PULTEGROUP INC/MI/PHM
PULTEGROUP INC/MI/ Income Taxes Disclosure
Income taxes
Components of current and deferred income tax expense (benefit) are as follows ($000’s omitted):
| 2025 | 2024 | 2023 | |||||||||||||||
| Current expense | |||||||||||||||||
| Federal | $ | 560,980 | $ | 649,308 | $ | 622,205 | |||||||||||
| State and other | 120,832 | 122,212 | 120,424 | ||||||||||||||
| $ | 681,812 | $ | 771,520 | $ | 742,629 | ||||||||||||
| Deferred expense | |||||||||||||||||
| Federal | $ | 4,677 | $ | 120,415 | $ | 72,854 | |||||||||||
| State and other | 6,102 | 30,682 | 31,412 | ||||||||||||||
| $ | 10,779 | $ | 151,097 | $ | 104,266 | ||||||||||||
| Income tax expense | $ | 692,591 | $ | 922,617 | $ | 846,895 | |||||||||||
The following table reconciles the statutory federal income tax rate to the effective income tax rate ($000's omitted, expect percentages):
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Amount | Percent | Percent | Percent | |||||||||||||||||
| Income taxes at federal statutory rate | $ | 611,377 | 21.0 | % | 21.0 | % | 21.0 | % | ||||||||||||
State and local income taxes, net of federal tax (a) | 101,631 | 3.5 | 3.6 | 3.5 | ||||||||||||||||
| Domestic federal reconciling items | ||||||||||||||||||||
| Federal tax credits | (23,001) | (0.8) | (1.1) | (0.2) | ||||||||||||||||
| Other | 2,584 | 0.1 | (0.5) | 0.3 | ||||||||||||||||
| Effective rate | $ | 692,591 | 23.8 | % | 23.0 | % | 24.6 | % | ||||||||||||
(a)State taxes in Florida, California, and Illinois comprised the majority (greater than 50 percent) of the tax effect in this category in 2025.
The effective tax rates differ from the federal statutory rate primarily due to state income tax expense and benefits associated with various federal energy tax credits.
The following table presents our income taxes paid, net of any refunds, by jurisdiction ($000's omitted):
| 2025 | ||||||||
US federal (a) | $ | 570,413 | ||||||
| State and local | ||||||||
| Florida | 46,543 | |||||||
| Other | 81,800 | |||||||
| Total | $ | 698,756 | ||||||
(a) Includes cash payments of $341.4 million to acquire transferable tax credits, which were applied to our federal income tax obligations.
Deferred tax assets and liabilities reflect temporary differences arising from the different treatment of items for tax and accounting purposes. Components of our net deferred tax liability are as follows ($000’s omitted):
| At December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Accrued insurance | $ | 92,004 | $ | 92,283 | |||||||
| Inventory valuation reserves | 49,564 | 51,370 | |||||||||
| Capitalized inventory expenses | 42,325 | 43,338 | |||||||||
| State NOL carryforwards | 67,511 | 73,550 | |||||||||
| Other | 78,408 | 66,055 | |||||||||
| 329,812 | 326,596 | ||||||||||
| Deferred tax liabilities: | |||||||||||
| Deferred income | (637,003) | (630,888) | |||||||||
| Fixed assets and intangibles | (26,089) | (21,882) | |||||||||
| Other | (44,639) | (39,983) | |||||||||
| (707,731) | (692,753) | ||||||||||
| Valuation allowance | (21,417) | (22,368) | |||||||||
| Net deferred tax liability | $ | (399,336) | $ | (388,525) | |||||||
We have state NOLs in various jurisdictions that may generally be carried forward up to 20 years, depending on the jurisdiction. Our state NOL carryforward deferred tax assets will expire if unused at various dates as follows: $27.5 million from 2026 to 2030 and $40.0 million from 2031 and thereafter.
We evaluate our deferred tax assets each period to determine if a valuation allowance is required based on whether it is "more likely than not" that some portion of the deferred tax assets would not be realized. The ultimate realization of these deferred tax assets is dependent upon the generation of sufficient taxable income during future periods. We conduct our evaluation by considering all available positive and negative evidence, including, among other factors, historical operating results, forecasts of future profitability, the duration of statutory carryforward periods, and the outlooks for the U.S. housing industry and broader economy.
The accounting for deferred taxes is based upon estimates of future results. Differences between estimated and actual results could result in changes in the valuation of our deferred tax assets that could have a material impact on our consolidated results of operations or financial position. Changes in existing tax laws could also affect actual tax results and the realization of deferred tax assets over time.
Unrecognized tax benefits represent the difference between tax positions taken or expected to be taken in a tax return and the benefits recognized for financial statement purposes. We had $29.9 million and $38.7 million of gross unrecognized tax benefits at December 31, 2025 and 2024, respectively. If recognized, $23.6 million and $30.6 million, respectively, of these amounts would impact our effective tax rate. Additionally, we had accrued interest and penalties of $0.6 million and $1.9 million at December 31, 2025 and 2024, respectively.
We do not expect the total amount of gross unrecognized tax benefits to increase or decrease by a material amount within the next twelve months. A reconciliation of the change in the unrecognized tax benefits is as follows ($000’s omitted):
| 2025 | 2024 | 2023 | |||||||||||||||
| Unrecognized tax benefits, beginning of period | $ | 38,715 | $ | 58,228 | $ | 23,612 | |||||||||||
| Increases related to positions taken during a prior period | — | 544 | 34,687 | ||||||||||||||
| Decreases related to positions taken during a prior period | — | (17,992) | — | ||||||||||||||
| Increases related to positions taken during the current period | — | — | — | ||||||||||||||
| Decreases related to settlements with taxing authorities | (5,552) | (1,994) | — | ||||||||||||||
| Decreases related to lapse of the applicable statute of limitations | (3,248) | (71) | (71) | ||||||||||||||
| Unrecognized tax benefits, end of period | $ | 29,915 | $ | 38,715 | $ | 58,228 | |||||||||||
We continue to participate in the Compliance Assurance Process (“CAP”) with the IRS as an alternative to the traditional IRS examination process. Through the CAP program, we work with the IRS to achieve tax compliance by resolving issues prior to filing the tax return. We are also currently under examination by state taxing jurisdictions and anticipate finalizing certain of the examinations within the next twelve months. The outcome of these examinations is not yet determinable, and we are not aware of unrecorded liabilities. The statute of limitations for our major tax jurisdictions generally remains open for examination for tax years 2021 to 2025.
We are under contract to purchase federal transferable tax credits that we expect to use to offset future federal income tax obligations totaling $354.1 million. The timing of such purchases is intended to approximate the timing of our expected federal income tax obligations.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 4, 2026 | Showing above |
| 2024 | Feb 6, 2025 | |
| 2023 | Feb 5, 2024 | |
| 2022 | Feb 6, 2023 | |
| 2021 | Feb 7, 2022 | |
| 2020 | Feb 2, 2021 | |
| 2019 | Jan 30, 2020 | |
| 2018 | Jan 31, 2019 | |
| 2017 | Feb 7, 2018 | |
| 2016 | Feb 1, 2017 | |
| 2015 | Feb 8, 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.