INDEPENDENT BANK CORPINDB
INDEPENDENT BANK CORP Income Taxes Disclosure
INCOME TAXES
The provision for income taxes is comprised of the following components:
| Years Ended December 31 | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Current expense | |||||||||||||||||
| Federal | $ | 46,155 | $ | 47,830 | $ | 51,771 | |||||||||||
| State | 14,176 | 17,816 | 21,123 | ||||||||||||||
| Total current expense | 60,331 | 65,646 | 72,894 | ||||||||||||||
| Deferred expense (benefit) | |||||||||||||||||
| Federal | (1,748) | (7,671) | 1,336 | ||||||||||||||
| State | (1,535) | (2,929) | 1,402 | ||||||||||||||
| Total deferred expense (benefit) | (3,283) | (10,600) | 2,738 | ||||||||||||||
| Total expense | $ | 57,048 | $ | 55,046 | $ | 75,632 | |||||||||||
The difference between the statutory federal income tax rate and the effective income tax rate reported for the last three years is detailed below:
| Years Ended December 31 | ||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||
| $ | 55,056 | 21.00 | % | $ | 51,897 | 21.00 | % | $ | 66,178 | 21.00 | % | |||||||||||||||
| State and local income tax, net of federal income tax benefit | 10,420 | 3.97 | % | 12,143 | 4.91 | % | 17,992 | 5.71 | % | |||||||||||||||||
| Tax Credits | ||||||||||||||||||||||||||
| Low income housing tax credits | (3,594) | (1.37) | % | (4,496) | (1.82) | % | (3,740) | (1.19) | % | |||||||||||||||||
| Other | (27) | (0.01) | % | — | — | % | (76) | (0.02) | % | |||||||||||||||||
| Nontaxable or nondeductible items | ||||||||||||||||||||||||||
| Tax-exempt interest, net of disallowance | (3,716) | (1.42) | % | (3,653) | (1.48) | % | (3,508) | (1.11) | % | |||||||||||||||||
| Other | (1,716) | (0.65) | % | (1,629) | (0.66) | % | (2,260) | (0.72) | % | |||||||||||||||||
| Changes in unrecognized tax benefits | (942) | (0.36) | % | (1,215) | (0.49) | % | (655) | (0.21) | % | |||||||||||||||||
| Other adjustments | 1,567 | 0.60 | % | 1,999 | 0.81 | % | 1,701 | 0.54 | % | |||||||||||||||||
| Effective income tax rate | $ | 57,048 | 21.76 | % | $ | 55,046 | 22.27 | % | $ | 75,632 | 24.00 | % | ||||||||||||||
The tax-effected components of the net deferred tax asset at December 31 of the years presented were as follows:
| 2025 | 2024 | ||||||||||
| (Dollars in thousands) | |||||||||||
| Deferred tax assets | |||||||||||
| Allowance for credit losses | $ | 51,939 | $ | 46,372 | |||||||
| Accrued expenses not deducted for tax purposes | 16,517 | 17,720 | |||||||||
| Basis difference on loans | 42,703 | 1,612 | |||||||||
| Basis differences on acquired securities | 15,852 | — | |||||||||
| Derivatives fair value adjustment | 2,164 | 5,304 | |||||||||
| Employee and director equity compensation | 5,268 | 1,930 | |||||||||
| Foreign Tax Credit Carryforward | 89 | 89 | |||||||||
| Net operating loss carry-forward | 1,002 | 627 | |||||||||
| Net unrealized loss on securities available for sale | 11,607 | 23,795 | |||||||||
| Operating lease liability | 20,707 | 15,471 | |||||||||
| State purchased credits | 15,638 | 21,448 | |||||||||
| Other | 541 | 621 | |||||||||
| Gross deferred tax assets | $ | 184,027 | $ | 134,989 | |||||||
Valuation allowance (1) | (485) | (531) | |||||||||
| Total deferred tax assets net of valuation allowance | $ | 183,542 | $ | 134,458 | |||||||
| Deferred tax liabilities | |||||||||||
| Core deposit and other intangibles | $ | 34,622 | $ | 1,453 | |||||||
| Deferred loan fees, net | 11,226 | 8,080 | |||||||||
| Fixed assets | 9,741 | 14,747 | |||||||||
| Goodwill | 11,690 | 11,476 | |||||||||
| Prepaid pension | 3,137 | 7,260 | |||||||||
| Right of use asset | 20,107 | 14,921 | |||||||||
| Other | 1,592 | 1,868 | |||||||||
| Gross deferred tax liabilities | $ | 92,115 | $ | 59,805 | |||||||
| Total net deferred tax asset | $ | 91,427 | $ | 74,653 | |||||||
(1)Deferred tax assets are to be reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The realization of the tax benefit depends upon the existence of sufficient taxable income in future periods.
Uncertainty in Income Taxes
The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction as well as in various states. The Company is subject to U.S. federal, state and local income tax examinations by tax authorities for the 2022 through 2024 tax years including any related income tax filings from its recent acquisitions. The Company believes that its income tax returns have been filed based upon applicable statutes, regulations and case law in effect at the time of filing, however, the Internal Revenue Service (“IRS”) and /or state jurisdictions could disagree with the Company’s interpretation upon examination. The Company accounts for uncertainties in income taxes by providing a tax reserve for certain positions. The following is a reconciliation of the beginning and ending amount of unrecognized tax benefits:
| (Dollars in thousands) | |||||
| Balance at December 31, 2022 | $ | 2,720 | |||
| Reduction of tax positions for prior years | (959) | ||||
| Balance at December 31, 2023 | $ | 1,761 | |||
| Reduction of tax positions for prior years | (999) | ||||
| Balance at December 31, 2024 | $ | 762 | |||
| Reduction of tax positions for prior years | (762) | ||||
| Balance at December 31, 2025 | $ | — | |||
Increases to the Company’s unrealized tax positions occur as a result of accruing for any unrecognized tax benefit, as well as the accrual of interest and penalties related to prior year positions. Decreases in the Company’s unrealized tax positions occur as a result of the statute of limitation lapsing on prior year positions and/or settlements relating to outstanding positions. At December 31, 2025, there were no indirect federal benefit of state tax positions, included in the balances noted in the table above, and there were approximately $160,000, and $343,000 at December 31, 2024, and 2023, respectively.
The following table summarizes the changes in accrued interest and penalties related to uncertain tax positions for the periods presented:
| As of December 31 | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Beginning Balance | $ | 383 | $ | 689 | $ | 585 | |||||||||||
| Expense (benefit) recognized in provision for income taxes | (314) | (306) | 104 | ||||||||||||||
| Ending Balance | $ | 69 | $ | 383 | $ | 689 | |||||||||||
The following table presents cash paid, net of refunds, for federal, state, and foreign income taxes for the periods presented:
| Years Ended December 31 | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Cash Paid for Federal Income Taxes | $ | 26,000 | $ | 38,000 | $ | 33,081 | |||||||||||
| Cash Paid for State Income Taxes | |||||||||||||||||
Massachusetts(1) | 6,896 | 10,710 | 10,045 | ||||||||||||||
Other (2) | 1,887 | 2,369 | 580 | ||||||||||||||
| State subtotal | 8,783 | 13,079 | 10,625 | ||||||||||||||
| Total Cash Paid for Income Taxes | $ | 34,783 | $ | 51,079 | $ | 43,706 | |||||||||||
(1)Amounts shown above exclude $7.9 million, $8.2 million, and $7.9 million in purchased Massachusetts state credits for the years ended December 31, 2025, 2024, and 2023, respectively. These credits represent pre-payments of Massachusetts state taxes.
(2)The amount of income taxes paid during the year does not meet the 5% disaggregation threshold.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 28, 2017 | |
| 2015 | Feb 25, 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.