings resulting from the Act.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 21, 2025 | Showing above |
| 2024 | Nov 22, 2024 | |
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.