Limbach Holdings, Inc.LMB
Limbach Holdings, Inc. Income Taxes Disclosure
Income Taxes
The Company is taxed as a C corporation and files income tax returns in the U.S. federal jurisdiction and in various state jurisdictions.
Provision for Income Taxes
The Company’s provision for income taxes related to continuing operations consists of the following:
| For the Years Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Current tax provision | |||||||||||||||||
| U.S. Federal | $ | 4,676 | $ | 6,902 | $ | 5,851 | |||||||||||
| State and local | 2,275 | 2,541 | 1,845 | ||||||||||||||
| Total current tax provision | 6,951 | 9,443 | 7,696 | ||||||||||||||
| Deferred tax provision | |||||||||||||||||
| U.S. Federal | 2,558 | 16 | (253) | ||||||||||||||
| State and local | 56 | (368) | (97) | ||||||||||||||
| Total deferred tax provision | 2,614 | (352) | (350) | ||||||||||||||
| Income tax provision | $ | 9,565 | $ | 9,091 | $ | 7,346 | |||||||||||
The provision for income taxes for the years ended December 31, 2025, 2024 and 2023 resulted in effective tax rates on continuing operations of 19.7%, 22.7%, and 26.1%, respectively.
As further described in Note 2, the Company has elected to retrospectively adopt the guidance in ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). The following table is a reconciliation of the U.S. federal statutory rate of 21% to the Company’s effective tax rate for the years ended December 31, 2025, 2024 and 2023 in accordance with the guidance in ASU 2023-09.
| For the Years Ended December 31, | |||||||||||||||||||||||||||||||||||
| (in thousands, except for percentages) | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||
| Provision for income taxes at U.S. federal statutory rate | $ | 10,212 | 21.0 | % | $ | 8,393 | 21.0 | % | $ | 5,901 | 21.0 | % | |||||||||||||||||||||||
State income taxes, net of federal income tax effect(1) | 1,842 | 3.8 | % | 1,717 | 4.3 | % | 1,353 | 4.8 | % | ||||||||||||||||||||||||||
| Nontaxable or nondeductible items | |||||||||||||||||||||||||||||||||||
| 162(m) limitation | 2,567 | 5.3 | % | 1,725 | 4.3 | % | 263 | 0.9 | % | ||||||||||||||||||||||||||
| Stock-based compensation | (5,311) | (10.9) | % | (2,646) | (6.6) | % | (304) | (1.1) | % | ||||||||||||||||||||||||||
| Other | 151 | 0.3 | % | 123 | 0.3 | % | 133 | 0.5 | % | ||||||||||||||||||||||||||
| Other adjustments | 104 | 0.2 | % | (109) | (0.3) | % | 135 | 0.5 | % | ||||||||||||||||||||||||||
| Tax credits | |||||||||||||||||||||||||||||||||||
| Research and development | — | — | % | (112) | (0.3) | % | (135) | (0.5) | % | ||||||||||||||||||||||||||
| Income tax provision and effective tax rate | $ | 9,565 | 19.7 | % | $ | 9,091 | 22.7 | % | $ | 7,346 | 26.1 | % | |||||||||||||||||||||||
(1) The states that contributed to the majority (greater than 50%) of the tax effect in this category included: For fiscal year ended December 31, 2025, Florida, Michigan, and Massachusetts; for fiscal year ended December 31, 2024, Florida, Michigan, Pennsylvania and Tennessee; and for fiscal year ended December 31, 2023, Michigan, Florida and Massachusetts.
The Company is subject to taxation and files income tax returns in the U.S. federal jurisdiction and in various state jurisdictions. The Company’s 2022 and forward tax returns remain subject to examination by the U.S. federal taxing authorities. The Company’s 2021 and forward tax returns remain subject to examination by various state taxing authorities.
Applying the updated requirements in ASU 2023-09 on a retrospective basis, cash payments made for income taxes, net of refunds, were as follows:
| For the Years Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| U.S. federal taxes | $ | 4,950 | $ | 6,400 | $ | 7,300 | |||||||||||
U.S. state and local taxes:(1) | |||||||||||||||||
| Michigan | 418 | 442 | * | ||||||||||||||
| Florida | 528 | * | * | ||||||||||||||
| All other states and locals below 5% threshold | 1,450 | 1,687 | 1,856 | ||||||||||||||
| Total income taxes paid | $ | 7,346 | $ | 8,529 | $ | 9,156 | |||||||||||
(1) Income taxes paid, net of refunds, exceeded 5% of total income taxes paid, in the following jurisdictions.
* Jurisdiction below the threshold for the period presented.
Deferred Tax Assets (Liabilities)
Deferred tax assets and liabilities are recognized for temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The significant components of deferred tax assets and liabilities were as follows:
| As of December 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Accrued expenses | $ | 510 | $ | 649 | |||||||
| Allowance for doubtful accounts | 334 | 100 | |||||||||
| Intangibles | 1,918 | 915 | |||||||||
| Goodwill | 2,984 | 3,581 | |||||||||
| Startup costs | 38 | 48 | |||||||||
| Stock-based compensation | 2,891 | 2,187 | |||||||||
| Research and development expenses | — | 1,415 | |||||||||
| Lease liabilities | 6,684 | 7,018 | |||||||||
| Accrued bonuses and commissions | 99 | 384 | |||||||||
| Total deferred tax assets | 15,458 | 16,297 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Fixed assets | (7,197) | (4,386) | |||||||||
| Right-of-use assets | (4,987) | (5,317) | |||||||||
| Percentage of completion | (350) | (1,006) | |||||||||
| Interest | (7) | (57) | |||||||||
| Total deferred tax liabilities | (12,541) | (10,766) | |||||||||
| Net deferred tax asset | $ | 2,917 | $ | 5,531 | |||||||
Management assesses the realizability of deferred tax assets based on whether it is more likely than not that such assets will be realized, which depends on the generation of sufficient future taxable income in the periods in which the related temporary differences reverse. In performing this assessment, the Company considers both positive and negative evidence. Based on this evaluation, management concluded that the Company’s deferred tax assets are more likely than not to be fully realized; accordingly, no valuation allowance was recorded as of December 31, 2025 and 2024.
As of December 31, 2025 and 2024, the Company had no net operating loss carryforwards.
Liabilities for Uncertain Tax Positions
The Company had no unrecognized tax benefits as of December 31, 2025 and 2024.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 2, 2026 | Showing above |
| 2024 | Mar 10, 2025 | |
| 2023 | Mar 13, 2024 | |
| 2022 | Mar 8, 2023 | |
| 2021 | Mar 16, 2022 | |
| 2020 | Mar 25, 2021 | |
| 2019 | May 12, 2020 | |
| 2018 | Apr 15, 2019 | |
| 2017 | Apr 2, 2018 | |
| 2016 | Apr 17, 2017 | |
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.