7. Income Taxes

The components of the provision for income taxes were as follows:


	Years Ended December 31,
(in thousands)	2025		2024		2023
Current tax expense:
U.S. federal	$	6,850	$	14,067	$	16,530
State and local	3,297		5,014		5,998
Total current tax expense	10,147		19,081		22,528
Deferred tax expense (benefit):
U.S. federal	1,583		(1,596)		1,157
State and local	390		(275)		490
Total deferred tax expense (benefit)	1,973		(1,871)		1,647
Total Income tax expense	$	12,120	$	17,210	$	24,175

The provision for income taxes results in an effective tax rate that differs from the U.S. federal statutory rate. The following is a reconciliation of income tax expense at the U.S. federal statutory rate to total Income tax expense:


	Years Ended December 31,
	2025				2024				2023
(dollars in thousands)	Amount		Percent		Amount		Percent		Amount		Percent
U.S. federal statutory income tax rate	$	9,859	21.0	%	$	14,201	21.0	%	$	17,902	21.0	%
State and local income tax, net of federal income tax effect (1)	2,913		6.2		3,760		5.6		5,125		6.0
Nontaxable or nondeductible items:
Executive compensation	1,246		2.6		986		1.4		1,711		2.0
Other	771		1.6		64		0.1		(494)		(0.5)
Tax credits:
Research and development	(2,765)		(5.9)		—		0.0		—		0.0
Other	138		0.3		(989)		(1.5)		(676)		(0.8)
Other adjustments	(42)		0.0		(812)		(1.2)		607		0.7





Total Income tax expense and effective tax rate	$	12,120	25.8	%	$	17,210	25.4	%	$	24,175	28.4	%

(1) State income taxes in California, Florida, Texas and Virginia made up the majority of the tax effect in this category for the year ended December 31, 2025. For each of the years ended December 31, 2024 and 2023, California, Florida, New Jersey and Texas made up the majority of the tax effect in this category.

The effective tax rate of 25.8% for the year ended December 31, 2025 is primarily driven by state and local income taxes and nondeductible executive compensation, partially offset by research and development activities associated with our strategic priorities. The effective tax rates of 25.4% and 28.4% for the years ended December 31, 2024 and 2023, respectively, is primarily driven by state and local income taxes.

Deferred tax assets and liabilities are composed of the following:


	December 31,
(in thousands)	2025		2024
Deferred tax assets:
Deferred compensation obligation	$	5,560	$	6,549
Operating lease liabilities	4,094		3,923
Stock-based compensation	1,954		1,561
Accrued liabilities	1,044		995
Accounts receivable reserves	319		399
Research and development	—		2,027
Other	3		8
Deferred tax assets	12,974		15,462
Deferred tax liabilities:
ROU assets for operating leases	(3,721)		(3,512)
Fixed assets	(3,326)		(3,700)
Goodwill	(2,284)		(2,291)
Prepaid expenses	(595)		(513)
Other	(12)		(437)
Deferred tax liabilities	(9,938)		(10,453)
Valuation allowance	—		—
Total Deferred tax assets, net	$	3,036	$	5,009

Kforce is periodically subject to IRS audits, as well as state and other local income tax audits for various tax years. Although Kforce has not experienced any material liabilities in the past due to income tax audits, Kforce can make no assurances concerning any future income tax audits.

Kforce and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states. With a few exceptions, Kforce is no longer subject to U.S. federal, state, local, or non-U.S. income tax examinations by tax authorities for years before 2022.

The following is a reconciliation of cash paid for income taxes, net of refunds:


	Years Ended December 31,
(in thousands)	2025 (1)		2024		2023 (1)
U.S. federal	$	16,228	$	4,823	$	22,201
Aggregated state and other jurisdictions	3,697		2,802		6,415
Disaggregated state and other jurisdictions:
Texas	—		848		—
Florida	—		717		—
California	—		587		—
Total cash paid for income taxes, net	$	19,925	$	9,777	$	28,616

(1) Cash paid for income taxes in Texas, Florida and California were below the 5% disaggregation threshold for the years ended December 31, 2025 and 2023, and all balances are included within aggregated state and other jurisdictions for those years.

Historical Timeline

Fiscal Year	Filed
2025	Feb 20, 2026	Showing above
2018	Feb 22, 2019

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.

KFORCE INC Income Taxes Disclosure

Historical Timeline

About Income Taxes Disclosures

Other Available Disclosures