MARCUS CORPMCS
MARCUS CORP Income Taxes Disclosure
9. Income Taxes
The components of the net deferred tax liability are as follows:
| December 31, 2025 | December 26, 2024 | ||||||||||
| Deferred tax assets | |||||||||||
| Accrued employee benefits | $ | 13,230 | $ | 13,171 | |||||||
| Operating lease liabilities | 43,116 | 47,121 | |||||||||
| Gift card liabilities | 5,701 | 6,030 | |||||||||
| Net operating loss, disallowed interest & tax credit carryforwards | 23,150 | 18,784 | |||||||||
| Other | 135 | 130 | |||||||||
| Total | 85,332 | 85,236 | |||||||||
| Less valuation allowance | (3,594) | (3,583) | |||||||||
| Deferred tax assets | 81,738 | 81,653 | |||||||||
| Deferred tax liabilities | |||||||||||
| Depreciation and amortization | (69,102) | (68,767) | |||||||||
| Operating lease assets | (37,092) | (41,549) | |||||||||
| Deferred tax liabilities | (106,194) | (110,316) | |||||||||
| Net deferred tax liability | $ | (24,456) | $ | (28,663) | |||||||
| Amounts recognized in the consolidated balance sheets consist of: | |||||||||||
| Deferred income taxes - other assets | $ | 6,449 | $ | 3,956 | |||||||
| Deferred income taxes - liabilities | (30,905) | (32,619) | |||||||||
| Net amount recognized | $ | (24,456) | $ | (28,663) | |||||||
As of December 31, 2025 and December 26, 2024, the Company had federal tax credit carryforwards of $9,067 and $3,010, respectively, and state tax credit carryforwards of $3,500 and $0, respectively. In fiscal 2025, the Company generated federal and state historic rehabilitation credits of $5,233 and $3,500, respectively, related to the renovation of the Hilton Milwaukee. In January 2026, the Company entered into a contract to sell the $3,500 state historic rehabilitation credits for $2,975 and recorded a valuation allowance of $525.
As of December 31, 2025 and December 26, 2024, the Company had state net operating loss carryforwards of $188,849 and $200,279, respectively, which will expire primarily in the next 12 to 20 years. As of December 26, 2024, the valuation allowance for a portion of the Company’s state net operating loss carryforwards that were not more likely than not to be realized was $3,583. In fiscal 2025, the Company decreased the valuation allowance for state net operating loss carryforwards by $513 to $3,070. The amount of the state net operating loss carryforwards considered realizable could be adjusted if, among other factors, estimates of future taxable income during the carryforward periods are reduced or increased.
Income tax expense (benefit) consists of the following:
| Year Ended | |||||||||||||||||
| December 31, 2025 | December 26, 2024 | December 28, 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 95 | $ | 846 | $ | 603 | |||||||||||
| State | 187 | 713 | 692 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | (1,759) | 2,833 | 3,900 | ||||||||||||||
| State | (2,507) | (6,814) | 1,661 | ||||||||||||||
| $ | (3,984) | $ | (2,422) | $ | 6,856 | ||||||||||||
The Company’s effective income tax rate was (45.8)%, 23.7% and 31.7% for fiscal 2025, fiscal 2024 and fiscal 2023, respectively. A reconciliation of the statutory federal tax rate to the effective tax rate on earnings attributable to The Marcus Corporation follows:
| Year Ended | |||||||||||||||||||||||||||||||||||
| December 31, 2025 | December 26, 2024 | December 28, 2023 | |||||||||||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||
| U.S. federal statutory tax rate | $ | 1,828 | 21.0 | % | $ | (2,144) | 21.0 | % | $ | 4,547 | 21.0 | % | |||||||||||||||||||||||
State income taxes, net of federal income tax effect(1) | |||||||||||||||||||||||||||||||||||
| State income taxes | 926 | 10.6 | 753 | (7.4) | 2,472 | 11.4 | |||||||||||||||||||||||||||||
| State valuation allowances | (406) | (4.7) | (6,126) | 60.0 | (817) | (3.8) | |||||||||||||||||||||||||||||
| State historic rehabilitation credits, net of valuation allowance | (2,350) | (27.0) | — | — | — | — | |||||||||||||||||||||||||||||
| Effect of changes in tax laws | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Tax credits | |||||||||||||||||||||||||||||||||||
| Employment-related tax credits | (813) | (9.3) | (1,301) | 12.7 | (1,207) | (5.6) | |||||||||||||||||||||||||||||
| Historic rehabilitation credit | (5,233) | (60.1) | — | — | — | — | |||||||||||||||||||||||||||||
| Nontaxable or nondeductible items | |||||||||||||||||||||||||||||||||||
| Excess tax benefits on share-based compensation | 191 | 2.2 | 334 | (3.3) | 617 | 2.8 | |||||||||||||||||||||||||||||
| Other compensation & benefits | 1,707 | 19.6 | 1,786 | (17.5) | 1,178 | 5.4 | |||||||||||||||||||||||||||||
| Meals & entertainment | 305 | 3.5 | 261 | (2.6) | 229 | 1.1 | |||||||||||||||||||||||||||||
| Debt conversion | — | — | 3,888 | (38.1) | — | — | |||||||||||||||||||||||||||||
| Section 831(b) exclusion - captive insurance | (262) | (3.0) | (283) | 2.8 | (215) | (1.0) | |||||||||||||||||||||||||||||
| Other adjustments | 123 | 1.4 | 411 | (3.9) | 53 | 0.2 | |||||||||||||||||||||||||||||
| Effective tax rate | $ | (3,984) | (45.8) | % | $ | (2,422) | 23.7 | % | $ | 6,856 | 31.7 | % | |||||||||||||||||||||||
(1) State taxes in Wisconsin made up the majority of the tax effect in this category in fiscal 2025, fiscal 2024 and fiscal 2023.
The Company's effective income tax rate during fiscal 2025 was positively impacted by the historic rehabilitation credits of $7,583, net of valuation allowance, and by a $406 release of valuation allowances previously recorded against deferred tax
assets for state net operating loss carryforwards (net of federal benefit). The Company has adopted the flow-through method of accounting for these credits. The Company’s effective income tax rate was negatively impacted by excess compensation subject to deduction limitations.
The Company's effective income tax rate during fiscal 2024 was positively impacted by a $7,755 decrease in the valuation allowance for state net operating loss carryforwards, partially offset by a corresponding decrease in the federal benefit on the valuation allowance of $1,629, and was negatively impacted by a nondeductible debt conversion expense resulting from the Convertible Note Repurchases and related termination of the Capped Call Transactions.
Net income taxes paid in fiscal 2025, 2024, and 2023 were $244, $1,428, and $1,776, respectively. Net income taxes paid by jurisdiction is as follows:
Year Ended | |||||||||||||||||
| December 31, 2025 | December 26, 2024 | December 28, 2023 | |||||||||||||||
| Federal | $ | — | $ | 800 | $ | 743 | |||||||||||
| State | 244 | 628 | $ | 1,033 | |||||||||||||
| Total | $ | 244 | $ | 1,428 | $ | 1,776 | |||||||||||
Income taxes paid (net of refunds) exceeded 5 percent of total income taxes paid (net of refunds) in the following jurisdictions:
Year Ended | |||||||||||||||||
| December 31, 2025 | December 26, 2024 | December 28, 2023 | |||||||||||||||
| Illinois | 50 | 417 | 448 | ||||||||||||||
| Minnesota | 17 | * | 90 | ||||||||||||||
| Missouri | 40 | 35 | * | ||||||||||||||
| New York | 13 | * | * | ||||||||||||||
| Oklahoma | * | * | 179 | ||||||||||||||
| Pennsylvania | 20 | * | 58 | ||||||||||||||
| Texas | 100 | 73 | 76 | ||||||||||||||
The Company had no unrecognized tax benefits as of December 31, 2025, December 26, 2024 and December 28, 2023. The Company had no accrued interest or penalties at December 31, 2025 or December 26, 2024. The Company classifies interest and penalties relating to income taxes as income tax expense. For the years ended December 31, 2025 and December 26, 2024, no interest income or expense was recognized in the consolidated statement of operations, compared $1 of interest expense for the year ended December 28, 2023.
The Company's federal income tax returns for fiscal 2021 and prior are no longer subject to examination. With certain exceptions, the Company's state income tax returns are no longer subject to examination prior to fiscal 2020. At this time, the Company does not expect the results from any income tax audit or appeal to have a significant impact on the Company's financial statements.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Mar 1, 2024 | |
| 2022 | Mar 2, 2023 | |
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.