SHENANDOAH TELECOMMUNICATIONS CO/VA/SHEN
SHENANDOAH TELECOMMUNICATIONS CO/VA/ Income Taxes Disclosure
Income Taxes
The Company files a consolidated U.S. federal income tax return and various state income tax returns. The provision for the federal and state income taxes attributable to (loss) income from continuing operations consisted of the following components:
| Years Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Current expense (benefit) | |||||||||||||||||
| Federal taxes | $ | (110) | $ | — | $ | (2,707) | |||||||||||
| State taxes | 660 | 89 | (680) | ||||||||||||||
| Total current provision | 550 | 89 | (3,387) | ||||||||||||||
| Deferred (benefit) expense | |||||||||||||||||
| Federal taxes | (7,032) | (5,238) | 4,564 | ||||||||||||||
| State taxes | (2,431) | (4,521) | (676) | ||||||||||||||
| Total deferred (benefit) expense | (9,463) | (9,759) | 3,888 | ||||||||||||||
| Income tax (benefit) expense | $ | (8,913) | $ | (9,670) | $ | 501 | |||||||||||
| Effective tax rate | 21.3 | % | 25.4 | % | 33.0 | % | |||||||||||
As further described in Note 2, Summary of Significant Accounting Policies , the Company has elected to prospectively adopt the guidance in ASU No. 2023-09. The following table is a reconciliation of income tax (benefit) expense determined by applying the federal and state tax rates to (loss) income from continuing operations before income taxes for the year ended December 31, 2025:
| (in thousands) | Amount | Percent | |||||||||
| Expected tax (benefit) expense at federal statutory | $ | (8,790) | 21.0 | % | |||||||
State income tax (benefit) expense, net of federal tax effect1 | (1,399) | 3.3 | % | ||||||||
| Nontaxable and nondeductible items: | |||||||||||
| Excess tax deficiency from share-based compensation | 1,142 | (2.7) | % | ||||||||
Other | 134 | (0.3) | % | ||||||||
| Income tax (benefit) expense | $ | (8,913) | 21.3 | % | |||||||
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1.For the year ended December 31, 2025, Virginia made up greater than 50% of the state income taxes in this category.
A reconciliation of income tax (benefit) expense determined by applying the federal and state tax rates to (loss) income from continuing operations before income taxes for the years ended December 31, 2024 and 2023, is as follows:
| Years Ended December 31, | |||||||||||
| (in thousands) | 2024 | 2023 | |||||||||
| Expected tax (benefit) expense at federal statutory | $ | (7,986) | $ | 319 | |||||||
| State income tax (benefit) expense, net of federal tax effect | (3,159) | 268 | |||||||||
| Revaluation of deferred tax liabilities | — | (1,373) | |||||||||
| Excess tax deficiency from share-based compensation and other expense, net | 1,475 | 764 | |||||||||
| Valuation allowance | — | 523 | |||||||||
| Income tax (benefit) expense | $ | (9,670) | $ | 501 | |||||||
The following table presents income taxes paid (net of refunds received) by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025:
| (in thousands) | Income Taxes Paid | ||||
| Federal | $ | 936 | |||
| US state and local | |||||
| Pennsylvania | 930 | ||||
| Virginia | 120 | ||||
| Other | 64 | ||||
| Total | $ | 2,050 | |||
The Company received $1.3 million and $25.6 million in cash refunds for income taxes for the years ended December 31, 2024 and 2023, respectively. The Company paid $8.4 million, and $0.1 million in income taxes for the years ended December 31, 2024 and 2023, respectively.
Deferred tax assets and liabilities are measured using enacted tax rates that are expected to apply in the year of reversal or settlement and arise from temporary differences between the US GAAP and tax bases of the following assets and liabilities:
| (in thousands) | December 31, 2025 | December 31, 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss carryforwards | $ | 117,691 | $ | 64,599 | |||||||
| Business interest limitation carryforwards | 15,659 | 11,669 | |||||||||
| Accruals and stock-based compensation | 4,552 | 5,274 | |||||||||
| Leases | 4,395 | 4,399 | |||||||||
| Other | 12,575 | 12,020 | |||||||||
| Total gross deferred tax assets | 154,872 | 97,961 | |||||||||
| Less valuation allowance | — | — | |||||||||
| Net deferred tax assets | 154,872 | 97,961 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Property, plant and equipment | 285,250 | 239,180 | |||||||||
| Intangible assets | 18,386 | 17,866 | |||||||||
| Leases | 5,406 | 5,356 | |||||||||
| Prepaid assets and other | 3,448 | 3,275 | |||||||||
| Total gross deferred tax liabilities | 312,490 | 265,677 | |||||||||
| Net deferred tax liabilities | $ | 157,618 | $ | 167,716 | |||||||
The Company has a deferred tax asset of $117.7 million related to federal and various state net operating losses. As of December 31, 2025, the Company had approximately $519.7 million of federal net operating losses, including approximately $508.3 million of federal net operating losses generated after 2017. Federal net operating losses generated prior to 2018 expire through 2034. The Horizon federal net operating losses are subject to limitations under Section 382 of the Code. The Company also had approximately $187.3 million of state net operating losses, most of which can be carried forward indefinitely. The
Company’s income tax expense (benefit) for the year ended December 31, 2023 included tax expense of $0.5 million for the valuation allowance on deferred tax assets related to federal net operating losses expected to expire unused. The Company recorded no valuation allowances for the year ended December 31, 2025 and 2024.
As of December 31, 2025 and 2024, the Company had no unrecognized tax benefits.
The Company’s returns are generally open to examination from 2022 forward. The net operating losses acquired from Horizon are open to examination from 2013 forward. The Company is currently involved in one state income tax audit and no federal income tax audits as of December 31, 2025.
On July 4, 2025, H.R.1 was signed into law and includes numerous changes to existing tax law, including provisions providing current deductibility of certain property additions and limitations on interest deductions based on a tax EBITDA framework. These provisions are generally effective beginning in 2025, and we currently anticipate they will partially defer our income tax payments in future years. The legislation did not have a material impact on the Company’s effective tax rate for the year ended December 31, 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 26, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Mar 15, 2018 | |
| 2016 | Mar 23, 2017 | |
| 2015 | Feb 26, 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.