M/I HOMES, INC.MHO
M/I HOMES, INC. Income Taxes Disclosure
Income Taxes
(1) The states that contributed to a majority (greater than 50%) of the tax effect in this category include Florida, Illinois and Minnesota for 2025, 2024 and 2023.
In 2025 and 2023, the only jurisdiction with cash taxes paid that exceeded 5% of total income taxes paid was Florida. In 2024 there was no individual jurisdiction with cash taxes paid that equaled or exceeded 5% of total income taxes paid.
The Company records income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and attributable to operating loss and tax credit carryforwards, if any. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which the temporary differences are expected to be recovered or paid.
In accordance with ASC 740, we evaluate our deferred tax assets, including the benefit from NOLs and tax credit carryforwards, if any, to determine if a valuation allowance is required. Companies must assess, using significant judgments, whether a valuation allowance should be established based on the consideration of all available evidence using a “more likely than not” standard with significant weight being given to evidence that can be objectively verified. This assessment gives appropriate consideration to all positive and negative evidence related to the realization of the deferred tax assets and considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the length of statutory carryforward periods, our experience with operating losses and our experience of utilizing tax credit carryforwards and tax planning alternatives. Based upon a review of all available evidence, we believe our deferred tax assets were fully realizable in all periods presented. At December 31, 2025, the Company’s total deferred tax assets were $34.1 million which were offset by $29.6 million of total deferred tax liabilities for a $4.5 million net deferred tax asset which is reported on the Company’s Consolidated Balance Sheets.
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The tax effects of the significant temporary differences that comprise the deferred tax assets and liabilities are as follows:
| December 31, | ||||||||
| (In thousands) | 2025 | 2024 | ||||||
| Deferred tax assets: | ||||||||
| Warranty, insurance and other accruals | $ | 14,695 | $ | 13,733 | ||||
| Equity-based compensation | 3,112 | 1,998 | ||||||
| Inventory | — | 846 | ||||||
| Operating lease liabilities | 14,197 | 13,869 | ||||||
| State taxes | 421 | 497 | ||||||
| Net operating loss carryforward | 65 | 65 | ||||||
| Deferred charges | 1,612 | 3,559 | ||||||
| Total deferred tax assets | $ | 34,102 | $ | 34,567 | ||||
| Deferred tax liabilities: | ||||||||
| Federal effect of state deferred taxes | $ | 170 | $ | 485 | ||||
| Inventory | 9,944 | — | ||||||
| Depreciation | 5,093 | 6,309 | ||||||
| Operating lease right-of-use assets | 13,772 | 13,501 | ||||||
| Prepaid expenses | 615 | 821 | ||||||
| Total deferred tax liabilities | $ | 29,594 | $ | 21,116 | ||||
| Net deferred tax asset | $ | 4,508 | $ | 13,451 | ||||
The provision from income taxes consists of the following:
| Year Ended December 31, | |||||||||||
| (In thousands) | 2025 | 2024 | 2023 | ||||||||
| Current: | |||||||||||
| Federal | $ | 95,280 | $ | 138,535 | $ | 117,115 | |||||
| State | 19,424 | 29,485 | 22,092 | ||||||||
| $ | 114,704 | $ | 168,020 | $ | 139,207 | ||||||
| (In thousands) | 2025 | 2024 | 2023 | ||||||||
| Deferred: | |||||||||||
| Federal | $ | 7,760 | $ | 1,616 | $ | 2,347 | |||||
| State | 1,183 | 247 | 358 | ||||||||
| $ | 8,943 | $ | 1,863 | $ | 2,705 | ||||||
| Total | $ | 123,647 | $ | 169,883 | $ | 141,912 | |||||
Our provision for income taxes includes tax benefits of $4.5 million, $3.6 million and $2.0 million for the years ended 2025, 2024 and 2023, respectively, under The Inflation Reduction Act. The One Big Beautiful Bill Act (the “Act”) enacted on July 4, 2025, terminates the availability of this benefit on June 30, 2026. We do not anticipate the Act will have a material impact to our financial statements as a whole.
For 2025, 2024 and 2023, the Company’s effective tax rate was 23.5%, 23.2%, and 23.4%, respectively. The following table provides a reconciliation of the differences between the effective income tax rate and the federal statutory tax rate for 2025, 2024 and 2023:
| Year Ended December 31, | ||||||||||||||||||||
| (In thousands) | 2025 | Percent | 2024 | Percent | 2023 | Percent | ||||||||||||||
Pre-tax income | $ | 526,588 | $ | 733,608 | $ | 607,277 | ||||||||||||||
| Federal taxes at statutory rate | 110,584 | 21.0 | % | 154,058 | 21.0 | % | 127,528 | 21.0 | % | |||||||||||
State and local taxes – net of federal tax benefit (1) | 18,662 | 3.5 | % | 25,205 | 3.4 | % | 20,172 | 3.3 | % | |||||||||||
Nontaxable or nondeductible items | 473 | 0.1 | % | (2,655) | (0.4) | % | (1,812) | (0.3) | % | |||||||||||
| Federal tax credits | (4,453) | (0.8) | % | (3,562) | (0.5) | % | (1,991) | (0.3) | % | |||||||||||
| Other | (1,619) | (0.3) | % | (3,163) | (0.4) | % | (1,985) | (0.3) | % | |||||||||||
| Total | $ | 123,647 | 23.5 | % | $ | 169,883 | 23.2 | % | $ | 141,912 | 23.4 | % | ||||||||
(1) The states that contributed to a majority (greater than 50%) of the tax effect in this category include Florida, Illinois and Minnesota for 2025, 2024 and 2023.
The Company files income tax returns in the U.S. federal jurisdiction, and various states. The Company is no longer subject to U.S. federal, state or local examinations by tax authorities for years before 2019. The Company is audited from time to time, and if any adjustments are made, they would be either immaterial or reserved.
The Company recognizes interest and penalties accrued related to unrecognized tax benefits in tax expense. At December 31, 2025, 2024 and 2023, we had no unrecognized tax benefits due to the lapse of the statute of limitations and completion of audits in prior years. We believe that our current income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change.
The amounts of cash taxes paid by the Company for 2025, 2024 and 2023 were as follows:
| Year Ended December 31, | |||||||||||||||||||||||||||||
| (In thousands) | 2025 | % | 2024 | % | 2023 | % | |||||||||||||||||||||||
Federal | $ | 105,822 | 81 | % | $ | 137,735 | 86 | % | $ | 124,620 | 83 | % | |||||||||||||||||
| State and local taxes: | |||||||||||||||||||||||||||||
Florida | 7,822 | 6 | % | 5,476 | 3 | % | 9,301 | 6 | % | ||||||||||||||||||||
| Other | 17,796 | 14 | % | 16,411 | 11 | % | 16,747 | 11 | % | ||||||||||||||||||||
| Total | $ | 131,440 | 100 | % | $ | 159,622 | 100 | % | $ | 150,668 | 100 | % | |||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 13, 2026 | Showing above |
| 2024 | Feb 14, 2025 | |
| 2023 | Feb 16, 2024 | |
| 2022 | Feb 17, 2023 | |
| 2021 | Feb 17, 2022 | |
| 2020 | Feb 19, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 22, 2019 | |
| 2017 | Feb 16, 2018 | |
| 2016 | Feb 17, 2017 | |
| 2015 | Feb 26, 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.