Red Rock Resorts, Inc.RRR
Red Rock Resorts, Inc. Income Taxes Disclosure
Income Taxes
Red Rock is taxed as a corporation and is subject to corporate federal, state and local taxes on income allocated to it by Station Holdco based upon Red Rock’s economic interest held in Station Holdco. Station Holdco is treated as a pass-through partnership for income tax reporting purposes. Station Holdco’s members, including the Company, are liable for federal, state and local income taxes based on their share of Station Holdco’s pass-through taxable income.
Income Tax Expense
The components of income tax expense are as follows (amounts in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current income taxes: | |||||||||||||||||
Federal | $ | 21,480 | $ | 34,607 | $ | 7,095 | |||||||||||
| State and local | 9 | — | — | ||||||||||||||
| Total current income taxes | 21,489 | 34,607 | 7,095 | ||||||||||||||
| Deferred income taxes: | |||||||||||||||||
Federal | 25,157 | 2,307 | 35,888 | ||||||||||||||
State and local | 4 | — | 1 | ||||||||||||||
Total deferred income taxes | 25,161 | 2,307 | 35,889 | ||||||||||||||
| Total income tax expense | $ | 46,650 | $ | 36,914 | $ | 42,984 | |||||||||||
A reconciliation of the U.S. federal statutory tax rate to the effective tax rate is as follows (amounts in thousands):
| Year Ended December 31, 2025 | ||||||||||||||
| Amount | Percent | |||||||||||||
| U.S. federal statutory tax rate | $ | 84,487 | 21.0 | % | ||||||||||
| State and local income taxes, net of federal income tax effect | 13 | — | % | |||||||||||
| Tax credits | (1,756) | (0.4) | % | |||||||||||
| Nontaxable or nondeductible Items: | ||||||||||||||
| Share-based payment awards | (3,521) | (0.9) | % | |||||||||||
| Income attributable to noncontrolling interests | (35,197) | (8.7) | % | |||||||||||
| Other | 2,413 | 0.6 | % | |||||||||||
| Changes in unrecognized tax benefits | 159 | — | % | |||||||||||
| Other adjustments | 52 | — | % | |||||||||||
| Effective tax rate | $ | 46,650 | 11.6 | % | ||||||||||
| Year Ended December 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
Expected U.S. federal income taxes at statutory rate | $ | 68,923 | $ | 79,960 | ||||||||||
Income attributable to noncontrolling interests | (28,821) | (33,972) | ||||||||||||
| Change in valuation allowance | — | (322) | ||||||||||||
| Other | (3,188) | (2,682) | ||||||||||||
| Income tax expense | $ | 36,914 | $ | 42,984 | ||||||||||
The Company’s effective tax rate was 11.6%, 11.2% and 11.3% for the years ended December 31, 2025, 2024 and 2023, respectively. The Company’s effective tax rate differs from the U.S. federal statutory rate of 21% primarily due to income attributable to noncontrolling interests, for which the Company does not record income taxes. State taxes in California made up the majority (greater than 50 percent) of the tax effect in this category.
The components of deferred tax assets are as follows (amounts in thousands):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
Deferred tax assets: | |||||||||||
| Interest expense carryforwards and other attributes | $ | 15,090 | $ | 21,807 | |||||||
Investment in partnership | 12,123 | 26,052 | |||||||||
| Equity-based compensation | 3,376 | 4,284 | |||||||||
| Tax receivable agreement | 4,328 | 4,290 | |||||||||
| Total deferred tax assets | $ | 34,917 | $ | 56,433 | |||||||
As a result of the Company’s IPO in 2016 and certain reorganization transactions, the Company recorded a net deferred tax asset resulting from the outside basis difference of its interest in Station Holdco. The Company also recorded a deferred tax asset for its liability related to payments to be made pursuant to the TRA representing 85% of the tax savings the Company expects to realize from the amortization deductions associated with the step up in the basis of depreciable assets under Section 743 of the Internal Revenue Code. In addition, the Company has recorded deferred tax assets related to tax attributes, primarily interest limitation carryforwards. As of December 31, 2025, the Company had no material net operating loss carryforwards. As of December 31, 2025, the Company had $71.0 million of federal U.S. interest limitation carryforwards, which can be carried forward indefinitely.
The Company considers both positive and negative evidence when measuring the need for a valuation allowance. A valuation allowance is not required to the extent that, in management’s judgment, positive evidence exists with a magnitude and duration sufficient to result in a conclusion that it is more likely than not (a likelihood of more than 50%) that the Company’s deferred tax assets will be realized. At December 31, 2025 and 2024, the Company recorded no valuation allowance against the Company’s deferred tax assets.
Income Taxes Paid
Cash income taxes paid (net of refunds) are shown by jurisdiction below (amounts in thousands):
| Year Ended December 31, 2025 | |||||
| U.S. federal | $ | 20,352 | |||
| U.S. state | 10 | ||||
| Total income taxes paid, net | $ | 20,362 | |||
Income tax payments, net of refunds received, were $30.3 million and $21.1 million for the years ended December 31, 2024 and 2023, respectively.
Uncertain Tax Positions
The Company recorded $1.8 million of unrecognized tax benefits as of December 31, 2025. Included in the balance of unrecognized tax benefits as of December 31, 2025 and December 31, 2024 are tax benefits of $1.8 million that, if recognized, would impact the effective tax rate. The Company recorded interest of $0.2 million for each of the years ended December 31, 2025 and December 31, 2024. The Company did not record interest or penalties for unrecognized tax benefits for prior periods, as any recognition would have resulted in a reduction of its net operating loss or other tax attributes and would not have resulted in the underpayment of tax. The Company recognizes interest and penalties related to income taxes within the provision for income taxes.
The Company files annual income tax returns for Red Rock and Station Holdco in the U.S. federal jurisdiction and California. Under the 2017 U.S. federal tax year examination, the Internal Revenue Service (“IRS”) previously issued a Notice of Proposed Adjustment in relation to the 2017 land lease deduction. During 2024, the Company came to a final agreement with the IRS on the 2017 federal tax year examination and made a deposit equal to what the Company expected to owe. During 2025, final determinations with respect to the deposits were received from the IRS, and immaterial differences were recorded through the provision for income taxes. No net liability remains on the balance sheet.
There are no ongoing income tax audits as of December 31, 2025. For federal income tax purposes, the years 2022, 2023 and 2024 are subject to examination as the normal three-year statute of limitations would expire three years after the actual filing date of the returns.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”), which includes a broad range of tax reform provisions, was signed into law in the United States. The legislation did not have a material impact on the Company’s effective income tax rate for 2025.
The Company had the following activity for unrecognized tax benefits (amounts in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance at beginning of year | $ | 1,798 | $ | 1,798 | $ | 1,798 | |||||||||||
| Adjustments for tax positions of prior years | — | — | — | ||||||||||||||
| Balance at end of year | $ | 1,798 | $ | 1,798 | $ | 1,798 | |||||||||||
Tax Receivable Agreement
Pursuant to the election under Section 754 of the Internal Revenue Code, the Company continues to expect to obtain an increase in its share of the tax basis in the net assets of Station Holdco when LLC Units are exchanged by Station Holdco’s noncontrolling interest holders and other qualifying transactions. These increases in tax basis may reduce the amounts that the Company would otherwise pay in the future to various tax authorities. They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets. The Company expects to realize these tax benefits based on current projections of taxable income.
During the year ended December 31, 2025, an exchange of LLC Units resulted in an increase in the amount payable under the TRA liability of $1.3 million, which was recorded through stockholders’ equity. For the year ended December 31, 2024, there were no exchanges of LLC Units and Class B common shares for Class A common stock. At December 31, 2025 and 2024, the Company’s liability under the TRA with respect to previously consummated transactions was $20.6 million and $20.4 million, respectively, which is due primarily to current and former executives of the Company or members of their respective family group. Of these amounts, $5.2 million and $5.6 million was payable to Fertitta Family Entities at December 31, 2025 and 2024, respectively. Future payments to the pre-IPO owners in respect of any subsequent exchanges of LLC Units and Class B common shares for Class A common stock would be in addition to these amounts and are expected to be substantial.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 20, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 23, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Mar 13, 2017 | |
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.