Sinclair, Inc.SBGI
Sinclair, Inc. Income Taxes Disclosure
9. INCOME TAXES:
The (benefit) provision for income taxes consisted of the following for the years ended December 31, 2025, 2024, and 2023 (in millions):
| 2025 | 2024 | 2023 | |||||||||||||||
| Current provision (benefit) for income taxes: | |||||||||||||||||
| Federal | $ | 37 | $ | (35) | $ | 5 | |||||||||||
| State | 19 | 4 | (5) | ||||||||||||||
| 56 | (31) | — | |||||||||||||||
| Deferred (benefit) provision for income taxes: | |||||||||||||||||
| Federal | (85) | 95 | (331) | ||||||||||||||
| State | (34) | (4) | (28) | ||||||||||||||
| (119) | 91 | (359) | |||||||||||||||
| (Benefit) provision for income taxes | $ | (63) | $ | 60 | $ | (359) | |||||||||||
A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before taxes for the year ended December 31, 2025, after the prospective adoption of ASU 2023-09, is as follows (in millions, except percentages):
| 2025 | 2025 | ||||||||||
| Tax Expense/(Benefit) | Estimated Tax Rate | ||||||||||
| U.S. federal statutory tax rate | $ | (46) | 21.0 | % | |||||||
| State income taxes, net of federal tax benefit (a) (b) | (19) | 8.6 | % | ||||||||
| Tax credits (federal R&D credit) | (4) | 1.8 | % | ||||||||
| Nontaxable or nondeductible items: | |||||||||||
| Executive compensation | 6 | (2.6) | % | ||||||||
| Other | — | (0.1) | % | ||||||||
| Changes in unrecognized tax benefits | 2 | (0.8) | % | ||||||||
| Other adjustments: | |||||||||||
| Pending tax refunds interest income | (6) | 2.7 | % | ||||||||
| Effective of consolidated VIEs | 3 | (1.3) | % | ||||||||
| Other | 1 | (0.4) | % | ||||||||
| Effective income tax rate | $ | (63) | 28.9 | % | |||||||
(a)The 2025 state jurisdiction that contributes to the majority (greater than 50%) of the tax effect in this category is Maryland.
(b)Includes a $22 million decrease in valuation allowance primarily as a result of a change in recent years from cumulative loss to cumulative earnings in certain state jurisdictions.
A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before taxes for years ended December 31, 2024 and 2023, prior to the prospective adoption of ASU 2023-09, is as follows:
| 2024 | 2023 | ||||||||||
| U.S. federal statutory tax rate | 21.0 | % | 21.0 | % | |||||||
| Adjustments: | |||||||||||
| State income taxes, net of federal tax benefit (a) | 6.0 | % | 4.7 | % | |||||||
| Valuation allowance (b) | (5.8) | % | 33.5 | % | |||||||
| Pending tax refunds interest income (c) | (4.6) | % | — | % | |||||||
| Non-deductible items | 1.9 | % | (0.6) | % | |||||||
| Federal tax credits | (1.9) | % | 0.6 | % | |||||||
| Adjustment to prior year taxes | 1.7 | % | — | % | |||||||
| Other | 2.0 | % | 0.2 | % | |||||||
| Effective income tax rate | 20.3 | % | 59.4 | % | |||||||
(a)Included in state income taxes are deferred income tax effects related to certain acquisitions, intercompany mergers, tax elections, law changes and/or impact of changes in apportionment.
(b)SBG’s 2024 income tax provision includes a $17 million decrease in valuation allowance primarily result of a change in recent years from cumulative loss to cumulative earnings in certain state jurisdictions, and a remeasurement of state net deferred tax assets due to state apportionment updates. SBG’s 2023 income tax provision includes a $212 million decrease related to the release of valuation allowance associated with the federal interest expense carryforwards under the IRC Section 163(j).
(c)SBG’s 2024 income tax provision includes a $14 million accrual of interest income attributable to prior years’ pending income tax refund claims, including an immaterial $7.5 million correcting adjustment related to the accrual of interest income attributable to prior years’ pending income tax refund claims.
Temporary differences between the financial reporting carrying amounts and the tax bases of assets and liabilities give rise to deferred taxes. Total deferred tax assets and deferred tax liabilities as of December 31, 2025 and 2024 were as follows (in millions):
| 2025 | 2024 | ||||||||||
| Deferred Tax Assets: | |||||||||||
| Net operating losses: | |||||||||||
| Federal | $ | — | $ | 75 | |||||||
| State | 120 | 149 | |||||||||
| IRC Section 163(j) interest expense carryforward | 52 | 139 | |||||||||
| Operating lease liabilities | 30 | 36 | |||||||||
| Tax Credits | — | 90 | |||||||||
| Capitalized research and development expenses | 7 | 44 | |||||||||
| Other | 41 | 45 | |||||||||
| 250 | 578 | ||||||||||
| Valuation allowance for deferred tax assets | (74) | (96) | |||||||||
| Total deferred tax assets | $ | 176 | $ | 482 | |||||||
| Deferred Tax Liabilities: | |||||||||||
| Goodwill and intangible assets | $ | (320) | $ | (331) | |||||||
| Property & equipment, net | (80) | (87) | |||||||||
| Investment in Diamond | — | (405) | |||||||||
| Operating lease assets | (26) | (32) | |||||||||
| Other | (5) | — | |||||||||
| Total deferred tax liabilities | (431) | (855) | |||||||||
| Net deferred tax liabilities | $ | (255) | $ | (373) | |||||||
At December 31, 2025, SBG had approximately $2,408 million of state net operating losses. Except for those without an expiration date, these losses will expire during various years from 2026 to 2045, and some of them are subject to annual limitations under state provisions. As discussed in Income Taxes under Note 1. Nature of Operations and Summary of Significant Accounting Policies, SBG establishes a valuation allowance in accordance with the guidance related to accounting for income taxes. As of December 31, 2025, a valuation allowance has been provided for deferred tax assets related to certain temporary basis differences and a substantial portion of SBG’s available state net operating loss carryforwards based on past operating results, expected timing of the reversals of existing temporary basis differences, alternative tax strategies, current and cumulative losses, and projected future taxable income. Although realization is not assured for the remaining deferred tax assets, SBG believes it is more likely than not that they will be realized in the future. During the year ended December 31, 2025, SBG decreased its valuation allowance by $22 million to $74 million. The decrease was primarily a result of a change in recent years from cumulative loss to cumulative earnings in certain state jurisdictions. During the year ended December 31, 2024, SBG decreased its valuation allowance by $17 million to $96 million. The decrease was primarily a result of a change in recent years from cumulative loss to cumulative earnings in certain state jurisdictions, and a remeasurement of state net deferred tax assets due to state apportionment updates.
The following table summarizes the activity related to SBG’s accrued unrecognized tax benefits for the years ended December 31, 2025, 2024, and 2023 (in millions):
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance at January 1, | $ | 13 | $ | 12 | $ | 17 | |||||||||||
| Additions related to current year tax positions | 1 | 1 | 1 | ||||||||||||||
| Reductions related to positions transferred to Ventures | — | — | (2) | ||||||||||||||
| Reductions related to settlements with taxing authorities | — | — | (2) | ||||||||||||||
| Reductions related to expiration of the applicable statute of limitations | — | — | (2) | ||||||||||||||
| Balance at December 31, | $ | 14 | $ | 13 | $ | 12 | |||||||||||
SBG is a subsidiary of Sinclair and is subject to U.S. federal income tax as part of the consolidated return. SBG is also subject to income tax of multiple state jurisdictions. SBG’s 2014 through 2020 federal tax returns are currently under audit, and several of SBG’s subsidiaries are currently under state examinations for various years. SBG does not anticipate that resolution of these matters will result in a material change to SBG’s financial statements. In addition, SBG does not believe that SBG’s liability for unrecognized tax benefits would be materially impacted, in the next twelve months, as a result of expected statute of limitations expirations and resolution of examination issues and settlements with tax authorities.
The net cash income taxes paid by the Company for the year ended December 31, 2025 were as follows (in millions):
| 2025 | |||||
| Federal | $ | 31 | |||
| State & local: | |||||
| California | 6 | ||||
| Other | 8 | ||||
| Foreign | — | ||||
| Income taxes, net of amounts refunded | $ | 45 | |||
The net cash income taxes paid by the Company during the years ended December 31, 2024 and 2023 were $3 million and $4 million, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 29, 2024 | |
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.