QUANTA SERVICES, INC.PWR
QUANTA SERVICES, INC. Income Taxes Disclosure
INCOME TAXES:
The components of income before income taxes were as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Income before income taxes: | |||||||||||||||||
| Domestic | $ | 1,238,190 | $ | 1,052,185 | $ | 823,691 | |||||||||||
| Foreign | 151,315 | 159,845 | 146,265 | ||||||||||||||
| Total | $ | 1,389,505 | $ | 1,212,030 | $ | 969,956 | |||||||||||
The components of the provision for income taxes were as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 184,159 | $ | 185,357 | $ | 132,727 | |||||||||||
| State | 58,955 | 55,691 | 42,783 | ||||||||||||||
| Foreign | 66,871 | 52,024 | 39,941 | ||||||||||||||
| Total current tax provision | 309,985 | 293,072 | 215,451 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | 62,992 | 34,498 | 16,055 | ||||||||||||||
| State | 6,201 | 14,556 | (556) | ||||||||||||||
| Foreign | (31,590) | (57,379) | (11,683) | ||||||||||||||
Total deferred tax provision (benefit) | 37,603 | (8,325) | 3,816 | ||||||||||||||
| Total provision for income taxes | $ | 347,588 | $ | 284,747 | $ | 219,267 | |||||||||||
There was no tax on foreign currency translation adjustment within other comprehensive income (loss) for the years
ended December 31, 2025, 2024 and 2023.
The actual income tax provision differed from the income tax provision computed by applying the U.S. federal statutory corporate rate to income before provision for income taxes as follows (in thousands, except percentages):
| Year Ended | |||||||||||
| December 31, 2025 | |||||||||||
| Amount | Percentage of Pre-Tax Income | ||||||||||
| U.S. federal statutory tax rate | $ | 291,796 | 21.0 | % | |||||||
State and local income tax, net of federal (national) income tax effect (1) | 53,215 | 3.8 | |||||||||
| Foreign tax effects | (2,973) | (0.2) | |||||||||
| Effect of cross-border tax laws | 14,163 | 1.0 | |||||||||
| Tax credits | (11,408) | (0.8) | |||||||||
| Changes in valuation allowances | 51 | — | |||||||||
| Nontaxable or nondeductible items: | |||||||||||
| Employee per diems, meals and entertainment | 35,710 | 2.6 | |||||||||
Share-based payment awards | (23,662) | (1.7) | |||||||||
| Other | (10,977) | (0.8) | |||||||||
| Changes in unrecognized tax benefits | 3,030 | 0.2 | |||||||||
Other adjustments | (1,357) | (0.1) | |||||||||
| Total provision for income taxes and effective tax rate | $ | 347,588 | 25.0 | % | |||||||
(1) State taxes in California, Florida, Illinois, Indiana, Iowa, New Mexico, New York, Texas and Wisconsin made up the majority (greater than 50 percent) of the tax effect in this category.
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Provision at the statutory rate | $ | 254,526 | $ | 203,691 | |||||||
| Increases (decreases) resulting from: | |||||||||||
| State taxes | 51,575 | 41,920 | |||||||||
| Employee per diems, meals and entertainment | 31,768 | 27,039 | |||||||||
| Tax contingency reserves, net | 15,046 | 6,882 | |||||||||
| Valuation allowance on deferred tax assets | 4,868 | (20,177) | |||||||||
| Company-owned life insurance | (2,430) | (2,262) | |||||||||
| Foreign taxes | (2,861) | 2,927 | |||||||||
Entity restructuring efforts | (10,195) | — | |||||||||
| Taxes on certain equity method investments and non-controlling interests | (14,007) | (9,519) | |||||||||
Stock-based compensation (1) | (55,068) | (35,007) | |||||||||
| Other | 11,525 | 3,773 | |||||||||
| Total provision for income taxes | $ | 284,747 | $ | 219,267 | |||||||
(1) Stock-based compensation for the years ended December 31, 2024 and 2023, include state tax benefits of $7.2 million and $5.4 million.
Deferred income taxes result from temporary differences in the recognition of income and expenses for financial reporting purposes and tax purposes. The tax effects of these temporary differences, representing deferred tax assets and liabilities, result principally from the following (in thousands):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred income tax liabilities: | |||||||||||
| Property and equipment | $ | (460,786) | $ | (370,703) | |||||||
| Goodwill | (261,272) | (212,724) | |||||||||
| Leased assets | (177,259) | (135,361) | |||||||||
| Retainage | (17,805) | (14,059) | |||||||||
Other | (11,408) | (13,502) | |||||||||
| Total deferred income tax liabilities | (928,530) | (746,349) | |||||||||
| Deferred income tax assets: | |||||||||||
| Net operating loss carryforwards | 122,860 | 179,276 | |||||||||
| Lease liabilities | 167,739 | 129,623 | |||||||||
| Stock and incentive compensation | 102,099 | 78,396 | |||||||||
| Accruals and reserves | 98,374 | 64,449 | |||||||||
| Tax credits | 21,536 | 14,644 | |||||||||
| Deferred tax benefits on unrecognized tax positions | 6,896 | 7,726 | |||||||||
| Equity method investments and non-controlling interests | 11,423 | 6,751 | |||||||||
| Other intangible assets | 17,971 | 3,118 | |||||||||
| Other | 4,220 | 14,777 | |||||||||
| Subtotal | 553,118 | 498,760 | |||||||||
| Valuation allowance | (34,766) | (42,576) | |||||||||
| Total deferred income tax assets | 518,352 | 456,184 | |||||||||
| Total net deferred income tax liabilities | $ | (410,178) | $ | (290,165) | |||||||
The net deferred income tax assets and liabilities comprised the following in the accompanying consolidated balance sheets (in thousands):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred income taxes: | |||||||||||
| Assets | $ | 92,448 | $ | 63,103 | |||||||
| Liabilities | (502,626) | (353,268) | |||||||||
| Total net deferred income tax liabilities | $ | (410,178) | $ | (290,165) | |||||||
The valuation allowances for deferred income tax assets at December 31, 2025, 2024 and 2023 were $34.8 million, $42.6 million and $40.0 million. These valuation allowances relate to state and foreign net operating loss carryforwards and foreign tax credits. The valuation allowances were established primarily as a result of uncertainty as to the amount of future taxable income in particular jurisdictions. Quanta believes it is more likely than not that it will realize the benefit of its deferred income tax assets, net of existing valuation allowances.
At December 31, 2025, Quanta had federal, state and foreign net operating loss carryforwards, the tax effect of which was $128.5 million. These carryforwards will expire as follows: 2026, $0.5 million; 2027, $1.3 million; 2028, $0.1 million; 2029, $1.1 million; 2030, $0.9 million and $124.6 million after 2030. A valuation allowance of $28.4 million has been recorded against certain foreign and state net operating loss carryforwards.
Quanta generally does not provide for taxes related to undistributed earnings of its foreign subsidiaries because such earnings either would not be taxable when remitted or they are considered to be indefinitely reinvested. Quanta could also be
subject to additional foreign withholding taxes if it were to repatriate cash that is indefinitely reinvested outside the United States, but it does not expect such amount to be material.
A reconciliation of unrecognized tax benefit balances is as follows (in thousands):
| December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance at beginning of year | $ | 74,118 | $ | 45,136 | $ | 41,639 | |||||||||||
| Additions based on tax positions related to the current year | 12,492 | 19,155 | 10,304 | ||||||||||||||
Additions for tax positions of prior years from business combinations | 734 | 12,461 | — | ||||||||||||||
| Additions for tax positions of prior years | — | 2,924 | — | ||||||||||||||
Reductions resulting from a lapse of the applicable statute of limitations periods | (12,929) | (5,558) | (6,807) | ||||||||||||||
| Balance at end of year | $ | 74,415 | $ | 74,118 | $ | 45,136 | |||||||||||
The balances of unrecognized tax benefits, the amount of related interest and penalties are as follows (in thousands):
| December 31, 2025 | |||||
| Unrecognized tax benefits | $ | 74,415 | |||
Portion that, if recognized, would reduce tax expense and effective tax rate | $ | 71,055 | |||
| Accrued interest on unrecognized tax benefits | $ | 9,294 | |||
| Accrued penalties on unrecognized tax benefits | $ | 2,285 | |||
Quanta classifies interest and penalties within the provision for income taxes. Quanta recognized interest expense of $1.5 million, $1.7 million and $0.5 million in the provision for income taxes for the years ended December 31, 2025, 2024 and 2023.
Quanta’s consolidated federal income tax returns for tax years 2022 through 2024 remain open to examination by the IRS, as the applicable statute of limitations periods have not yet expired. Additionally, various state and foreign tax returns filed by Quanta and certain subsidiaries for multiple periods remain under examination by various U.S. state and foreign tax authorities. Quanta does not consider any U.S. state in which it does business to be a major tax jurisdiction.
On July 4, 2025, the U.S. government enacted new tax legislation pursuant to Public Law No: 119-21 (the One Big Beautiful Bill). Among other provisions, the legislation extends 100% bonus depreciation for qualifying property effective January 19, 2025 and modifies certain provisions of the Tax Cuts and Jobs Act previously scheduled to expire or change after 2025. Quanta incorporated the effects of the legislation within its financial statements for the year ended December 31, 2025, which did not have a material impact on its effective annual tax rate.Free Sentinel
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Mar 1, 2017 | |
| 2015 | Feb 29, 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.