NELNET INCNNI
NELNET INC Income Taxes Disclosure
Income Taxes
The Company is subject to income taxes in the United States and certain foreign countries. Significant judgment is required in evaluating the Company's tax positions and determining the provision for income taxes.
As of December 31, 2025, the total amount of gross unrecognized tax benefits (excluding the federal benefit received from state positions) was $17.9 million, which is included in “other liabilities” on the consolidated balance sheet. Of this total, $14.1 million (net of the federal benefit on state issues) represents the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate in future periods. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits follows:
| Year ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Gross balance - beginning of year | $ | 18,182 | 17,084 | ||||||||
| Additions based on tax positions of prior years | 35 | 2,081 | |||||||||
| Additions based on tax positions related to the current year | 3,406 | 2,397 | |||||||||
| Reductions for tax positions of prior years | (571) | (885) | |||||||||
| Reductions due to lapse of applicable statutes of limitations | (3,196) | (2,495) | |||||||||
| Gross balance - end of year | $ | 17,856 | 18,182 | ||||||||
All the reductions shown in the table above which are due to prior year tax positions and the lapse of statutes of limitations impacted the effective tax rate.
The Company's policy is to recognize interest and penalties accrued on uncertain tax positions as part of interest expense and other expense, respectively. As of December 31, 2025 and 2024, $5.2 million and $5.6 million in accrued interest and penalties, respectively, were included in “other liabilities” on the consolidated balance sheets. The Company recognized interest benefits of $0.4 million, and interest expense of $0.9 million and $0.8 million, related to uncertain tax positions for the years ended
December 31, 2025, 2024, and 2023, respectively. The impact to the consolidated statements of income related to penalties for uncertain tax positions was not significant for the years 2025, 2024, and 2023. The impact of timing differences and tax attributes are considered when calculating interest and penalty accruals associated with the unrecognized tax benefits.
The Company and its subsidiaries file a consolidated federal income tax return in the U.S. and the Company or one of its subsidiaries files income tax returns in various state, local, and foreign jurisdictions. The Company is no longer subject to U.S. federal income tax examinations for years prior to 2020. The Company is no longer subject to U.S. state and local income tax examinations by tax authorities prior to 2018.
The provision for income taxes consists of the following components:
| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 115,162 | 66,295 | 65,952 | |||||||||||||
| State | 17,288 | 7,849 | 5,732 | ||||||||||||||
| Foreign | (157) | 146 | 32 | ||||||||||||||
| Total current provision | 132,293 | 74,290 | 71,716 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | (5,328) | (18,716) | (42,073) | ||||||||||||||
| State | 1,388 | (2,786) | (10,270) | ||||||||||||||
| Foreign | (367) | (119) | 12 | ||||||||||||||
| Total deferred provision | (4,307) | (21,621) | (52,331) | ||||||||||||||
| Provision for income tax expense | $ | 127,986 | 52,669 | 19,385 | |||||||||||||
The table below presents the updated income tax disclosure requirements for 2025. The reconciliation of the provision for income taxes, from the federal statutory rate to the actual effective tax rate, expressed in both amounts and percentages, for the year ended December 31, 2025 is shown below:
| Amount | Percentage | ||||||||||
| Federal income tax statutory rate | $ | 116,857 | 21.0 | % | |||||||
| State tax, net of federal benefit (a) | 16,124 | 2.9 | |||||||||
| Changes in valuation allowances | 461 | 0.1 | |||||||||
| Nontaxable or nondeductible items | 314 | 0.0 | |||||||||
| Tax credits | (6,296) | (1.1) | |||||||||
| Changes in unrecognized tax benefits | (176) | (0.0 | ) | ||||||||
| Foreign tax effects | (81) | (0.0 | ) | ||||||||
| Other | 783 | 0.1 | |||||||||
| Total tax provision and effective tax rate | $ | 127,986 | 23.0 | % | |||||||
| The components of income (loss) before taxes were attributable to the following regions: | |||||||||||
| Domestic | $ | 558,019 | |||||||||
| Foreign | (1,559) | ||||||||||
| Total income before income taxes | $ | 556,460 | |||||||||
(a) State taxes in California, Nebraska, and New York made up the majority (greater than 50%) of the tax effect in this category.
As previously presented for the years ended December 31, 2024 and 2023, the reconciliation of the provision for income taxes from the federal statutory rate to the actual effective tax rate is presented below by percentage only.
| Year ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Tax expense at federal rate | 21.0 | % | 21.0 | % | |||||||
| Increase (decrease) resulting from: | |||||||||||
| State tax, net of federal income tax benefit | 2.1 | (0.6) | |||||||||
| Tax credits | (1.8) | (4.1) | |||||||||
| Change in valuation allowance | 0.1 | 0.4 | |||||||||
| Other | 0.9 | 1.1 | |||||||||
| Effective tax rate | 22.3 | % | 17.8 | % | |||||||
The following table presents income taxes paid (net of refunds received) for the year ended December 31, 2025:
| U.S. federal | $ | 44,000 | |||
| U.S. state and local: | |||||
| California | 5,052 | ||||
| New York | 4,987 | ||||
| Other | 14,697 | ||||
| Foreign | 127 | ||||
| Total | $ | 68,863 | |||
The tax effect of temporary differences that gives rise to deferred tax assets and liabilities include the following:
| As of December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Tax credit carryforwards | $ | 59,894 | 30,252 | ||||||||
| Loan receivables | 26,549 | 20,354 | |||||||||
| Deferred revenue | 16,307 | 18,322 | |||||||||
| Accrued expenses | 8,126 | 15,129 | |||||||||
| Stock compensation | 6,531 | 6,541 | |||||||||
| Net operating losses | 4,484 | 4,556 | |||||||||
| Intangible assets | 3,829 | 4,778 | |||||||||
| Lease liability | 3,060 | 2,685 | |||||||||
| Other | 8 | 428 | |||||||||
| Total gross deferred tax assets | 128,788 | 103,045 | |||||||||
| Less state tax valuation allowance | (1,164) | (703) | |||||||||
| Net deferred tax assets | 127,624 | 102,342 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Partnership basis | 58,262 | 71,509 | |||||||||
| Debt and equity investments | 10,759 | 12,015 | |||||||||
| Depreciation | 7,801 | 6,229 | |||||||||
| Prepaid expenses | 7,593 | 5,615 | |||||||||
| Basis in certain derivative contracts | 4,839 | 11,614 | |||||||||
| Lease right of use asset | 2,270 | 2,573 | |||||||||
| Loan origination services | 1,614 | 2,026 | |||||||||
| Securitization | 72 | 170 | |||||||||
| Total gross deferred tax liabilities | 93,210 | 111,751 | |||||||||
| Net deferred tax asset (liability) | $ | 34,414 | (9,409) | ||||||||
The Company has performed an evaluation of the recoverability of deferred tax assets. In assessing the realizability of the Company's 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 period in which those temporary differences become deductible or eligible for utilization of a tax credit carryforward. Management considers the scheduled reversals of deferred tax liabilities, projected taxable income, carry back opportunities, and tax planning strategies in making the assessment of the amount of the valuation allowance. With the exception of a portion of the Company's state net operating losses, it is management's opinion that it is more likely than not that the deferred tax assets will be realized and should not be reduced by a valuation allowance. The amount of deferred tax assets considered realizable could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.
As of December 31, 2025 and 2024, net deferred tax liabilities of $38.2 million and $30.4 million, respectively, and net deferred tax assets of $72.6 million and $21.0 million, respectively, were included in “other liabilities” and “other assets,” respectively, on the consolidated balance sheets.
As of December 31, 2025 and 2024, the Company had a current income tax receivable of $84.9 million and $61.8 million, respectively, that is included in “other assets" on the consolidated balance sheets.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Feb 27, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 27, 2017 | |
| 2015 | Feb 25, 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.