LINCOLN EDUCATIONAL SERVICES CORPLINC

LINCOLN EDUCATIONAL SERVICES CORP Income Taxes Disclosure

10-KFiled Mar 2, 20263 min read
14. INCOME TAXES
 
The components of income before income taxes were as follows:
 
                   
 
Year Ended December 31,  
     2025      2024      2023  
Domestic
 $ 26,118   $ 14,711   $ 35,639 
Foreign
   0.00     0.00     0.00 
Income before income taxes
 $ 26,118   $ 14,711   $ 35,639 
 
Components of the provision for income taxes were as follows:
 
                
 
Year Ended December 31,  
    2025     2024     2023  
Current:
              
Federal
 $285   $4,496   $5,825 
State
  3,212    2,566    2,185 
Foreign
   -      -      -  
Total
  3,497    7,062    8,010 
                
Deferred:
              
Federal
  3,957    (1,555)    989 
State
  (1,334)    (687)    643 
Foreign
   -      -      -  
Total
  2,623    (2,242)    1,632 
                
Total provision
 $6,120   $4,820   $9,642 
Effective Tax rate
 
The following is a reconciliation of the difference between the effective income tax rate and the federal statutory tax rate for the year ended December 31, 2025:
 
                
 
Year Ended December 31,  
 
2025  
     $ amount (in thousands)       %  
Tax provision at the U.S. federal statutory rate
 $ 5,485       21.0 %
State and local income tax, net of federal income tax effect (1)
   1,465       5.6 %
Foreign tax effects
     -           -    
Enactment of new tax laws
     -           -    
Cross-border tax laws
     -           -    
Tax credits
     -           -    
Changes in valuation allowance
     -           -    
Nontaxable and nondeductible
              
Share-based compensation
   (516 )      (2 )%
Other
   450       1.7 %
Unrecognized tax benefits
     -           -    
Other                 
Other adjustments
   (37 )      (0.1 )%
Pension withdrawal
   (727 )      (3.0 )%
Income tax expense and effective income tax rate
 $ 6,120       23.4 %
 
(1) The state that contributed to the majority (greater than 50%) of the tax effect in this category was New Jersey
 
The reconciliation of the effective tax rate to the U.S. Statutory Federal Income tax rate was:
 
                     
 
2024  
2023  
Income before taxes
 $14,711        $35,639      
Expected tax
 $3,089    21.0% $7,484    21.0%
State tax (net of federal benefit)
  1,483    10.1%  2,234    6.3%
Other
  248    1.7%  (76)    (0.2)%
Total
 $4,820    32.8% $9,642    27.1%
 
The decrease in the effective tax rate is primarily due to an increase in pre-tax income and increased tax benefit from the reversal of deferred taxes related to the pension withdrawal.
 
Deferred Taxes
 
The components of the non-current deferred tax assets (liabilities) were as follows:
 
           
 
At December 31,  
    2025     2024  
Gross noncurrent deferred tax assets (liabilities)
         
Operating lease liability
 $46,313   $40,209 
Provision for credit losses
  18,881    17,558 
Finance lease liability
  8,352    7,835 
Net operating loss carryforwards
  1,913    807 
Stock-based compensation
  1,198    843 
Accrued expenses
  28    26 
Other intangibles
  21    23 
Pension plan liabilities
   -     (416) 
Goodwill
  (605)    (603) 
Depreciation and amortization
  (6,309)    3,142 
Finance lease right of use assets
  (6,730)    (7,161) 
Operating lease right-of-use assets
  (41,394)    (36,904) 
Noncurrent deferred tax assets, net
 $21,668   $25,359 
 
As of December 31, 2025, 2024 and 2023, the Company had gross net operating losses (“NOL”) of $11.7 million, $14.0 million and $18.1 million, respectively, for state tax purposes and $5.9 million, zero and zero, for federal tax purposes. While some states NOL can be carried forward indefinitely, the majority of state NOLs expire in 2033 and end in 2037 if not utilized.
 
The following table presents supplemental cash flow information related to income taxes paid (net of refunds received):
 
    Year ended December 31, 2025  
Cash paid during the period for income taxes, net of refunds:
    
US federal
 $3,500
US state and local
    
New Jersey
  862 
Connecticut
  362 
Other   1,445 
US state and local
  2,669 
Foreign
   -  
Total cash paid during the period for income taxes, net of refunds received
 $6,169
 
Cash paid for income taxes, net of refunds received, for the years ended December 31, 2024, and 2023 was $8,836 and $7,201, respectively.

Historical Timeline

Fiscal YearFiled
2025Mar 2, 2026Showing above
2024Mar 4, 2025
2023Mar 5, 2024
2022Mar 7, 2023
2021Mar 3, 2022
2020Mar 9, 2021
2019Mar 6, 2020
2018Mar 13, 2019
2017Mar 9, 2018
2016Mar 10, 2017
2015Mar 10, 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.

Other Available Disclosures

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