LGI Homes, Inc.LGIH
LGI Homes, Inc. Income Taxes Disclosure
INCOME TAXES
All of the Company’s operations are domestic. We do not have foreign subsidiaries or foreign operations therefore, no foreign income taxes are incurred or reported.
The provision for income taxes consisted of the following (in thousands):
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Current: | ||||||||||||||||||||
| Federal | $ | 21,601 | $ | 53,114 | $ | 54,013 | ||||||||||||||
| State | 4,966 | 10,836 | 10,492 | |||||||||||||||||
| Current tax provision | 26,567 | 63,950 | 64,505 | |||||||||||||||||
| Deferred: | ||||||||||||||||||||
| Federal | (437) | (931) | (1,638) | |||||||||||||||||
| State | (196) | (177) | (340) | |||||||||||||||||
| Deferred tax provision (benefit) | (633) | (1,108) | (1,978) | |||||||||||||||||
| Total income tax provision | $ | 25,934 | $ | 62,842 | $ | 62,527 | ||||||||||||||
Income taxes paid (net of refunds) consisted of the following (in thousands):
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Federal | $ | 54,500 | $ | 24,500 | $ | 85,458 | ||||||||||||||
| State | ||||||||||||||||||||
| Florida | — | 2,485 | — | |||||||||||||||||
| California | — | 3,103 | — | |||||||||||||||||
| Other states (combined) | 7,887 | 5,295 | 10,838 | |||||||||||||||||
| Total net cash paid for income taxes | $ | 62,387 | $ | 35,383 | $ | 96,296 | ||||||||||||||
State taxes for Florida and California did not exceed the 5% threshold for net income taxes paid in 2025 and 2023.
Domestic net income before income taxes and related income tax expense consisted of the following (in thousands):
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Domestic (U.S.) | $ | 98,486 | $ | 258,913 | $ | 261,754 | ||||||||||||||
| Total net income before income taxes | $ | 98,486 | $ | 258,913 | $ | 261,754 | ||||||||||||||
A reconciliation of the provision for income taxes and the amount computed by applying the statutory federal income tax rate to income before provision for income taxes for the years ended December 31, 2025, 2024, and 2023 (in thousands):
| Year Ended December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Tax at federal statutory rate | $ | 20,682 | 21.0 | % | $ | 54,372 | 21.0 | % | $ | 54,968 | 21.0 | % | |||||||||||||||||||||||
| State income taxes (net of federal benefit) | 3,877 | 3.9 | 8,448 | 3.3 | 8,052 | 3.1 | |||||||||||||||||||||||||||||
| Stock-based compensation | 798 | 0.8 | (93) | — | (2,230) | (0.9) | |||||||||||||||||||||||||||||
| Non deductible expenses and other | 1,167 | 1.2 | 2,054 | 0.8 | 3,033 | 1.2 | |||||||||||||||||||||||||||||
| Change in tax rates - deferred taxes | (403) | (0.4) | (187) | (0.1) | (89) | — | |||||||||||||||||||||||||||||
| Federal energy efficient homes tax credits | (187) | (0.2) | (1,752) | (0.7) | (1,207) | (0.5) | |||||||||||||||||||||||||||||
| Tax at effective rate | $ | 25,934 | 2593400000.0% | 26.3 | % | $ | 62,842 | 24.3 | % | $ | 62,527 | 23.9 | % | ||||||||||||||||||||||
The 2025 effective tax rate differs from the federal statutory rate primarily due to state income tax expense on current year earnings and non-deductible salaries related to Section 162(m) of the U.S. Internal Revenue Code, as amended (the “Code”). The 2024 effective tax rate differs from the federal statutory rate primarily due to state income tax expense on current year earnings and non-deductible salaries related to Section 162(m) of the Code, partially offset by the windfalls for share-based payments and benefits associated with the federal energy efficient homes tax credits (the “45L Tax Credits”). The 2023 effective tax rate differs from the federal statutory rate primarily due to state income tax expense on current year earnings and non-deductible salaries related to Section 162(m) of the Code, partially offset by benefits associated with the 45L Tax Credits and the windfalls for share-based payments.
Income tax expense for 2025, 2024, and 2023 includes a benefit of $0.2 million, $1.8 million and $1.2 million, respectively, associated with the 45L Tax Credits. The 45L Tax Credits provision applies to qualifying homes closed through December 31, 2025.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
The components of net deferred tax assets and liabilities at December 31, 2025 and 2024 are as follows (in thousands):
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Deferred tax assets: | ||||||||||||||
| Accruals and reserves | $ | 4,641 | $ | 5,752 | ||||||||||
| Stock-based compensation | 2,893 | 3,136 | ||||||||||||
| Inventory | 3,750 | 1,531 | ||||||||||||
| Leases | 956 | 1,181 | ||||||||||||
| Other | 3,624 | 2,938 | ||||||||||||
| Total deferred tax assets | 15,865 | 14,538 | ||||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Prepaids | $ | (1,382) | $ | (1,075) | ||||||||||
| Leases | (1,127) | (1,305) | ||||||||||||
| Goodwill and other assets amortized for tax | (1,400) | (1,258) | ||||||||||||
| Tax depreciation in excess of book depreciation | (1,250) | (885) | ||||||||||||
| Other | (802) | (744) | ||||||||||||
| Total deferred tax liabilities | (5,961) | (5,267) | ||||||||||||
| Total net deferred tax assets | $ | 9,904 | $ | 9,271 | ||||||||||
We file U.S. and state income tax returns in jurisdictions with varying statutes of limitations. The statute of limitations with regards to our federal income tax filings is three years. The statute of limitations for our state tax jurisdictions is three to four years depending on the jurisdiction. In the normal course of business, we are subject to tax audits in various jurisdictions, and such jurisdictions may assess additional income taxes. We do not expect the outcome of any audit to have a material effect on our consolidated financial statements; however, audit outcomes and the timing of audit adjustments are subject to significant uncertainty.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 20, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 20, 2024 | |
| 2022 | Feb 21, 2023 | |
| 2021 | Feb 15, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 25, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Mar 7, 2017 | |
| 2015 | Mar 9, 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.