MGIC INVESTMENT CORPMTG

MGIC INVESTMENT CORP Income Taxes Disclosure

10-KFiled Feb 25, 20263 min read
Income Taxes
Net deferred tax assets (liabilities) as reported on the consolidated balance sheets as of December 31, 2025 and 2024 are shown in table 16.1 below.
Deferred Tax Assets and Liabilities
Table16.1
(In thousands)20252024
Total deferred tax assets$60,277 $105,437 
Total deferred tax liabilities(41,765)(35,562)
Net deferred tax asset (liability)$18,512 $69,875 

Table 16.2 includes the components of the net deferred tax asset (liability) as of December 31, 2025 and 2024.
Deferred Tax Components
Table16.2
(In thousands)20252024
Unrealized losses on investments$32,081 $68,550 
Unearned premium reserves8,845 11,111 
Transferable tax credits8,733 — 
Deferred compensation6,411 7,878 
Loss reserves3,047 2,291 
Research and experimental costs160 14,143 
Benefit plans(32,086)(25,195)
Bond discount amortization(3,996)(3,535)
Fixed assets(2,534)(2,833)
Deferred policy acquisition costs(1,759)(2,456)
Other, net(390)(79)
Net deferred tax asset (liability)$18,512 $69,875 

The $8.7 million carryforward for our transferable tax credits expires in 2048. We believe that all gross deferred tax assets at December 31, 2025 and 2024 are fully realizable and no valuation allowance has been established.

Table 16.3 summarizes income before income tax expense for the periods indicated.
U.S. and Foreign Income Before Income Tax Expense
Table
16.3
202520242023
(In thousands)Amount Percent (%)Amount Percent (%)Amount Percent (%)
U.S.922,82699.4 %962,78499.4 %893,95799.1 %
Foreign5,7110.6 %5,9250.6 %8,2720.9 %
Income before tax928,537100.0 %968,709100.0 %902,229100.0 %

Table 16.4 summarizes the components of the provision for income taxes for the periods indicated.
Provision for (Benefit from) Income Taxes
Table
16.4
(In thousands)202520242023
Current U.S. federal$163,227 $196,582 $185,191 
Deferred19,226 1,805 1,550 
Other7,737 7,328 2,539 
Provision for income taxes$190,190 $205,715 $189,280 
Table 16.5 reconciles the amount and rate of tax from the U.S. federal statutory income tax rate to our effective tax provision rate after the prospective adoption of ASU 2023-09.

Effective Tax Rate Reconciliation After Adoption of ASU 2023-09
Table
16.5
2025
(In thousands)
Amount
Percent (%)
U.S. federal statutory income tax rate
194,99321.0 %
Tax credits:
Transferable tax credits
(10,032)(1.1)%
Other credits
(2,066)(0.2)%
Other
7,2950.8 %
Effective tax rate190,19020.5 %

Table 16.6 reconciles the rate of tax from the U.S. federal statutory income tax rate to our effective tax provision rate for years prior to the adoption of ASU 2023-09.

Effective Tax Rate Reconciliation Prior to Adoption of ASU 2023-09
Table
16.6
 20242023
U.S. federal statutory income tax rate
21.0 %21.0 %
Tax exempt municipal bond interest(0.3)%(0.5)%
Other, net0.5 %0.5 %
Effective tax rate21.2 %21.0 %

Table 16.7 provides our income tax payments by jurisdiction.

Income Taxes Paid by Jurisdiction
Table
16.7
2025
(In thousands)
Amount Percent (%)
Federal
U.S.57,04373 %
Transferable tax credits12,17416 %
Total federal income taxes paid69,21789 %
State6,3518 %
Other
2,2363 %
Total income taxes paid77,804100 %

Current federal income tax payments were $181.8 million and $188.2 million in 2024 and 2023, respectively. U.S. Tax payments include cash payments to the IRS and net purchases of U.S. government non-interest-bearing tax and loss bonds. As of December 31, 2025 we owned $984.2 million of tax and loss bonds and our federal tax credits payable was $135.3 million. Excluding Federal, no jurisdiction comprises 5% or more of the total income taxes paid.

We have not recorded any uncertain tax positions during 2025 and 2024 and have no unrecognized tax benefits at December 31, 2025 and December 31, 2024. We recognize interest accrued and penalties related to unrecognized tax benefits in income taxes. Generally, tax years after 2021 are open to examination by tax authorities.

Historical Timeline

Fiscal YearFiled
2025Feb 25, 2026Showing above
2024Feb 26, 2025
2023Feb 21, 2024
2022Feb 22, 2023
2021Feb 23, 2022
2020Feb 23, 2021
2019Feb 24, 2020
2018Feb 22, 2019
2017Feb 23, 2018
2016Feb 21, 2017
2015Feb 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.

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