NVR INCNVR
NVR INC Income Taxes Disclosure
Income Taxes
The provision for income taxes consists of the following:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Current: | ||||||||||||||||||||
| Federal | $ | 329,813 | $ | 326,357 | $ | 261,481 | ||||||||||||||
| State | 93,746 | 101,428 | 79,023 | |||||||||||||||||
| Deferred: | ||||||||||||||||||||
| Federal | (610) | 5,470 | (3,986) | |||||||||||||||||
| State | (833) | 323 | 244 | |||||||||||||||||
| Income tax expense | $ | 422,116 | $ | 433,578 | $ | 336,762 | ||||||||||||||
Deferred income taxes on our consolidated balance sheets were comprised of the following:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Deferred tax assets: | ||||||||||||||
| Other accrued expenses and contract land deposit allowance | $ | 79,308 | $ | 68,784 | ||||||||||
| Deferred compensation | 4,351 | 4,349 | ||||||||||||
| Equity-based compensation expense | 48,518 | 47,467 | ||||||||||||
| Inventory | 16,727 | 18,468 | ||||||||||||
| Unrecognized tax benefit | 5,400 | 6,998 | ||||||||||||
| Other | 9,833 | 13,595 | ||||||||||||
| Total deferred tax assets | 164,137 | 159,661 | ||||||||||||
| Less: Deferred tax liabilities | 13,168 | 10,135 | ||||||||||||
| Net deferred tax asset | $ | 150,969 | $ | 149,526 | ||||||||||
Deferred tax assets arise principally as a result of various accruals required for financial reporting purposes and equity-based compensation expense, which are not currently deductible for tax return purposes.
Management believes that we will have sufficient future taxable income to make it more likely than not that the net deferred tax assets will be realized. Federal taxable income is estimated to be approximately $1,588,000 for the year ended December 31, 2025, and was $1,679,957 for the year ended December 31, 2024.
A reconciliation of our provision for income taxes and effective tax rate to the applicable statutory rates is as follows:
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||||||||||||||||||
U.S. federal statutory tax rate | $ | 370,005 | 21.00 | % | $ | 444,256 | 21.00 | % | $ | 404,958 | 21.00 | % | ||||||||||||||||||||||||||
State and local income taxes, net of federal income tax effect (1) | 79,683 | 4.53 | % | 84,744 | 4.02 | % | 66,379 | 3.44 | % | |||||||||||||||||||||||||||||
| Federal tax credits | (2,402) | (0.14) | % | (18,443) | (0.87) | % | (12,839) | (0.67) | % | |||||||||||||||||||||||||||||
| Changes in valuation allowances | — | — | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||
| Nontaxable or nondeductible items: | ||||||||||||||||||||||||||||||||||||||
| Excess tax benefits from equity-based compensation | (22,884) | (1.30) | % | (76,711) | (3.63) | % | (124,018) | (6.43) | % | |||||||||||||||||||||||||||||
| Other | 3,868 | 0.22 | % | 4,076 | 0.19 | % | 5,932 | 0.31 | % | |||||||||||||||||||||||||||||
Changes in unrecognized tax benefits | (6,154) | (0.35) | % | (4,344) | (0.21) | % | (3,650) | (0.19) | % | |||||||||||||||||||||||||||||
Effective tax rate | $ | 422,116 | 23.96 | % | $ | 433,578 | 20.50 | % | $ | 336,762 | 17.46 | % | ||||||||||||||||||||||||||
(1)State taxes in Maryland, Pennsylvania, and Virginia made up the majority (greater than 50%) of the tax expense in this category.
Total income taxes paid consists of the following:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Federal taxes paid | $ | 326,610 | $ | 321,700 | $ | 265,600 | ||||||||||||||
| State and local taxes paid: | ||||||||||||||||||||
| Maryland | 26,098 | * | 32,700 | |||||||||||||||||
| Pennsylvania | * | * | 30,596 | |||||||||||||||||
| Virginia | * | * | 24,053 | |||||||||||||||||
| Other | 86,058 | 88,153 | 54,236 | |||||||||||||||||
| Total Income Taxes Paid | $ | 438,766 | $ | 409,853 | $ | 407,185 | ||||||||||||||
* The amount of income taxes paid during the year does not meet the 5% disaggregation threshold.
We file a consolidated U.S. federal income tax return, as well as state and local tax returns in all jurisdictions where we maintain operations. With few exceptions, we are no longer subject to income tax examinations by tax authorities for years prior to 2022.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| Year Ended December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Balance at beginning of year | $ | 20,909 | $ | 25,588 | ||||||||||
| Additions based on tax positions related to the current year | 610 | 572 | ||||||||||||
| Reductions for tax positions of prior years | (6,453) | (5,251) | ||||||||||||
| Settlements | — | — | ||||||||||||
| Balance at end of year | $ | 15,066 | $ | 20,909 | ||||||||||
If recognized, the total amount of unrecognized tax benefits that would affect the effective tax rate (net of the federal tax benefit) is $11,902 as of December 31, 2025.
We recognize interest related to unrecognized tax benefits as a component of income tax expense. For the years ended December 31, 2025 and 2024, we recognized a net reversal of accrued interest on unrecognized tax benefits in the amount of $1,428 and $264, respectively. For the year ended December 31, 2023, we recognized a net addition of accrued interest on unrecognized tax benefits in the amount of $106. As of December 31, 2025 and 2024, we had a total of $8,600 and $10,028, respectively, of accrued interest on unrecognized tax benefits which are included in “Accrued expenses and other liabilities” on the accompanying consolidated balance sheets.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 11, 2026 | Showing above |
| 2024 | Feb 12, 2025 | |
| 2023 | Feb 14, 2024 | |
| 2022 | Feb 15, 2023 | |
| 2021 | Feb 16, 2022 | |
| 2020 | Feb 12, 2021 | |
| 2019 | Feb 19, 2020 | |
| 2018 | Feb 13, 2019 | |
| 2017 | Feb 14, 2018 | |
| 2016 | Feb 15, 2017 | |
| 2015 | Feb 17, 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.