Life Time Group Holdings, Inc.LTH
Life Time Group Holdings, Inc. Income Taxes Disclosure
Income Taxes
Income from continuing operations before income taxes is comprised of:
Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Domestic | $ | 488,578 | $ | 200,691 | $ | 92,057 | |||||||||||
Foreign | 4,925 | 8,077 | 2,733 | ||||||||||||||
Income from continuing operations before taxes | $ | 493,503 | $ | 208,768 | $ | 94,790 | |||||||||||
The provision for income taxes is comprised of:
Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Current tax expense (benefit) | |||||||||||||||||
Federal | $ | 12,330 | $ | 5,913 | $ | (2,497) | |||||||||||
State and local | 20,010 | 17,158 | 6,649 | ||||||||||||||
Foreign | — | — | (2) | ||||||||||||||
Total current tax expense | 32,340 | 23,071 | 4,150 | ||||||||||||||
Deferred tax expense (benefit) | |||||||||||||||||
Federal | 73,271 | 35,464 | 25,341 | ||||||||||||||
State and local | 13,006 | (40) | (11,491) | ||||||||||||||
Foreign | 1,215 | (5,967) | 727 | ||||||||||||||
Total deferred tax expense | 87,492 | 29,457 | 14,577 | ||||||||||||||
Provision for income taxes | $ | 119,832 | $ | 52,528 | $ | 18,727 | |||||||||||
The amount of deferred tax expense differs from the change in the year-end deferred tax balances due to the tax effect of other comprehensive income, additional paid-in capital items or change in foreign currency exchange rates.
The reconciliation between our effective tax rate on income before income taxes and the statutory tax rate is as follows:
Year Ended December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||
U.S. federal statutory tax rate | $ | 103,636 | 21.0 | % | $ | 43,841 | 21.0 | % | $ | 19,906 | 21.0 | % | |||||||||||||||||||||||
State and local income taxes, net of federal income tax effect (1) | 29,594 | 6.0 | % | 13,719 | 6.6 | % | (6,667) | (7.0) | % | ||||||||||||||||||||||||||
Foreign tax effects | |||||||||||||||||||||||||||||||||||
Canada | |||||||||||||||||||||||||||||||||||
Change in valuation allowance | — | — | % | (7,516) | (3.6) | % | (157) | (0.2) | % | ||||||||||||||||||||||||||
Other | 180 | — | % | (148) | (0.1) | % | 308 | 0.3 | % | ||||||||||||||||||||||||||
Effects of changes in tax laws/rates enacted in the current period | 51 | — | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
Tax credits | (2,100) | (0.4) | % | (1,183) | (0.6) | % | (2,485) | (2.6) | % | ||||||||||||||||||||||||||
Changes in valuation allowance | — | — | % | (950) | (0.4) | % | — | — | % | ||||||||||||||||||||||||||
Share-based payment awards | (11,900) | (2.4) | % | 6,020 | 2.9 | % | 6,190 | 6.5 | % | ||||||||||||||||||||||||||
Other | 594 | 0.1 | % | 433 | 0.2 | % | 741 | 0.8 | % | ||||||||||||||||||||||||||
Other adjustments | (223) | — | % | (1,688) | (0.8) | % | 891 | 1.0 | % | ||||||||||||||||||||||||||
Effective tax rate | $ | 119,832 | 24.3 | % | $ | 52,528 | 25.2 | % | $ | 18,727 | 19.8 | % | |||||||||||||||||||||||
(1) The states that make up the majority (greater than 50 percent) of the effect of the state and local income taxes category are Minnesota, New Jersey, Illinois and New York for the year ended December 31, 2025. The states that make up the majority (greater than 50 percent) of the effect of the state and local income taxes category are Minnesota, Texas, Illinois and New Jersey for the year ended
December 31, 2024. The states that make up the majority (greater than 50 percent) of the effect of the state and local income taxes category are Illinois, Minnesota, California and New Jersey for the year ended December 31, 2023.
Income taxes paid were as follows:
Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Federal taxes paid | $ | 11,800 | $ | 1,000 | $ | 6,800 | |||||||||||
State and local taxes paid | 15,431 | 17,182 | 7,251 | ||||||||||||||
Total | $ | 27,231 | $ | 18,182 | $ | 14,051 | |||||||||||
Income taxes paid (net of refunds) exceeded 5% of total income taxes paid (net of refunds) in the following jurisdictions:
Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
State | |||||||||||||||||
| Illinois | * | 2,940 | 2,390 | ||||||||||||||
| Massachusetts | * | 1,360 | * | ||||||||||||||
| Minnesota | * | 1,900 | * | ||||||||||||||
| New Jersey | 1,520 | 2,110 | * | ||||||||||||||
| New York | 1,526 | 2,524 | * | ||||||||||||||
| Texas | 2,300 | 1,550 | 1,957 | ||||||||||||||
| 5,346 | 12,384 | 4,347 | |||||||||||||||
*Jurisdiction below the threshold for the period presented
The net deferred tax liabilities as of December 31, 2025 and 2024 consisted of the following:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | Classification in Consolidated Balance Sheets | |||||||||||||||
U.S. deferred tax liability | $ | (172,217) | $ | (85,255) | Deferred income taxes, net | ||||||||||||
Canadian deferred tax asset | 291 | — | Other assets | ||||||||||||||
Total net deferred tax liability | $ | (171,926) | $ | (85,255) | |||||||||||||
Deferred income taxes are the result of provisions of the tax laws that either require or permit certain items of income or expense to be reported for tax purposes in different periods than they are reported for financial reporting. The tax effect of temporary differences that gives rise to the net deferred tax liability are as follows:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
Deferred tax assets: | |||||||||||
Lease-related liabilities | $ | 692,974 | $ | 640,039 | |||||||
Share-based compensation | 20,708 | 69,082 | |||||||||
Accrued expenses | 24,725 | 21,129 | |||||||||
Deferred revenue | 182 | 907 | |||||||||
Net operating loss | 7,097 | 47,827 | |||||||||
Business interest | 30,116 | 66,333 | |||||||||
Other | 6,403 | 4,644 | |||||||||
Valuation allowance | (532) | (440) | |||||||||
Total deferred tax assets | 781,673 | 849,521 | |||||||||
Deferred tax liabilities: | |||||||||||
Property and equipment | (250,903) | (280,481) | |||||||||
Intangibles | (48,299) | (46,547) | |||||||||
Operating and finance lease right-of-use assets | (639,799) | (594,519) | |||||||||
Partnership interest | (1,958) | (1,869) | |||||||||
Prepaid expenses | (11,517) | (10,393) | |||||||||
Costs related to deferred revenue | (6) | (38) | |||||||||
Other | (1,117) | (929) | |||||||||
Total deferred tax liabilities | (953,599) | (934,776) | |||||||||
Net deferred tax liability | $ | (171,926) | $ | (85,255) | |||||||
We recognize a tax position when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. We adjust our liability for unrecognized tax benefits in the period in which an uncertain tax position is effectively settled, that statute of limitations expires for the relevant taxing authority to examine the tax position or when more information becomes available. No unrecognized tax benefits were recorded in any of the periods presented.
We are subject to taxation in the U.S., Canada and various states. Our tax years 2025, 2024, 2023 and 2022 are subject to examination by the tax authorities. With few exceptions, we are no longer subject to U.S. federal, state or local examinations by tax authorities for years before 2022.
As of December 31, 2025, we had state net operating loss carryforwards totaling approximately $105.2 million ($6.3 million tax effected), of which approximately $83.5 million ($5.2 million tax effected) expires between 2030 and 2046 and approximately $21.6 million ($1.1 million tax effected) can be carried forward indefinitely. As it relates to our Canada operations, we had an income tax net operating loss carryforward of approximately $3.0 million ($0.8 million tax effected) as of December 31, 2025, which is subject to expiration in 2042.
As of December 31, 2024, we had a federal income tax net operating loss carryforward related to our U.S. operations of approximately $170.7 million ($35.9 million tax effected), that could be carried forward indefinitely. As of December 31, 2024, we also had state net operating loss carryforwards totaling approximately $155.5 million ($8.8 million tax effected), of which approximately $121.9 million ($7.0 million tax effected) was to expire between 2027 and 2045 and approximately $33.6 million ($1.8 million tax effected) could be carried forward indefinitely. As it relates to our Canada operations, we had an income tax net operating loss carryforward of approximately $11.9 million ($3.2 million tax effected) as of December 31, 2024, which was subject to expiration between tax years 2037 and 2042.
As of December 31, 2025 and 2024, we had a business interest carryforward of approximately $119.0 million ($30.1 million tax effected) and $264.2 million ($66.3 million tax effected), respectively, that can be carried forward indefinitely.
We considered all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations to determine the extent to which we believe net
deferred tax assets will more likely than not be realized. Based on this assessment, as of December 31, 2025, a valuation allowance of $0.5 million has been recorded to reduce the deferred tax asset associated with certain state net operating loss carryforwards.
As of December 31, 2024, a valuation allowance of $0.4 million was recorded to reduce the deferred tax asset associated with the state net operating loss carryforwards and other deferred tax assets.
We consider the earnings of certain non-U.S. subsidiaries to be indefinitely invested outside the United States on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs and our specific plans for reinvestment of those subsidiary earnings. We have not recorded a deferred tax liability related to the U.S. federal and state income taxes and foreign withholding taxes on undistributed earnings of foreign subsidiaries indefinitely invested outside the United States.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Mar 8, 2023 | |
| 2021 | Mar 10, 2022 | |
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.