QCR HOLDINGS INC Income Taxes Disclosure

Note 14. Federal and State Income Taxes

Federal and state income tax expense was comprised of the following components for the years ended December 31, 2025, 2024, and 2023:

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A reconciliation of the expected federal income tax expense to the income tax expense included in the consolidated statements of income was as follows for the years ended December 31, 2025, 2024, and 2023:

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Note 14. Federal and State Income Taxes (continued)

A reconciliation of income taxes paid was as follows for the years ended December 31, 2025, 2024 and 2023.

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Changes in the unrecognized tax benefits included in other liabilities were as follows for the years ended December 31, 2025 and 2024:

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Included in the unrecognized tax benefits liability at December 31, 2025 were potential benefits of approximately $3.1 million that, if recognized, would have affected the effective tax rate for the year ended December 31, 2025.  Included in the unrecognized tax benefits liability at December 31, 2024 were potential benefits of approximately $3.8 million  that, if recognized, would have affected the effective tax rate for the year ended December 31, 2024.

The liability for unrecognized tax benefits includes accrued interest for tax positions, which either do not meet the more-likely-than-not recognition threshold or where the tax benefit is measured at an amount less than the tax benefit claimed or expected to be claimed on an income tax return. At December 31, 2025 and 2024, accrued interest on uncertain tax positions was approximately $1.1 million and $971 thousand, respectively. Estimated interest related to the underpayment of income taxes is classified as a component of “income tax expense” in the statements of income.

Effective January 1, 2024, the Company made an election under ASU2023-02 to account for its tax credit investments using the proportional amortization method under newly adopted accounting guidance. Under the proportional amortization method, the Company applies a practical expedient for its tax credit investments and amortizes the initial cost of the qualifying investments in proportion to the income tax credits received in the current period as compared to the total income tax credits expected to be received over the life of the investment.

Note 14. Federal and State Income Taxes (continued)

The following table summarizes that impact to the Consolidated Statements of Operations relative to the Company’s tax credit programs for which it has elected to apply the proportional amortization method of accounting:

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The Company did not recognize impairment losses resulting from the forfeiture or ineligibility of income tax credits or other circumstances during the years ending December 31, 2025, 2024 and 2023.

On July 4, 2025, the President signed H.R. 1, the “One Big Beautiful Bill Act”, into law.  The legislation included several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025, including the restoration of immediate expensing of domestic research and development expenditures, reinstatement of 100% bonus depreciation, and more favorable rules for determining the limitation on business interest expense.  These changes were reflected in the income tax provision for the year ended December 31, 2025.  The restoration of immediate expensing for domestic research and development and 100% bonus depreciation resulted in an adjustment to the Company’s deferred tax assets and liabilities. The Company expects these provisions to continue to favorably impact its effective tax rate and cash tax payments in future periods.  

The Company’s federal income tax returns are open and subject to examination from the 2022 tax return year and later. Various state franchise and income tax returns are generally open from the 2021 and later tax return years based on individual state statutes of limitations.

The net deferred tax assets consisted of the following as of December 31, 2025 and 2024:

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At December 31, 2025, the Company had $1.5 million of federal tax NOL carryforwards and $2.0 million of state tax NOL carryforwards. $361 thousand of the federal tax NOL carryforwards were related to the acquisition of Community National and CNB and these losses are set to expire in varying amounts between 2029 and 2033.  $2.0 million of the state tax NOL carryforwards are also related to the acquisition of Community National and CNB and

Note 14. Federal and State Income Taxes (continued)

are set to expire in varying amounts between 2026 and 2028. The additional $1.2 million of federal NOLs were acquired in 2022 with the Guaranty Bank acquisition.  The Guaranty Bank federal tax NOLs acquired are expected to be utilized prior to their expiration dates.

At December 31, 2024, the Company had $2.2 million of federal tax NOL carryforwards and $2.0 million of state tax NOL carryforwards. $886 thousand of the federal tax NOL carryforwards were related to the acquisition of Community National and CNB and these losses are set to expire in varying amounts between 2029 and 2033.  $2.0 million of the state tax NOL carryforwards are also related to the acquisition of Community National and CNB and are set to expire in varying amounts between 2025 and 2028. The additional $1.3 million of federal NOLs were acquired in 2022 with the Guaranty Bank acquisition.  The Guaranty Bank federal tax NOLs acquired are expected to be utilized prior to their expiration dates.

The change in deferred income taxes was reflected in the Consolidated Financial Statements as follows for the years ended December 31, 2025, 2024, and 2023:

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