RCI HOSPITALITY HOLDINGS, INC.RICK
RCI HOSPITALITY HOLDINGS, INC. Income Taxes Disclosure
Income Taxes
Income tax expense consisted of the following (in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||
| Current | |||||||||||||||||
| Federal | $ | 3,821 | $ | 4,570 | $ | 6,506 | |||||||||||
| State and local | 1,792 | 1,470 | 2,121 | ||||||||||||||
| Total current income tax expense | 5,613 | 6,040 | 8,627 | ||||||||||||||
| Deferred | |||||||||||||||||
| Federal | (1,174) | (5,522) | (1,294) | ||||||||||||||
| State and local | 170 | (928) | (487) | ||||||||||||||
| Total deferred income tax expense (benefit) | (1,004) | (6,450) | (1,781) | ||||||||||||||
| Total income tax expense (benefit) | $ | 4,609 | $ | (410) | $ | 6,846 | |||||||||||
The Company and its subsidiaries do not operate in tax jurisdictions outside of the United States.
Income tax expense (benefit) differs from the “expected” income tax expense computed by applying the U.S. federal statutory rate to earnings before income taxes for the years ended September 30 as a result of the following (dollars in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Amount | % | Amount | %(2) | Amount | % | ||||||||||||||||||||||||||||||
| Federal statutory income tax expense | $ | 3,244 | 21.0 | % | $ | 547 | 21.0 | % | $ | 7,549 | 21.0 | % | |||||||||||||||||||||||
State and local income taxes, net of federal benefit(1) | 1,574 | 10.2 | % | 209 | 8.0 | % | 1,189 | 3.3 | % | ||||||||||||||||||||||||||
| Nontaxable or nondeductible items | |||||||||||||||||||||||||||||||||||
| Goodwill impairment | — | — | % | 204 | 7.8 | % | 288 | 0.8 | % | ||||||||||||||||||||||||||
| Section 162(m) excess compensation | 204 | 1.3 | % | 170 | 6.5 | % | 177 | 0.5 | % | ||||||||||||||||||||||||||
| Meals and entertainment | 100 | 0.6 | % | 98 | 3.8 | % | 97 | 0.3 | % | ||||||||||||||||||||||||||
| Loss (gain) on sale of subsidiary stock | 131 | 0.8 | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
| Other nontaxable or nondeductible items | 15 | 0.1 | % | 14 | 0.5 | % | 42 | 0.1 | % | ||||||||||||||||||||||||||
| Change in valuation allowance | 89 | 0.6 | % | 48 | 1.8 | % | — | — | % | ||||||||||||||||||||||||||
| Tax credits | |||||||||||||||||||||||||||||||||||
| FICA tip credit | (1,605) | (10.4) | % | (1,652) | (63.3) | % | (1,754) | (4.9) | % | ||||||||||||||||||||||||||
| Work Opportunity Tax credits | (178) | (1.2) | % | (639) | (24.5) | % | (377) | (1.0) | % | ||||||||||||||||||||||||||
| Expiration of capital loss carryforwards | 471 | 3.0 | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
| Stock-based compensation forfeiture | 198 | 1.3 | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
| Return-to-provision and prior-period adjustments | 286 | 1.9 | % | 591 | 22.7 | % | (371) | (1.0) | % | ||||||||||||||||||||||||||
Other(3) | 80 | 0.5 | % | — | — | % | 6 | 0.0 | % | ||||||||||||||||||||||||||
| Total income tax expense (benefit) | $ | 4,609 | 29.8 | % | $ | (410) | (15.7) | % | $ | 6,846 | 19.0 | % | |||||||||||||||||||||||
(1) State taxes in New York, Florida, and Texas make up the majority of the tax effect in this category.
(2) For 2024, due to the low pretax income, insignificant dollar amounts appear to present greater than threshold percentages.
(3) Includes items that individually fail to meet the 5% of federal rate threshold.
The effective income tax rate difference from the statutory federal corporate tax rate of 21% comes from offsetting impact of state income tax, net of federal benefit, nontaxable and nondeductible items, changes in the deferred tax asset valuation allowance, tax credits, and return-to-provision adjustments (which are included in the related reconciling items previously mentioned). The effective income tax rate for fiscal 2024 was also affected by the low pretax income that caused a high offsetting rate for tax credits, whose dollar value does not change based on pretax income.
Total income taxes paid, net of refunds, for the fiscal years ended September 30, in the following jurisdictions are presented below (in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||
| Federal | $ | 3,400 | $ | 3,700 | $ | 6,160 | |||||||||||
| State and local | |||||||||||||||||
| Texas | 298 | 347 | 321 | ||||||||||||||
| New York | 347 | 68 | 504 | ||||||||||||||
| Florida | — | 343 | 633 | ||||||||||||||
| Illinois | 112 | 188 | 332 | ||||||||||||||
| Colorado | 52 | 122 | 158 | ||||||||||||||
| Other* | 338 | 300 | 528 | ||||||||||||||
| Total income taxes paid, net of refunds | $ | 4,547 | $ | 5,068 | $ | 8,636 | |||||||||||
* Includes tax jurisdictions that individually fail to meet the 5% threshold in all periods presented.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the Company’s deferred tax assets and liabilities were as follows (in thousands):
| September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss carryforwards | $ | 1,062 | $ | 961 | |||||||
| Capital loss carryforwards | — | 535 | |||||||||
| Operating lease right-of-use assets | 1,401 | 2,096 | |||||||||
| Accrued expenses | 3,107 | 733 | |||||||||
| Self-insurance reserve | 2,307 | — | |||||||||
| Stock-based compensation | 1,750 | 1,629 | |||||||||
| Other | 727 | 27 | |||||||||
| Valuation allowance | (1,015) | (951) | |||||||||
| Total deferred tax assets | 9,339 | 5,030 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Intangibles | (21,173) | (19,557) | |||||||||
| Property and equipment | (9,542) | (7,875) | |||||||||
| Prepaid expenses | (313) | (291) | |||||||||
| Total deferred tax liabilities | (31,028) | (27,723) | |||||||||
| Net deferred tax liability | $ | (21,689) | $ | (22,693) | |||||||
At September 30, 2025, we had net operating loss carryforwards of $137,000 for federal income tax and $13,000 for state income tax with indefinite carryforward periods. We also had net operating loss carryforwards of $912,000 for state and local income taxes with a 20-year carryforward period. The state and local tax net operating loss carryforwards will begin to expire in 2028 if unused prior to that time.
The Company may recognize the tax benefit from uncertain tax positions only if it is at least more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon settlement with the taxing authorities. We recognize accrued interest related to unrecognized tax benefits as a component of accrued liabilities. We recognize penalties related to unrecognized tax benefits as a component of selling, general and administrative expenses, and recognize interest accrued related to unrecognized tax benefits in interest expense.
The full balance of uncertain tax positions, if recognized, would affect the Company’s annual effective tax rate, net of any federal tax benefits. The Company does not have any uncertain tax position as of September 30, 2025, and 2024.
The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various states. The Company ordinarily goes through various federal and state reviews and examinations for various tax matters. Fiscal year ended September 30, 2022, and subsequent years remain open to federal tax examination.
On July 4, 2025, President Trump signed into law the legislation formally titled "An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14" (the "Act") and commonly referred to as the One Big Beautiful Bill Act. Among other things, the Act extends certain expiring, and in some cases expired, provisions of the 2017 Tax Cuts and Jobs Act. The Act also adjusted a number of provisions affecting businesses that were subject to sunsets, phase-outs, or phase-ins that would have taken effect in the absence of action by Congress or that have already taken effect. The Company has reviewed the changes from the Act and determined that any impact would be immaterial.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 19, 2026 | Showing above |
| 2024 | Dec 16, 2024 | |
| 2023 | Dec 14, 2023 | |
| 2022 | Dec 14, 2022 | |
| 2021 | Dec 14, 2021 | |
| 2020 | Dec 14, 2020 | |
| 2019 | Feb 13, 2020 | |
| 2018 | Dec 31, 2018 | |
| 2017 | Feb 14, 2018 | |
| 2016 | Dec 13, 2016 | |
| 2015 | Dec 14, 2015 | |
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.