Income Taxes
The components of income before taxes were attributable to the following (in thousands):
| | | | | | | | | | | | | | | | | | | | |
| | Years ended December 31, |
| | 2025 | | 2024 | | 2023 |
| Domestic | | $ | 791,719 | | | $ | 666,110 | | | $ | 755,872 | |
| Foreign | | 363,410 | | | 267,832 | | | 173,063 | |
| Total income before taxes | | $ | 1,155,129 | | | $ | 933,942 | | | $ | 928,935 | |
Provision for income taxes consisted of the following (in thousands):
| | | | | | | | | | | | | | | | | | | | |
| | Years ended December 31, |
| | 2025 | | 2024 | | 2023 |
| Current | | | | | | |
| Federal | | $ | — | | | $ | (407) | | | $ | 792 | |
| State and local | | 14,450 | | | 8,783 | | | 10,139 | |
| Foreign | | 70,293 | | | 54,673 | | | 41,086 | |
| Total current | | $ | 84,743 | | | $ | 63,049 | | | $ | 52,017 | |
| Deferred | | | | | | |
| Federal | | $ | — | | | $ | — | | | $ | — | |
| State and local | | — | | | — | | | — | |
| Foreign | | 603 | | 3,552 | | 4 | |
| Total deferred | | $ | 603 | | | $ | 3,552 | | | $ | 4 | |
| Total provision for income taxes | | $ | 85,346 | | | $ | 66,601 | | | $ | 52,021 | |
Our effective tax rates for the years ended December 31, 2025, 2024, and 2023 were 7.4%, 7.1%, and 5.6%, respectively. The primary drivers of the difference between the federal statutory rate of 21.0% and our overall effective tax rate were the tax benefits associated with our REIT status, including the dividends paid deduction, the impact of state and local income taxes, and the effect of differing statutory rates and related permanent differences applicable to our foreign earnings.
Income taxes paid for the year ended December 31, 2025 are as follows (in thousands):
| | | | | | | | | | | | |
| | Year ended December 31, |
| | 2025 | | | | |
| Federal | | $ | (233) | | | | | |
| | | | | | |
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| | | | | | |
| | | | | | |
| | | | | | |
| State and Local | | $ | 16,827 | | | | | |
| | | | | | |
| United Kingdom | | $ | 30,665 | | | | | |
| Other | | 2,526 | | | | | |
| Total Foreign | | $ | 33,191 | | | | | |
| Total income taxes paid | | $ | 49,785 | | | | | |
We recognize deferred income tax in our taxable subsidiaries, including certain international jurisdictions. Deferred income tax assets and liabilities are generally the result of temporary differences between book and tax accounting, such as timing differences caused by different useful lives used for depreciation. We provide for a valuation allowance for deferred income tax assets if we believe some or all of the deferred income tax assets may not be realized. As of December 31, 2025 and 2024, we had net deferred tax liabilities of $4.3 million and $3.5 million, respectively, which are reported in 'Other liabilities' on our consolidated balance sheets.
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.