INSPERITY, INC. Income Taxes Disclosure
| 7. | Income Taxes | ||||
| December 31, | ||||||||
(in millions) | 2025 | 2024 | ||||||
| Deferred tax liabilities | ||||||||
| Prepaid assets | $ | (4) | $ | (4) | ||||
| Depreciation | (3) | (5) | ||||||
| Software development costs | (2) | — | ||||||
| Tenant improvements | (3) | (3) | ||||||
| Right-of-use leased assets | (19) | (19) | ||||||
| Intangibles | (3) | (3) | ||||||
| Total deferred tax liabilities | (34) | (34) | ||||||
| Deferred tax assets | ||||||||
| Accrued incentive compensation | 11 | 12 | ||||||
| Workers’ compensation accruals | 4 | 4 | ||||||
| Accrued rent | 3 | 2 | ||||||
Software development costs | — | 13 | ||||||
| Stock-based compensation | 15 | 15 | ||||||
| Operating lease liabilities | 22 | 22 | ||||||
| Other | 2 | 1 | ||||||
| Total deferred tax assets | 57 | 69 | ||||||
| Valuation allowance | (1) | (1) | ||||||
| Total net deferred tax assets | 56 | 68 | ||||||
| Net deferred tax assets | $ | 22 | $ | 34 | ||||
| Year Ended December 31, | |||||||||||
(in millions) | 2025 | 2024 | 2023 | ||||||||
Current income tax expense (benefit) | |||||||||||
| Federal | $ | (7) | $ | 41 | $ | 49 | |||||
| State | (2) | 8 | 9 | ||||||||
Total current income tax expense (benefit) | (9) | 49 | 58 | ||||||||
Deferred income tax expense (benefit) | |||||||||||
| Federal | 10 | (11) | (3) | ||||||||
| State | 2 | (3) | (1) | ||||||||
Total deferred income tax expense (benefit) | 12 | (14) | (4) | ||||||||
| Total income tax expense | $ | 3 | $ | 35 | $ | 54 | |||||
| Year Ended December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
(in millions) | Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||
Expected income tax expense (benefit) at U.S. federal statutory rate | $ | 21 | % | $ | 21 | % | $ | 21 | % | |||||||||||||||||
State income taxes, net of federal benefit(1) | 1 | (14) | % | 4 | 3 | % | 7 | 3 | % | |||||||||||||||||
Tax credits | ||||||||||||||||||||||||||
Research and development credit | (3) | 70 | % | (1) | (1) | % | (1) | (1) | % | |||||||||||||||||
Nontaxable or nondeductible Items | ||||||||||||||||||||||||||
Equity compensation | 1 | (33) | % | 1 | 1 | % | (4) | (2) | % | |||||||||||||||||
Executive compensation limited under 162(m) | 2 | (42) | % | 3 | 2 | % | 2 | 1 | % | |||||||||||||||||
Qualified transportation benefits | 2 | (40) | % | 1 | 1 | % | 1 | 1 | % | |||||||||||||||||
Meals and entertainment | 1 | (37) | % | 1 | 1 | % | 2 | 1 | % | |||||||||||||||||
Effective tax rate | $ | 3 | (75) | % | $ | 35 | 28 | % | $ | 54 | 24 | % | ||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 11, 2026 | Showing above |
| 2023 | Feb 9, 2024 | |
| 2022 | Feb 10, 2023 | |
| 2021 | Feb 11, 2022 | |
| 2019 | Feb 12, 2020 | |
| 2018 | Feb 11, 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.