NBT BANCORP INCNBTB
NBT BANCORP INC Income Taxes Disclosure
11. Income Taxes
The Company’s income from continuing operations before income tax expense totaled $219.4 million, $179.5 million and $153.5 million for the years ended December 31, 2025, 2024 and 2023, respectively.
The significant components of income tax expense attributable to operations are as follows:
|
Years Ended December 31,
|
||||||||||||
|
(In thousands)
|
2025
|
2024
|
2023
|
|||||||||
|
Current:
|
||||||||||||
|
Federal
|
$
|
20,098
|
$
|
23,049
|
$
|
22,829
|
||||||
|
State
|
6,538
|
7,039
|
5,890
|
|||||||||
|
Total current
|
$
|
26,636
|
$
|
30,088
|
$
|
28,719
|
||||||
|
Deferred:
|
||||||||||||
|
Federal
|
$
|
18,890
|
$
|
8,306
|
$
|
4,593
|
|
|||||
|
State
|
4,683
|
423
|
1,365
|
|
||||||||
|
Total deferred
|
$
|
23,573
|
$
|
8,729
|
$
|
5,958
|
|
|||||
| Total income tax expense: |
||||||||||||
|
Federal
|
$ |
38,988 | $ |
31,355 | $ |
27,422 | ||||||
| State |
11,221 | 7,462 | 7,255 | |||||||||
|
Total income tax expense
|
$
|
50,209
|
$
|
38,817
|
$
|
34,677
|
||||||
The Company had no income tax in
foreign jurisdictions for the years ended December 31, 2025, 2024 and 2023, respectively.
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:
|
December 31,
|
||||||||
|
(In thousands)
|
2025
|
2024
|
||||||
|
Deferred tax assets:
|
||||||||
|
Allowance for loan losses
|
$
|
34,773
|
$
|
29,229
|
||||
|
Lease liability
|
8,349
|
7,646
|
||||||
|
Deferred compensation
|
13,148
|
10,581
|
||||||
| Fair value adjustments on acquisitions |
34,217 | 15,958 | ||||||
|
Loan fees
|
16,815
|
23,660
|
||||||
|
Stock-based compensation expense
|
2,872
|
3,375
|
||||||
| Unrealized losses on securities |
24,055 | 41,346 | ||||||
|
Other
|
10,712
|
6,382
|
||||||
|
Total deferred tax assets
|
$
|
144,941
|
$
|
138,177
|
||||
|
Deferred tax liabilities:
|
||||||||
|
Pension benefits
|
$
|
19,847
|
$
|
16,705
|
||||
|
Lease right-of-use asset
|
7,709
|
7,195
|
||||||
|
Amortization of intangible assets
|
29,004
|
22,476
|
||||||
|
Premises and equipment, primarily due to accelerated depreciation
|
6,220
|
1,510
|
||||||
|
Other
|
2,204
|
2,072
|
||||||
|
Total deferred tax liabilities
|
$
|
64,984
|
$
|
49,958
|
||||
|
Net deferred tax asset at year-end
|
$
|
79,957
|
$
|
88,219
|
||||
|
Net deferred tax asset at beginning of year
|
88,219
|
103,211
|
||||||
|
(Decrease) in net deferred tax asset
|
$
|
(8,262
|
)
|
$
|
(14,992
|
)
|
||
Realization of deferred tax assets is dependent upon the generation of future taxable income. A valuation allowance is recorded when it is more likely than not that
some portion of the deferred tax asset will not be realized. Based on available evidence, gross deferred tax assets will ultimately be realized and a valuation allowance was not deemed necessary at December 31, 2025 and 2024.
The following is a reconciliation of the provision for income taxes which presents our effective tax rate reconciliation for the year ended December 31, 2025, in
accordance with the new presentation and disclosure requirements of ASU 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”).
Consistent with ASC 740-10-50-12A, the table disaggregates both percentages and amounts across the required categories and items meeting the 5% threshold are further disaggregated as required.
|
Year Ended December 31, 2025
|
||||||||
|
(In thousands)
|
Amount |
Percentage |
||||||
|
Federal income tax at statutory rate
|
$
|
46,083
|
|
21.00
|
%
|
|||
|
Tax credits - Federal
|
(1,127
|
)
|
(0.51
|
)%
|
||||
|
State taxes, net of federal tax benefit(1)
|
8,911
|
4.06
|
%
|
|||||
| Nontaxable Items: |
||||||||
|
Tax exempt income
|
(1,753
|
)
|
(0.80
|
)%
|
||||
|
Net increase in cash surrender value of life insurance
|
(2,528
|
)
|
(1.15
|
)%
|
||||
|
Other, net
|
623
|
0.28
|
%
|
|||||
|
Income tax expense
|
$
|
50,209
|
|
22.88
|
%
|
|||
(1) State taxes in New York contributed to the majority (greater than 50%) of the tax effect in this category.
The following table presents our reconciliation of the
provision for income taxes for the years ended December 31, 2024, and 2023, prepared in accordance with the disclosure requirements applicable prior to the adoption of ASU 2023-09. These amounts are presented under the previous guidance and
therefore do not reflect the additional disaggregation required by ASU 2023-09.
|
Years Ended December 31,
|
||||||||
|
(In thousands)
|
2024
|
2023
|
||||||
|
Federal income tax at statutory rate
|
$
|
37,686
|
$
|
32,226
|
||||
|
Tax exempt income
|
(1,783
|
)
|
(1,442
|
)
|
||||
|
Net increase in cash surrender value of life insurance
|
(1,866
|
)
|
(1,367
|
)
|
||||
|
Federal tax credits
|
(1,171
|
)
|
(1,297
|
)
|
||||
|
State taxes, net of federal tax benefit
|
6,008
|
5,732
|
||||||
|
Other, net
|
(57
|
)
|
825
|
|||||
|
Income tax expense
|
$
|
38,817
|
$
|
34,677
|
||||
The following table presents cash income taxes paid, net of
refunds, for the year ended December 31, 2025, disaggregated by category and by individual jurisdictions that are equal to or greater than 5% of total income taxes paid, in accordance with ASU 2023‑09.
|
(In thousands)
|
Year Ended December 31, 2025
|
|||
|
Federal
|
$
|
20,000
|
||
|
New York
|
2,370
|
|||
| Other States |
2,200 | |||
|
Total state taxes paid, net
|
4,570
|
|||
|
Total income taxes paid, net
|
$
|
24,570
|
||
A reconciliation of the beginning and ending balance of Federal and State gross unrecognized tax benefits (“UTBs”) is as follows:
|
(In thousands)
|
2025
|
2024
|
||||||
|
Balance at January 1
|
$
|
2,914
|
$
|
2,879
|
||||
|
Additions for tax positions of prior years
|
-
|
57
|
||||||
| Reduction for tax positions of prior years |
(295 | ) | (265 | ) | ||||
|
Current period tax positions
|
223
|
243
|
||||||
|
Balance at December 31
|
$
|
2,842
|
$
|
2,914
|
||||
|
Amount that would affect the effective tax rate if recognized, gross of tax
|
$
|
2,245
|
$
|
2,302
|
||||
The Company recognizes interest and penalties on the income tax expense line in the accompanying consolidated statements of income. As of December 31, 2025, no significant changes to UTBs are projected; however, tax audit examinations are possible, but it is not reasonably possible to estimate when examinations in subsequent years will be completed. The Company recognized $0.8 million and $0.6 million of interest expense related to UTBs in the
consolidated statements of income for the years ended December 31, 2025 and 2024, respectively. The tax years are currently being audited by New York State. As of December 31, 2025, the Company is not under federal examination.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Mar 1, 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.