MARKEL GROUP INC.MKL
MARKEL GROUP INC. Income Taxes Disclosure
15. Income Taxes
Effective for the year ended December 31, 2025, the Company adopted ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures using a prospective approach. See note 1.
Income before incomes taxes includes the following components, based on country of domicile.
Year Ended December 31, | |||||||||||||||||
| (dollars in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| U.S. operations | $ | 1,985,180 | $ | 2,428,694 | $ | 1,711,849 | |||||||||||
| Foreign operations | 747,528 | 1,209,006 | 941,857 | ||||||||||||||
| Income before incomes taxes | $ | 2,732,708 | $ | 3,637,700 | $ | 2,653,706 | |||||||||||
Income tax expense includes the following components, based on the taxing authority to which taxes are paid. The Company's most significant U.K. and Bermuda subsidiaries have elected to be taxed as domestic corporations for U.S. tax purposes. U.S. income taxes have not been recognized on any undistributed earnings of the Company's foreign subsidiaries that are considered indefinitely reinvested, the amount of which is not material to the consolidated financial statements.
Year Ended December 31, | |||||||||||||||||
| (dollars in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Current: | |||||||||||||||||
| U.S. federal income tax | $ | 279,804 | $ | 244,904 | $ | 208,268 | |||||||||||
| U.S. state income tax | 26,307 | 26,897 | 40,881 | ||||||||||||||
| Foreign income tax | 122,973 | 123,933 | 69,669 | ||||||||||||||
| Total current tax expense | 429,084 | 395,734 | 318,818 | ||||||||||||||
| Deferred: | |||||||||||||||||
| U.S. federal income tax | 137,888 | 375,727 | 256,740 | ||||||||||||||
| U.S. state income tax | 34,855 | 23,442 | (6,699) | ||||||||||||||
| Foreign income tax | (21,524) | (4,609) | (16,243) | ||||||||||||||
| Total deferred tax expense | 151,219 | 394,560 | 233,798 | ||||||||||||||
Total: | |||||||||||||||||
| U.S. federal income tax | 417,692 | 620,631 | 465,008 | ||||||||||||||
| U.S. state income tax | 61,162 | 50,339 | 34,182 | ||||||||||||||
| Foreign income tax | 101,449 | 119,324 | 53,426 | ||||||||||||||
Total income tax expense | $ | 580,303 | $ | 790,294 | $ | 552,616 | |||||||||||
The following table presents the Company's net payments for income taxes by jurisdiction.
| (dollars in thousands) | Year Ended December 31, 2025 | ||||
U.S. federal income tax (1) | $ | 236,029 | |||
| U.S. state income tax | 32,630 | ||||
Foreign income tax | |||||
| United Kingdom | 91,197 | ||||
Canada | 30,574 | ||||
| Other jurisdictions | 12,192 | ||||
| Total income taxes paid | $ | 402,622 | |||
(1) U.S. federal income tax payments includes $86.4 million paid to purchase transferable tax credits.
The Company made net income tax payments of $382.5 million and $280.7 million in 2024 and 2023, respectively.
Income taxes payable were $88.2 million and $40.3 million at December 31, 2025 and 2024, respectively, and were included in other liabilities on the consolidated balance sheets. Income taxes receivable were $24.4 million and $13.3 million at December 31, 2025 and 2024, respectively, and were included in other assets on the consolidated balance sheets.
The following table presents a reconciliation of the Company's income tax expense using the U.S. federal corporate income tax rate to the Company's actual income tax expense for the year ended December 31, 2025.
| (dollars in thousands) | Year Ended December 31, 2025 | |||||||
| U.S. federal corporate tax rate | $ | 573,882 | 21.0 | % | ||||
| Increase (decrease) resulting from: | ||||||||
U.S. tax effects of cross-border tax laws | ||||||||
U.S. taxation of electing foreign entities, net of U.S. federal tax credits for foreign taxes incurred | 41,460 | 1.5 | ||||||
| Foreign tax effects | ||||||||
Bermuda | ||||||||
| Foreign tax credits | (65,614) | (2.4) | ||||||
| Other | (4,566) | (0.2) | ||||||
Other jurisdictions | 13,897 | 0.5 | ||||||
State income taxes, net of U.S. federal income tax benefit (1) | 1.8 | |||||||
| Other | (27,073) | (1.0) | ||||||
| Income tax expense | $ | 580,303 | 21.2 | % | ||||
(1) State taxes in California and Virginia comprised greater than 50% of the Company's state income tax expense.
The Company's most significant Bermuda subsidiary has elected to be taxed as a domestic corporation for U.S. tax purposes and pays U.S. tax at the 21% federal tax rate. The statutory income tax rate in Bermuda is 15%, and the Company generally receives a tax credit in Bermuda for U.S. taxes accrued that offsets Bermuda taxes.
The Company's most significant U.K. subsidiaries have elected to be taxed as domestic corporations for U.S. tax purposes and pay U.S. tax at the 21% federal tax rate. The Company generally receives a U.S. tax credit for taxes incurred in the U.K. The U.K. tax attributed to the difference between the U.S. tax rate and the U.K. statutory income tax rate of 25% is included in foreign tax effects for other jurisdictions in the preceding table.
The following table presents a reconciliation of the Company's income tax expense at the U.S. federal corporate income tax rate to the Company's actual income tax expense for the years ended December 31, 2024 and 2023.
Year Ended December 31, | |||||||||||||||||
| (dollars in thousands) | 2024 | 2023 | |||||||||||||||
U.S. federal corporate tax rate | $ | 763,917 | 21.0 | % | $ | 557,278 | 21.0 | % | |||||||||
| Increase (decrease) resulting from: | |||||||||||||||||
State income taxes, net of U.S. federal income tax benefit | 39,770 | 1.1 | 27,007 | 1.0 | |||||||||||||
| Tax-exempt investment income | (14,830) | (0.4) | (15,328) | (0.6) | |||||||||||||
| Foreign operations | 12,985 | 0.3 | 10,854 | 0.4 | |||||||||||||
Markel CATCo Re income not subject to tax | (12,201) | (0.3) | (15,013) | (0.6) | |||||||||||||
| Other | 653 | — | (12,182) | (0.4) | |||||||||||||
Income tax expense | $ | 790,294 | 21.7 | % | $ | 552,616 | 20.8 | % | |||||||||
The following table presents the components of deferred tax assets and liabilities.
| December 31, | |||||||||||
| (dollars in thousands) | 2025 | 2024 | |||||||||
| Assets: | |||||||||||
| Unpaid losses and loss adjustment expenses | $ | 288,135 | $ | 233,583 | |||||||
| Lease liabilities | 164,359 | 172,131 | |||||||||
| Unearned premiums | 163,294 | 164,485 | |||||||||
| Tax credit carryforwards | 61,527 | 45,481 | |||||||||
| Accrued incentive compensation | 61,163 | 51,943 | |||||||||
| Life and annuity benefits | 46,277 | 29,143 | |||||||||
| Net operating loss carryforwards | 33,054 | 37,168 | |||||||||
| Other differences between financial reporting and tax bases | 96,310 | 106,667 | |||||||||
| Total gross deferred tax assets | 914,119 | 840,601 | |||||||||
| Less valuation allowance | (30,948) | (33,292) | |||||||||
| Total gross deferred tax assets, net of allowance | 883,171 | 807,309 | |||||||||
| Liabilities: | |||||||||||
| Investments | 1,953,859 | 1,566,540 | |||||||||
| Goodwill and other intangible assets | 177,996 | 170,941 | |||||||||
| Deferred policy acquisition costs | 163,339 | 173,742 | |||||||||
| Property, plant, and equipment | 153,699 | 160,615 | |||||||||
| Right-of-use lease assets | 153,072 | 162,628 | |||||||||
| Other differences between financial reporting and tax bases | 116,164 | 113,873 | |||||||||
| Total gross deferred tax liabilities | 2,718,129 | 2,348,339 | |||||||||
| Net deferred tax liability | $ | 1,834,958 | $ | 1,541,030 | |||||||
Deferred tax assets and liabilities are recorded on the consolidated balance sheets on a net basis by taxing jurisdiction. As of December 31, 2025 and 2024, the Company's consolidated balance sheets included net deferred tax liabilities of $1.9 billion and $1.6 billion, respectively, in other liabilities and net deferred tax assets of $32.8 million and $40.0 million, respectively, in other assets.
At December 31, 2025, the Company had tax credit carryforwards of $61.5 million, the majority of which related to foreign tax credits to be used against U.S. income tax. The Company expects to utilize all tax credit carryforwards before expiration. The earliest any of these credits will expire is 2034.
At December 31, 2025, the Company had deferred tax assets of $18.9 million for U.S. state net operating loss carryforwards and $13.8 million for foreign net operating loss carryforwards, which are available to offset future taxable income in certain U.S. states and foreign jurisdictions, respectively. The Company's ability to benefit from the majority of these net operating loss carryforwards is not subject to expiration. As described below, deferred tax assets related to losses at certain of the Company's subsidiaries and branches are offset by valuation allowances.
At December 31, 2025, the Company had total gross deferred tax assets of $914.1 million. The Company has a valuation allowance of $30.9 million to offset gross deferred tax assets at certain of the Company's international subsidiaries and branches. The Company believes that it is more likely than not that it will realize the remaining $883.2 million of gross deferred tax assets through generating taxable income or the reversal of existing temporary differences attributable to the gross deferred tax liabilities.
At December 31, 2025, the Company did not have any material unrecognized tax benefits.
The Company is subject to income tax in the U.S. and in foreign jurisdictions. The Company is no longer subject to income tax examination by tax authorities for years ended before January 1, 2022.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2018 | Feb 28, 2019 | |
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.