ROBERT HALF INC.RHI

ROBERT HALF INC. Income Taxes Disclosure

10-KFiled Feb 13, 20265 min read
Note K—Income Taxes
The provision for income taxes for the years ended December 31, 2025, 2024 and 2023, consisted of the following (in thousands):
 Year Ended December 31,
 202520242023
Current:
Federal$15,402 $76,083 $108,825 
State7,884 28,090 38,365 
Foreign14,080 20,400 34,885 
Deferred:
Federal21,264 (10,674)(12,276)
State7,087 (3,838)(3,990)
Foreign(4,355)(3,988)(372)
$61,362 $106,073 $165,437 
Income before the provision for income taxes for the years ended December 31, 2025, 2024 and 2023, consisted of the following (in thousands):
 Year Ended December 31,
 202520242023
U.S.$200,201 $332,547 $485,291 
Foreign(5,849)25,124 91,292 
$194,352 $357,671 $576,583 
The income taxes shown above varied from the statutory federal income tax rates for these periods as follows (in thousands, except for percentages):
 Year Ended December 31,
 202520242023
$%$%$%
U.S. federal statutory tax rate$40,814 21.0%$75,111 21.0%$121,082 21.0%
State and local income taxes, net of federal tax effect (a)11,190 5.818,137 5.1 27,354 4.7 
Foreign tax effects9,418 4.98,695 2.4 14,039 2.4 
Effect of cross-border tax laws
Foreign-derived intangible income(2,058)(1.1)(2,219)(0.6)(1,628)(0.3)
Other(1,498)(0.8)(1,669)(0.5)(254)0.0 
Tax credits
  Work opportunity tax credits(4,850)(2.5)(4,110)(1.1)(5,121)(0.9)
  Other tax credits(500)(0.2)(500)(0.1)(500)(0.1)
Nontaxable or nondeductible items
Compensation book/tax differences4,899 2.56,303 1.8 7,734 1.3 
Meals & entertainment3,907 2.03,488 1.0 2,791 0.5 
Shared based compensation 3,202 1.7873 0.2 72 0.0 
Other1,250 0.61,204 0.3 1,353 0.2 
Unrecognized tax benefits(3,648)(1.9)(2,536)(0.7)(826)(0.1)
Other adjustments(764)(0.4)3,296 0.9 (659)0.0 
Effective tax rate$61,362 31.6%$106,073 29.7%$165,437 28.7%
(a)In 2025, state taxes in California, New Jersey, Illinois, Minnesota and New York made up the majority (majority is defined as greater than 50 percent) of the tax effect in this category. In 2024, state taxes in California, Illinois, New Jersey, Minnesota, Texas and New York made up the majority of the tax effect in this category. In 2023, state taxes in California, Illinois, New Jersey, New York and Minnesota made up the majority of the tax effect in this category.
Income taxes paid, net of refunds, for the years ended December 31, 2025, 2024 and 2023, consisted of the following (in thousands):
 Year Ended December 31,
 202520242023
Federal$18,000 $83,000 $100,000 
State13,227 29,546 29,760 
Foreign10,406 31,069 38,728 
Income taxes paid, net of refunds$41,633 $143,615 $168,488 
Income taxes paid (net of refunds) exceeded 5 percent of total income tax paid (net of refunds) in the following jurisdictions for the years ended December 31, 2025, 2024 and 2023 (in thousands):
 Year Ended December 31,
 202520242023
Foreign
  Germany$(2,140)$13,579 $11,671 
Belgium$5,145 **
U.S.
California$2,483 **
*Jurisdiction below the threshold for the period presented.
The deferred portion of the tax provision (benefit) for the years ended December 31, 2025, 2024 and 2023, consisted of the following (in thousands):
 Year Ended December 31,
 202520242023
Accrued expenses, deducted for tax when paid$(22,367)$(23,871)$(23,456)
Internal-use software and capitalized costs24,614 (6,677)(11,054)
Depreciation1,005 (1,343)(330)
Unrealized gains from investments held in employee deferred compensation trusts24,550 16,578 19,139 
Other, net(3,806)(3,187)(937)
$23,996 $(18,500)$(16,638)
The components of the deferred income tax amounts at December 31, 2025, and 2024, were as follows (in thousands):
 December 31,
 20252024
Deferred income tax assets
Employee deferred compensation and other benefit obligations$212,739 $189,407 
Credits and net operating loss carryforwards44,568 31,337 
Stock-based compensation8,327 7,440 
Allowance for credit losses4,328 5,909 
Workers’ compensation2,259 2,467 
Operating lease liabilities43,204 43,230 
Other15,397 17,082 
Total deferred income tax assets330,822 296,872 
Deferred income tax liabilities
Amortization of intangible assets(21,470)(20,816)
Property and equipment basis differences(26,315)(757)
Unrealized gains from investments held in employee deferred compensation trusts(68,260)(43,709)
Right-of-use assets(33,648)(35,213)
Other(13,616)(12,230)
Total deferred income tax liabilities(163,309)(112,725)
Valuation allowance(33,216)(26,417)
Total deferred income tax assets, net$134,297 $157,730 
Credits and net operating loss carryforwards include tax-effected net operating losses in foreign countries of $42.6 million that expire in 2026 and later, and foreign tax credits of $2.0 million that expire in 2030 and later. Valuation allowances of $31.2 million have been maintained against net operating loss carryforwards and other deferred items in foreign countries. In addition, a valuation allowance of $2.0 million has been maintained against the foreign tax credits.
As of December 31, 2025, the Company’s consolidated financial statements provide for any related U.S. tax liability on earnings of international subsidiaries that may be repatriated.
The following table reconciles the total amounts of gross unrecognized tax benefits from January 1, 2023, through December 31, 2025 (in thousands): 
 202520242023
Balance at beginning of period$8,619 $11,133 $12,260 
Gross increases—tax positions in prior years183 1,085 27 
Gross decreases—tax positions in prior years(4,299)0 0 
Gross increases—tax positions in current year1,019 902 769 
Lapse of statute of limitations(3)(4,501)(1,923)
Balance at end of period$5,519 $8,619 $11,133 
The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate is $5.3 million, $8.4 million and $11.1 million for 2025, 2024 and 2023, respectively.
The Company’s continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. The total amount of interest and penalties accrued as of December 31, 2025, is $0.9 million, including a $0.5 million decrease recorded in income tax expense during the year. The total amount of interest and penalties accrued as of December 31, 2024, was $1.4 million, including a $0.3 million increase recorded in income tax expense during the year. The total amount of interest and penalties accrued as of December 31, 2023, was $1.0 million, including a $0.4 million increase recorded in income tax expense during the year.
The Company’s major income tax jurisdictions are the U.S., Australia, Belgium, Brazil, Canada, Germany and the United Kingdom. For U.S. federal income tax, the Company remains subject to examination for 2022 and subsequent years. For major U.S. states, with few exceptions, the Company remains subject to examination for 2020 and subsequent years. Generally, for foreign countries, the Company remains subject to examination for 2018 and subsequent years. The Company concluded its Internal Revenue Service audit for the fiscal year ended December 31, 2021, and no material changes were identified.

Historical Timeline

Fiscal YearFiled
2025Feb 13, 2026Showing above
2024Feb 13, 2025
2023Feb 20, 2024
2022Feb 10, 2023
2021Feb 14, 2022
2020Feb 12, 2021
2019Feb 14, 2020
2018Feb 15, 2019
2017Feb 20, 2018
2016Feb 13, 2017
2015Feb 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.

Other Available Disclosures

RevenueEarnings Per SharePP&EGoodwill & IntangiblesLeasesSegmentsDebtCommitmentsStock CompensationNew Standards