SEI INVESTMENTS COSEIC

SEI INVESTMENTS CO Income Taxes Disclosure

10-KFiled Feb 23, 20266 min read
Income Taxes
The federal and state and foreign income tax provision is summarized as follows: 
Year Ended December 31,202520242023
Current tax provision:
Federal$100,730 $138,970 $133,465 
State21,922 26,536 23,621 
Foreign16,894 13,840 8,807 
Total Current139,546 179,346 165,893 
Deferred Tax Provision:
Federal56,862 (8,558)(29,837)
State1,973 (5,161)(3,620)
Foreign402 (61)(39)
Total Deferred59,237 (13,780)(33,496)
Total Current and Deferred Tax Provision:
Federal157,592 130,412 103,628 
State23,895 21,375 20,001 
Foreign17,296 13,779 8,768 
Provision for income taxes$198,783 $165,566 $132,397 
Annual tax provisions include amounts considered sufficient to pay assessments that may result from examination of prior year tax returns; however, the amount ultimately paid upon resolution of issues raised may differ materially from the amount accrued. The examination and the resolution process may last longer than one year.
The components of Income before income taxes are summarized as follows:
Year Ended December 31,202520242023
Domestic$838,477 $682,017 $545,642 
Foreign77,856 64,740 49,013 
$916,333 $746,757 $594,655 
The Company's foreign income is primarily earned in Canada, the Republic of Ireland, Luxembourg and the United Kingdom.
A reconciliation of the provision for income taxes to the amount computed by applying the statutory U.S. federal income tax rate to income before income taxes is as follows:
Year Ended December 31,202520242023
AmountPercentAmountPercentAmountPercent
Tax at statutory rate$192,430 21.0 %$156,819 21.0 %$124,878 21.0 %
State and local income taxes (1)
20,583 2.3 %17,236 2.3 %15,543 2.6 %
Foreign tax effects(584)(0.1)%(325)— %(1,347)(0.2)%
Effect of cross-border tax laws(1,435)(0.2)(176)— %(1,793)(0.3)%
Tax credits
Research & development credit(8,028)(0.9)%(6,589)(0.9)%(6,871)(1.2)%
Other(150)— %(150)— %(150)— %
Nontaxable and nondeductible items4,865 0.5 %4,398 0.6 %3,724 0.6 %
Excess tax benefits on share-based payments(7,588)(0.8)%(5,691)(0.8)%(2,034)(0.3)%
Changes in unrecognized tax benefits(1,310)(0.1)%44 — %447 0.1 %
Effective tax rate $198,783 21.7 %$165,566 22.2 %$132,397 22.3 %
(1) The states and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category include New York city and state, California, and Pennsylvania for years ending December 31, 2025, 2024 and 2023.
The components of deferred tax assets and liabilities at December 31, 2025 and 2024 were as follows:
20252024
Deferred Tax Assets:
Stock-based compensation expense$37,819 $41,176 
Federal net operating loss and R&D credit carryforward3,300 4,388 
State net operating loss carryforward 34,437 37,339 
Foreign net operating loss carryforward and other8,852 6,905 
Capitalized research and development— 18,650 
Accrued expense associated with voluntary separation program406 389 
Basis differences in investments2,156 7,079 
Federal benefit of state tax deduction for uncertain tax positions1,721 2,079 
Revenue and expense recognized in different periods for financial reporting and income tax purposes4,058 2,402 
Other assets— 2,419 
Total deferred income tax assets92,749 122,826 
Less: Federal net operating loss and R&D valuation allowance(794)(794)
Less: State net operating loss valuation allowance(26,320)(32,057)
Less: Foreign net operating loss valuation allowance(8,852)(6,905)
Net deferred income tax assets$56,783 $83,070 
Deferred Tax Liabilities:
Capitalized research and development$(21,247)$— 
Difference in financial reporting and income tax depreciation methods(7,978)(6,237)
Difference between book and tax basis of other assets(9,363)(8,316)
Goodwill and other intangibles (12,184)(6,263)
Capitalized contract costs(11,909)(10,270)
Other liabilities(2,896)— 
Total deferred income tax liabilities$(65,577)$(31,086)
Net deferred income tax (liability) asset$(8,794)$51,984 
20252024
Total deferred tax assets:
Other non-current assets$8,048 $51,984 
Total deferred tax liabilities:
Other non-current liabilities(16,842)— 
Net deferred tax (liability) assets$(8,794)$51,984 
The Company’s deferred tax assets include amounts related to capitalized research and development costs. During 2025, legislative changes resulted in accelerated amortization of previously capitalized domestic research costs, reducing deferred tax assets.
As of December 31, 2025, the Company has federal operating loss carryforwards of $9,518 remaining from the acquisition of Novus Partners as well as research and development credit carryforwards remaining of $1,302. Operating loss carryforwards generated after December 31, 2017 have an indefinite carryforward period, while those generated before December 31, 2017 will expire beginning in 2033 through 2037.
The valuation allowances against deferred tax assets at December 31, 2025 and 2024 are related to federal and state net operating losses from certain domestic subsidiaries, foreign net operating losses from certain foreign subsidiaries and the restriction of the use of the foreign tax credits. Certain state and foreign tax statutes significantly limit the utilization of net operating losses for domestic and foreign subsidiaries. Furthermore, these net operating losses cannot be used to offset the net income of other subsidiaries.
The Company recognizes uncertain tax positions in accordance with the applicable accounting guidance and adjusts these liabilities when management’s judgment changes as a result of the evaluation of new information not previously available. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the Company's current estimate of the tax liabilities. The Company’s total unrecognized tax benefit, including interest and penalties, as of December 31, 2025 was $15,298, of which $13,577 would affect the effective tax rate if the Company were to recognize the tax benefit. The gross amount of uncertain tax liability of $3,642 is expected to be paid within one year and is netted against the current payable account while the remaining amount of $11,656 is included in Other long-term liabilities on the accompanying Consolidated Balance Sheet. During the year ended December 31, 2025, the Company recognized $4,007 of previously unrecognized tax benefits relating to the lapse of the statute of limitation and settlements.
The Company files a consolidated federal income tax return and separate income tax returns with various states. Certain subsidiaries of the Company file tax returns in foreign jurisdictions. The Company is no longer subject to U.S. federal income tax examination for years before 2022 and is no longer subject to state, local or foreign income tax examinations by authorities for years before 2018.
A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:
202520242023
Balance as of January 1$15,241 $15,532 $15,204 
Tax positions related to current year:
Gross additions2,102 3,460 3,395 
Tax positions related to prior years:
Gross additions7 106 120 
Settlements— (491)— 
Lapses on statute of limitations(3,737)(3,366)(3,187)
Balance as of December 31$13,613 $15,241 $15,532 
The above reconciliation of the gross unrecognized tax benefit will differ from the amount which would affect the effective tax rate because of the recognition of the federal and state tax benefits and interest and penalties.
The Company classifies all interest and penalties as income tax expense. The Company has recorded $1,685, $1,725 and $1,385 in liabilities for tax-related interest and penalties in 2025, 2024 and 2023, respectively.
The Company includes its direct and indirect subsidiaries in its U.S. consolidated federal income tax return. The Company’s tax sharing allocation agreement provides that any subsidiary having taxable income will pay a tax liability equivalent to what that subsidiary would have paid if it filed a separate income tax return. If the separately calculated federal income tax provision for any subsidiary results in a tax loss, the current benefit resulting from such loss, to the extent utilizable on a separate return basis, is accrued and paid to that subsidiary.
The amounts of cash payments for income taxes made by the Company were as follows:
Year Ended December 31,202520242023
Federal$129,363 $150,053 $118,272 
State and Local25,024 24,893 20,785 
Foreign15,520 10,351 6,916 
Cash payments for income taxes$169,907 $185,297 $145,973 

Historical Timeline

Fiscal YearFiled
2025Feb 23, 2026Showing above
2024Feb 20, 2025
2023Feb 20, 2024
2022Feb 21, 2023
2021Feb 22, 2022
2020Feb 22, 2021
2019Feb 24, 2020
2018Feb 25, 2019
2017Feb 22, 2018
2015Feb 22, 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

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