El Pollo Loco Holdings, Inc. Income Taxes Disclosure
10. INCOME TAXES
The provision for income taxes is based on the following components (in thousands):
December 31, | December 25, | December 27, | |||||||
| 2025 | | 2024 | | 2023 | ||||
Current tax expense | |||||||||
U.S. Federal | $ | 6,569 | $ | 8,945 | $ | 6,572 | |||
U.S. State and local | 3,117 | 3,517 | 1,846 | ||||||
Total current tax expense | 9,686 | 12,462 | 8,418 | ||||||
Deferred tax expense (benefit) | |||||||||
U.S. Federal | 1,254 | (2,105) | (29) | ||||||
U.S. State and local | 149 | (752) | 935 | ||||||
Total deferred tax expense (benefit) | 1,403 | (2,857) | 906 | ||||||
Total income tax expense | |||||||||
U.S. Federal | 7,823 | 6,840 | 6,543 | ||||||
U.S. State and local | 3,266 | 2,765 | 2,781 | ||||||
Total income tax expense | $ | 11,089 | $ | 9,605 | $ | 9,324 | |||
The table below provides the updated requirements of ASU No. 2023-09, Improvements to Income Tax Disclosures for fiscal 2025, 2024 and 2023. The provision for income taxes differs from the amount computed by applying the federal income tax rate of 21.0% for fiscal 2025, 2024 and 2023 as follows (amounts in thousands):
December 31, | December 25, | December 27, | ||||||||||||||||
2025 | 2024 | 2023 | ||||||||||||||||
| Amount | | Percent | | Amount | | Percent | | Amount | | Percent | |||||||
U.S. federal statutory tax rate | $ | 7,891 | 21.0 | % | $ | 7,411 | 21.0 | % | $ | 7,324 | 21.0 | % | ||||||
State and local income taxes, net of federal income tax effect (1) (2) | 2,580 | 6.9 | 2,157 | 6.1 | 2,185 | 6.3 | ||||||||||||
Tax credits | — | — | ||||||||||||||||
WOTC credit | (164) | (0.4) | (163) | (0.5) | (295) | (0.7) | ||||||||||||
Nontaxable or nondeductible items | ||||||||||||||||||
Stock option exercises | 62 | 0.2 | 32 | 0.1 | 33 | 0.1 | ||||||||||||
Nondeductible stock compensation expense | 27 | 54 | 0.2 | 166 | 0.5 | |||||||||||||
162(m) nondeductible executive compensation | 614 | 1.6 | 6 | — | 194 | 0.6 | ||||||||||||
Other | 13 | 142 | 0.4 | 84 | — | |||||||||||||
Changes in unrecognized tax benefits | — | — | — | — | — | — | ||||||||||||
Other adjustments | — | — | — | — | — | — | ||||||||||||
Deferred tax liability true up | 66 | 0.2 | — | — | (381) | (1.1) | ||||||||||||
Other | — | — | (34) | (0.1) | 14 | 0.0 | ||||||||||||
$ | 11,089 | 29.5 | % | $ | 9,605 | 27.2 | % | $ | 9,324 | 26.7 | % | |||||||
| (1) | State taxes in California made up the majority (greater than 50 percent) of the tax effect in this category. |
| (2) | During fiscal 2023, the ten-year carryover period for California Enterprise Zone credits expired, and the Company released the corresponding valuation allowance. |
For the Fiscal Years Ended | |||||||||
Income Taxes Paid (Net of Refunds Received) | December 31, 2025 | December 25, 2024 | December 27, 2023 | ||||||
U.S. Federal | | $ | 5,955 | | $ | 7,541 | | $ | 6,174 |
State: | |||||||||
California | 3,766 | 2,720 | 1,503 | ||||||
Other | 9 | 90 | 44 | ||||||
Total | $ | 9,730 | $ | 10,351 | $ | 7,721 |
As of December 31, 2025, the Company had no federal and less than $0.1 million state NOL carryforwards. These State NOLs expire beginning 2029. The utilization of NOL carryforwards and state enterprise zone credits may be subject to limitation under section 382 of the Internal Revenue Code of 1986 (the “Code”) and similar state law provisions.
Deferred income tax assets and liabilities are recorded for differences between the financial statement and tax basis of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
The Company has evaluated the available evidence supporting the realization of its gross deferred tax assets. After evaluating all of the positive and negative evidence, including the Company’s continued income from operations, the Company concluded that it is more likely than not that its deferred tax assets will be realized. As of December 31, 2025 and December 25, 2024, the Company had no valuation allowance.
The Company’s deferred tax assets and liabilities as of December 31, 2025 and December 25, 2024 are summarized below (in thousands).
| December 31, | | December 25, | |||
2025 | 2024 | |||||
Deferred assets: |
| |
| | ||
Capital leases | $ | 75 | $ | 69 | ||
Accrued vacation |
| 482 |
| 466 | ||
Accrued legal |
| 128 |
| — | ||
Accrued workers’ compensation |
| 1,973 |
| 2,099 | ||
Accrued payroll |
| 6 |
| 5 | ||
Net operating losses |
| 5 |
| 5 | ||
Fixed assets |
| 2,759 |
| 2,981 | ||
ROU liabilities |
| 51,187 |
| 51,160 | ||
Other |
| 7,297 |
| 7,893 | ||
Total deferred tax assets |
| 63,912 |
| 64,678 | ||
Deferred liabilities: |
| |
| | ||
Goodwill |
| (5,962) |
| (5,961) | ||
Trademark |
| (16,812) |
| (16,808) | ||
Prepaid expense |
| (1,051) |
| (1,012) | ||
ROU assets |
| (45,631) |
| (45,790) | ||
Fixed assets | (1,880) | (1,128) | ||||
Total deferred tax liabilities |
| (71,336) |
| (70,699) | ||
Net deferred tax liability | $ | (7,424) | $ | (6,021) | ||
The net deferred tax asset/(liability) amounts above as of December 31, 2025 and December 25, 2024 have been classified in the accompanying consolidated balance sheets as noncurrent assets/(liabilities) and are as follows (in thousands):
| December 31, | | December 25, | |||
2025 | 2024 | |||||
Noncurrent: | ||||||
Assets - state | $ | 187 | $ | 336 | ||
Liabilities - federal |
| (7,611) |
| (6,357) | ||
As of December 31, 2025 and December 25, 2024, the Company had no accrual for unrecognized tax benefits. Consequently, no interest or penalties have been accrued by the Company. The Company is subject to taxation in the United States and in various state jurisdictions.
The Company is no longer subject to U.S. examination for years before 2022 by the federal taxing authority, and for years before 2021 by state taxing authorities.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 13, 2026 | Showing above |
| 2024 | Mar 7, 2025 | |
| 2023 | Mar 8, 2024 | |
| 2022 | Mar 10, 2023 | |
| 2020 | Mar 15, 2021 | |
| 2019 | Mar 6, 2020 | |
| 2017 | Mar 9, 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.