STEVEN MADDEN, LTD.SHOO
STEVEN MADDEN, LTD. Income Taxes Disclosure
Note 14 – Income Taxes
The components of income before provision for income taxes were as follows:
| Years Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| United States | $ | 44,165 | $ | 131,859 | $ | 131,343 | |||||||||||
| Foreign | 33,515 | 98,618 | 89,271 | ||||||||||||||
| Income before provision for income taxes | $ | 77,680 | $ | 230,477 | $ | 220,614 | |||||||||||
The components of provision for income taxes were as follows:
| Years Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 9,246 | $ | 32,894 | $ | 18,491 | |||||||||||
| State and local | 2,300 | 6,326 | 3,594 | ||||||||||||||
| Foreign | 21,785 | 20,058 | 18,449 | ||||||||||||||
| Provision for income taxes - current | 33,331 | 59,278 | 40,534 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | 1,509 | (4,558) | 5,229 | ||||||||||||||
| State and local | (697) | (465) | 682 | ||||||||||||||
| Foreign | (5,481) | 320 | 194 | ||||||||||||||
| Provision for income taxes - deferred | (4,669) | (4,703) | 6,105 | ||||||||||||||
| Provision for income taxes | $ | 28,662 | $ | 54,575 | $ | 46,639 | |||||||||||
A reconciliation between income taxes computed at the federal statutory rate and the effective tax rate is as follows:
| Years Ended December 31, | |||||||||||||||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||
| Income before provision for income taxes | $ | 77,680 | $ | 230,477 | $ | 220,614 | |||||||||||||||||||||||||||||
| U.S. Federal statutory tax rate | 16,313 | 21.0 | % | 48,400 | 21.0 | % | 46,329 | 21.0 | % | ||||||||||||||||||||||||||
| State and local income taxes, net of federal benefit | 1,225 | 1.6 | % | 4,720 | 2.0 | % | 3,608 | 1.6 | % | ||||||||||||||||||||||||||
| Foreign tax effects: | |||||||||||||||||||||||||||||||||||
| Hong Kong | |||||||||||||||||||||||||||||||||||
| Foreign rate differential | (2,192) | (2.8 | %) | (2,630) | (1.1 | %) | (2,137) | (1.0 | %) | ||||||||||||||||||||||||||
| Other | (49) | (0.1 | %) | (1,040) | (0.5 | %) | (665) | (0.3 | %) | ||||||||||||||||||||||||||
| United Kingdom | |||||||||||||||||||||||||||||||||||
| Foreign rate differential | (1,789) | (2.3 | %) | — | — | % | — | — | % | ||||||||||||||||||||||||||
| Top up payment | 9,705 | 12.5 | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
| Other | 113 | 0.1 | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
| Canada | 880 | 1.1 | % | 643 | 0.3 | % | 1,922 | 0.9 | % | ||||||||||||||||||||||||||
| Other foreign jurisdictions | 2,777 | 3.6 | % | 3,317 | 1.4 | % | 2,129 | 1.0 | % | ||||||||||||||||||||||||||
| Effect of cross-border tax laws: | |||||||||||||||||||||||||||||||||||
| FDII | (1,006) | (1.3 | %) | (1,084) | (0.5 | %) | (246) | 0.1 | % | ||||||||||||||||||||||||||
| Other | (34) | — | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
| Nontaxable or nondeductible items: | |||||||||||||||||||||||||||||||||||
| Share-based compensation | 1,478 | 1.9 | % | 1,413 | 0.6 | % | (3,821) | (1.7 | %) | ||||||||||||||||||||||||||
| Transaction costs | 1,014 | 1.3 | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
| Other | 957 | 1.2 | % | 1,483 | 0.6 | % | 461 | 0.2 | % | ||||||||||||||||||||||||||
| Changes in unrecognized tax benefits | |||||||||||||||||||||||||||||||||||
| Other adjustments: | |||||||||||||||||||||||||||||||||||
| Other | (730) | (0.9 | %) | (647) | (0.3 | %) | (941) | (0.4 | %) | ||||||||||||||||||||||||||
| Provision for income taxes and effective tax rate | $ | 28,662 | 36.9 | % | $ | 54,575 | 23.7 | % | $ | 46,639 | 21.1 | % | |||||||||||||||||||||||
The changes between the Company’s effective tax rate for the years ended December 31, 2025 and 2024 were primarily due to non-deductible expenses related to the acquisition of the Kurt Geiger business. The changes between the Company’s effective tax rate for the years ended December 31, 2024, and 2023, were due to lower tax benefits related to equity-based awards and in pre-tax income in jurisdictions with higher tax rates.
The Company's effective tax rate includes the effects of state and local income taxes, net of the federal income tax benefit, which are primarily attributable to California and New York, where the Company has significant business activities. These states have higher effective tax rates compared to other jurisdictions where the Company operates, and together, they account for more than half of the Company's total state tax expense.
The following summarizes the Company's income taxes paid (net of refunds received) for the years presented below:
| Years Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Federal | $ | 20,917 | $ | 23,564 | $ | 20,780 | |||||||||||
| State and local | 5,602 | 3,676 | 4,027 | ||||||||||||||
| Foreign | 19,799 | 23,906 | 20,718 | ||||||||||||||
| Income taxes paid (net of refunds received) | $ | 46,318 | $ | 51,146 | $ | 45,525 | |||||||||||
The following summarizes the jurisdictions that exceeded 5% of the Company's total income taxes paid (net of refunds) for the years presented below:
| Years Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| State | |||||||||||||||||
| California | $ | 3,124 | * | * | |||||||||||||
| Foreign | |||||||||||||||||
| Hong Kong | $ | 7,195 | $ | 11,050 | $ | 8,292 | |||||||||||
| Mexico | * | $ | 4,994 | $ | 4,672 | ||||||||||||
| Canada | * | * | $ | 3,213 | |||||||||||||
| Netherlands | $ | 2,432 | * | $ | 2,404 | ||||||||||||
| South Africa | $ | 3,765 | $ | 4,203 | * | ||||||||||||
| United Kingdom | $ | 3,633 | * | * | |||||||||||||
The components of deferred tax assets and liabilities were as follows:
| As of December 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Deferred tax assets | |||||||||||
| Receivable allowances | $ | 8,585 | $ | 8,073 | |||||||
| Inventory | 12,096 | 7,748 | |||||||||
| Accrued expenses | 7,437 | 484 | |||||||||
| Deferred compensation | 6,199 | 5,858 | |||||||||
| Net operating loss carryforwards | 8,531 | 4,208 | |||||||||
| Lease liability | 60,295 | 34,706 | |||||||||
| Other | 4,318 | 2,435 | |||||||||
| Gross deferred tax assets before valuation allowance | 107,461 | 63,512 | |||||||||
| Less: valuation allowance | 3,459 | 3,051 | |||||||||
| Gross deferred tax assets after valuation allowance | 104,002 | 60,461 | |||||||||
| Deferred tax liabilities | |||||||||||
| Depreciation and amortization | (26,104) | (22,547) | |||||||||
| Unremitted earnings of foreign subsidiaries | (3,208) | (3,041) | |||||||||
| Right-of-use asset | (56,100) | (31,234) | |||||||||
| Amortization of goodwill | (7,747) | (7,655) | |||||||||
| Indefinite-lived intangibles | (43,765) | — | |||||||||
| Gross deferred tax liabilities | (136,924) | (64,477) | |||||||||
| Net deferred tax liabilities | $ | (32,922) | $ | (4,016) | |||||||
The Company applies the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax‑planning strategies in making this assessment.
The Company’s increase in valuation allowance of $408 is due to an increase of net operating loss deferred tax assets in various foreign subsidiaries, which resulted in an aggregate valuation allowance of $3,459 for the year ended December 31, 2025.
A reconciliation of the beginning and ending amount of unrecognized tax benefits were as follows:
| Years Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Beginning Balance | $ | — | $ | 238 | $ | 1,145 | |||||||||||
| Additions for tax positions of prior years | 761 | — | — | ||||||||||||||
| Reductions for tax positions of prior years | — | (238) | (907) | ||||||||||||||
| Ending Balance | $ | 761 | $ | — | $ | 238 | |||||||||||
For the years ended December 31, 2025 and 2023 the total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is approximately $761 and $238, in the aggregate, respectively. There were no unrecognized tax benefits that, if recognized, would affect the tax rate in 2024. The Company recognizes interest and penalties, if any, related to uncertain income tax positions in income tax expense. Accrued interest and penalties on unrecognized tax benefits and interest and penalty expense are immaterial to the consolidated financial statements for all periods presented. It is reasonably possible that the unrecognized tax benefits will decrease in the next twelve months.
The Company’s consolidated financial statements provide for any related tax liability on amounts that may be repatriated from foreign operations, aside from undistributed earnings of certain of the Company’s foreign subsidiaries that are intended to be indefinitely reinvested in operations outside the U.S. The deferred tax liability of $3,208 as of December 31, 2025 reflects the withholding tax on amounts that may be repatriated from foreign operations.
The Company files income tax returns in the U.S. for federal, state, and local purposes, and in certain foreign jurisdictions. The Company's tax years for 2022 through 2024 remain open to examination by most taxing authorities.
On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law, which contains certain revisions to the Internal Revenue Code, including a 15% corporate minimum income tax for tax years beginning after December 31, 2022. While the 15% corporate minimum income tax has no effect on the Company’s results of operations in the near term, the Company will continue to evaluate its impact on future years. The IRA also assesses a 1% excise tax on repurchases of corporate stock which impacts the Company’s stock repurchases effective January 1, 2023. The excise tax recorded as an incremental cost in treasury stock on the Company's Consolidated Balance Sheets was $0 and $752 for the years ended December 31, 2025 and 2024, respectively.
The Organization for Economic Cooperation and Development (“OECD”) has implemented the global minimum tax rate of at least 15% for large multinational companies as of 2024 (“Pillar Two”). Under Pillar Two, a top-up tax will be required for any jurisdiction that has enacted Pillar Two and whose effective tax rate falls below the 15% global minimum rate. Additionally, the OECD issued administrative guidance providing transition and safe harbor rules around the implementation of the global minimum tax under Pillar Two. Under the safe harbor, companies would be excluded from Pillar Two requirements provided certain criteria are met. Based on the Company's analysis, the enactment of Pillar Two legislation does not have a material effect on the Company’s financial position. The Company will continue to monitor and reflect the impact of such legislative changes in future periods, as appropriate.
On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was signed into law, which includes a broad range of tax reform provisions as well as the extension of certain Tax Cuts and Job Act provisions that were set to expire. We have accounted for the OBBBA tax law changes, which did not have a material impact on our effective tax rate in 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 2, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Mar 4, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 16, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Feb 28, 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.