National Bank Holdings Corp Income Taxes Disclosure
Note 18 Income Taxes
Income tax expense attributable to income before taxes was $24.1 million, $26.4 million and $33.6 million for 2025, 2024 and 2023, respectively.
(a) Income taxes
Total income taxes for 2025, 2024 and 2023 were allocated as follows:
For the years ended December 31, | |||||||||
2025 | 2024 | 2023 | |||||||
Current expense: | |||||||||
U.S. federal | $ | 6,067 | $ | 19,076 | $ | 30,319 | |||
State and local | 1,539 | 3,502 | 5,750 | ||||||
Total current income tax expense | 7,606 | 22,578 | 36,069 | ||||||
Deferred expense (benefit): | |||||||||
U.S. federal | 14,514 | 2,993 | (1,564) | ||||||
State and local | 1,935 | 861 | (951) | ||||||
Total deferred income tax expense (benefit) | 16,449 | 3,854 | (2,515) | ||||||
Income tax expense | $ | 24,055 | $ | 26,432 | $ | 33,554 | |||
(b) Tax Rate Reconciliation
The reconciliation between the income tax expenses and the amounts computed by applying the U.S. federal income tax rate to pretax income is as follows:
For the years ended December 31, | |||||||||||||||
2025 | 2024 | 2023 | |||||||||||||
U.S. federal statutory income tax rate | $ | 28,062 | 21.00% | $ | 30,502 | 21.00% | $ | 36,876 | 21.00% | ||||||
Domestic federal reconciling items: | |||||||||||||||
Tax credits: | |||||||||||||||
Research credits | (550) | (0.41)% | (1,600) | (1.10)% | (2,400) | (1.37)% | |||||||||
Other | (92) | (0.07)% | (92) | (0.06)% | (92) | (0.05)% | |||||||||
Nontaxable and nondeductible items: | |||||||||||||||
Tax exempt municipal interest income, net | (6,483) | (4.85)% | (4,480) | (3.08)% | (4,437) | (2.53)% | |||||||||
Other, net | 400 | 0.30% | (545) | (0.38)% | (259) | (0.15)% | |||||||||
Other | (26) | (0.02)% | (800) | (0.55)% | 75 | 0.04% | |||||||||
Domestic state and local income taxes, net of federal effect(1) | 2,744 | 2.05% | 3,447 | 2.37% | 3,791 | 2.17% | |||||||||
$ | 24,055 | 18.00% | $ | 26,432 | 18.20% | $ | 33,554 | 19.11% | |||||||
(1) | | State taxes in Colorado and Utah made up the majority (greater than 50 percent) of the tax effect in this category. |
(c) Significant Components of Deferred Taxes
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2025 and 2024 are presented below:
December 31, 2025 | December 31, 2024 | ||||
Deferred tax assets: | |||||
Allowance for credit losses | $ | 20,761 | $ | 22,471 | |
Net unrealized losses on investment securities | 13,748 | 21,864 | |||
Lease liability | 7,008 | 6,884 | |||
Accrued compensation | 5,642 | 5,479 | |||
Accrued stock-based compensation | 2,310 | 2,276 | |||
Net unrealized losses on equity securities | 1,845 | 1,845 | |||
Nonaccrual interest income | 1,156 | 1,034 | |||
Other accrued expenses | 949 | 123 | |||
Net operating loss | 570 | 393 | |||
Net deferred loan fees | 453 | 919 | |||
Excess tax basis of acquired loans over carrying value | 335 | 401 | |||
Other | 2,000 | 2,767 | |||
Total deferred tax assets | 56,777 | 66,456 | |||
Deferred tax liabilities: | |||||
Intangible assets | (15,343) | (13,660) | |||
Capitalized research and development costs | (13,470) | (1,123) | |||
Right of use assets | (6,540) | (6,459) | |||
Premises and equipment | (4,813) | (4,126) | |||
Excess book basis in partnerships | (1,032) | (1,174) | |||
Mortgage servicing rights | (907) | (1,511) | |||
Other | (3,932) | (3,098) | |||
Total deferred tax liabilities | (46,037) | (31,151) | |||
Net deferred tax asset | $ | 10,740 | $ | 35,305 | |
At December 31, 2025, the Company had federal and state NOLs of $1.1 million and $2.6 million, respectively, which are available to offset future taxable income. The federal NOLs expire in varying amounts through 2034, and the state NOLs expire in varying amounts between 2026 and 2035. While these NOLs are subject to certain restrictions on the amount that can be utilized per year, the Company does not expect any tax attribute carryovers to expire before they are utilized.
On July 4, 2025, the OBBBA was signed into law, enacting significant changes to U.S. tax regulations, including the restoration of 100% bonus depreciation for qualifying assets placed in service after January 19, 2025, and the immediate deductibility of domestic research and experimentation expenditures for tax years beginning after December 31, 2024. The bill also allows companies to elect to deduct any remaining unamortized domestic research and experimental expenditures previously capitalized under prior law from 2022 to 2024 either fully in 2025 or ratably or two years (2025 and 2026). The Company elected to fully deduct the remaining costs in 2025.
As a result of the enactment of the OBBBA, the Company remeasured its deferred tax assets and liabilities during the third quarter of 2025 and recorded a reduction in net deferred tax assets, primarily driven by the reversal of deferred tax assets related to the capitalization of R&D expenditures (Section 174). The accelerated tax deductions under the new law, which permit immediate expensing, reduced the temporary differences that previously created these deferred tax assets.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, if any (including the impact of available carryforward periods), projected future taxable income, and tax-planning strategies in making this assessment. For the years ended December 31, 2025 and 2024, management believes a valuation allowance on the deferred tax asset is not necessary
based on the current and future projected earnings of the Company. The Company has no ASC 740-10 unrecognized tax benefits recorded as of December 31, 2025 and 2024 and does not expect the total amount of unrecognized tax benefits to significantly increase within the next 12 months.
The following table presents income taxes paid, net of refunds, for the years ended December 31, 2025, 2024 and 2023:
For the years ended December 31, | |||||||||
2025 | 2024 | 2023 | |||||||
Federal taxes paid | $ | 8,733 | $ | 17,900 | $ | 26,781 | |||
State and city taxes paid: | |||||||||
Colorado | 271 | 500 | 2,400 | ||||||
Other | 1,544 | 2,441 | 3,665 | ||||||
Total state and city taxes paid | 1,815 | 2,941 | 6,065 | ||||||
Total income taxes paid | $ | 10,548 | $ | 20,841 | $ | 32,846 | |||
The Company and its subsidiary banks are subject to income tax by federal, state and local government taxing authorities. The Company is not currently subject to any open income tax examinations; however, the Company’s tax returns for the years ended December 31, 2022 through 2025 remain subject to examination by U.S. federal income tax authorities. The years open to examination by state and local government authorities vary by jurisdiction.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Feb 26, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Feb 29, 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.