INVESTORS TITLE COITIC
INVESTORS TITLE CO Income Taxes Disclosure
Income Taxes
The components of income tax expense for the years ended December 31 are summarized as follows:
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 6,045 | $ | 7,371 | $ | 8,389 | |||||||||||
| State | 447 | 395 | 389 | ||||||||||||||
| Total current | 6,492 | 7,766 | 8,778 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | 2,700 | 555 | (4,150) | ||||||||||||||
| State | 177 | 69 | (84) | ||||||||||||||
| Total deferred | 2,877 | 624 | (4,234) | ||||||||||||||
| Total | $ | 9,369 | $ | 8,390 | $ | 4,544 | |||||||||||
For state income tax purposes, ITIC and NITIC generally pay only a gross premium tax found in other expenses in the Consolidated Statements of Operations.
At December 31, the approximate tax effect of each component of deferred income tax assets and liabilities is summarized as follows:
| (in thousands) | 2025 | 2024 | |||||||||
| Deferred income tax assets: | |||||||||||
| Accrued benefits and retirement services | $ | 4,163 | $ | 4,132 | |||||||
| Lease assets | 1,431 | 1,335 | |||||||||
| Net operating loss carryforward | — | 210 | |||||||||
| Impairment of assets | 232 | 135 | |||||||||
| Reinsurance and commission payable | 24 | 23 | |||||||||
| Allowance for doubtful accounts | 6 | 6 | |||||||||
| Other | 678 | 559 | |||||||||
| Total | 6,534 | 6,400 | |||||||||
| Deferred income tax liabilities: | |||||||||||
| Excess of tax over book depreciation | 3,678 | 721 | |||||||||
| Net unrealized gain on investments | 2,985 | 3,015 | |||||||||
| Recorded statutory premium reserve, net of reserves for claims | 2,714 | 2,508 | |||||||||
| Lease liabilities | 1,375 | 1,293 | |||||||||
| 1031 gain | 925 | 933 | |||||||||
| Intangible assets | 860 | 730 | |||||||||
| Postretirement benefit | 26 | — | |||||||||
| Other | 1,142 | 1,295 | |||||||||
| Total | 13,705 | 10,495 | |||||||||
| Net deferred income tax liabilities | $ | (7,171) | $ | (4,095) | |||||||
At December 31, 2025 and 2024, there were no valuation allowances recorded. Based upon the Company’s historical results of operations, the existing financial condition of the Company and management’s assessment of all other available information, management believes that it is more likely than not that the benefit of these deferred income tax assets will be realized.
A reconciliation of the U.S. federal statutory income tax rate of 21.0% for the years ended December 31, 2025, 2024, and 2023 to income tax expense, is as follows:
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Anticipated income tax expense | $ | 9,355 | $ | 8,287 | $ | 5,508 | |||||||||||
| (Decrease) increase related to: | |||||||||||||||||
| Research and development credit | (172) | (753) | (921) | ||||||||||||||
| State income taxes, net of federal income tax benefit | 353 | 312 | 307 | ||||||||||||||
| Tax-exempt interest income, net of amortization | (722) | (986) | (525) | ||||||||||||||
| Other, net | 555 | 1,530 | 175 | ||||||||||||||
| Provision for income taxes | $ | 9,369 | $ | 8,390 | $ | 4,544 | |||||||||||
A rate reconciliation of the December 31, 2025, 2024, and 2023 to the provision for income taxes, is as follows:
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| U.S. federal statutory rate | 21.0 | % | 21.0 | % | 21.0 | % | |||||||||||
| Research and development credit | (0.4) | % | (1.9) | % | (3.5) | % | |||||||||||
| State income taxes, net of federal income tax benefit | 0.8 | % | 0.8 | % | 1.1 | % | |||||||||||
| Tax-exempt interest income, net of amortization | (1.6) | % | (2.5) | % | (2.0) | % | |||||||||||
| Other, net | 1.2 | % | 3.9 | % | 0.7 | % | |||||||||||
| Effective income tax rate | 21.0 | % | 21.3 | % | 17.3 | % | |||||||||||
Income taxes paid (net of refunds) are as follows:
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Jurisdiction | |||||||||||||||||
| U.S. federal | $ | 7,852 | $ | 6,268 | $ | 8,193 | |||||||||||
| State | 560 | 352 | 495 | ||||||||||||||
| Foreign | — | — | — | ||||||||||||||
| Total income taxes paid, net | $ | 8,412 | $ | 6,620 | $ | 8,688 | |||||||||||
The state and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category are North Carolina for years 2023 through 2025.
In accounting for uncertainty in income taxes, the Company is required to recognize in its Consolidated Financial Statements the impact of a tax position if that position is more likely than not of being sustained on an audit, based on the technical merits of the position. In this regard, an uncertain tax position represents the Company’s expected treatment of a tax position taken in a filed tax return, or planned to be taken in a future tax return, that has not been reflected in measuring the provision for income taxes for financial reporting purposes. There were no known unrecognized tax benefits or liabilities as of December 31, 2025.
The amount of unrecognized tax benefit or liability may increase or decrease in the future for various reasons, including adding amounts for current tax year positions, expiration of open income tax returns due to the expiration of the applicable statute of limitations, changes in management’s judgment about the level of uncertainty, status of examinations, litigation and legislative activity and the additions or eliminations of uncertain tax positions.
The Company’s policy is to report interest and penalties related to income taxes in the other expenses line item in the Consolidated Statements of Operations.
The Company files income tax returns in the U.S. federal jurisdiction and various states. With few exceptions, the Company is no longer subject to U.S. federal or state and local examinations by taxing authorities for years before 2021. The One Big Beautiful Bill Act, enacted July 4, 2025, made significant updates to federal tax law. The Company has reviewed the law’s provisions and incorporated the applicable impacts into the Company’s tax calculations and related disclosures. The primary impact on the financial statements resulted in offsetting current/deferred adjustments to the provision for income taxes as it relates to the Company’s research and development expenditures.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 16, 2026 | Showing above |
| 2024 | Mar 17, 2025 | |
| 2023 | Mar 15, 2024 | |
| 2022 | Mar 14, 2023 | |
| 2021 | Mar 14, 2022 | |
| 2020 | Mar 15, 2021 | |
| 2019 | Mar 11, 2020 | |
| 2018 | Mar 13, 2019 | |
| 2017 | Mar 12, 2018 | |
| 2016 | Mar 10, 2017 | |
| 2015 | Mar 11, 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.