SLM CorpSLM
SLM Corp Income Taxes Disclosure
Income Taxes
We adopted ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” on a prospective basis beginning with the year ended December 31, 2025. The following table presents required disclosure pursuant to ASU 2023-09 and reconciles the statutory U.S. federal income tax amount and rate to our effective tax amount and rate for continuing operations for the year ended December 31, 2025:
| Year ended December 31, (dollars in thousands) | 2025 | |||||||||||||
| Statutory rate | $ | 208,438 | 21.0 | % | ||||||||||
| Tax credits: | ||||||||||||||
| Research credit | (4,037) | (0.4) | ||||||||||||
| Low-income housing credit | (2,791) | (0.3) | ||||||||||||
| Nondeductible items | 10,107 | 1.0 | ||||||||||||
| Expired capital losses | 14,020 | 1.4 | ||||||||||||
| Other, net | (7,879) | (0.7) | ||||||||||||
| Changes in valuation allowances | (10,982) | (1.1) | ||||||||||||
| State and local income taxes, net of federal effect | 34,756 | 3.5 | ||||||||||||
| Changes in unrecognized tax benefits | 6,084 | 0.6 | ||||||||||||
| Effective tax rate | $ | 247,716 | 25.0 | % | ||||||||||
The following table presents the required disclosures prior to our adoption of ASU 2023-09 and reconciles the statutory U.S. federal income tax rate to our effective tax rate for continuing operations for the years ended December 31, 2024 and 2023:
| Years ended December 31, | 2024 | 2023 | ||||||||||||
| Statutory rate | 21.0 | % | 21.0 | % | ||||||||||
| State tax, net of federal benefit | 2.3 | 3.8 | ||||||||||||
| Business credits | (2.0) | (1.3) | ||||||||||||
| Other, net | 2.5 | 1.8 | ||||||||||||
| Effective tax rate | 23.8 | % | 25.3 | % | ||||||||||
The effective tax rate varies from the statutory U.S. federal rate of 21 percent primarily due to the impact of state taxes, net of federal benefit, for the year ended December 31, 2025 and due to business tax credits and the impact of state taxes, net of federal benefit, for the years ended December 31, 2024 and 2023. For the year ended December 31, 2025, California, New York, New Jersey, Illinois, and Delaware comprised the majority of the domestic, state, and local income taxes, net of federal effect category. For the year ended December 31, 2024, New York, New Jersey, Delaware, California, and Illinois comprised the majority of the domestic, state, and local income taxes, net of federal effect category. For the year ended December 31, 2023, New Jersey, New York, Delaware, Illinois, California, and Massachusetts comprised the majority of the domestic, state, and local income taxes, net of federal effect category.
Income tax expense consists of:
| As of December 31, (dollars in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Current provision (benefit): | ||||||||||||||||||||
| U.S. Federal | $ | 149,056 | $ | 181,132 | $ | 175,977 | ||||||||||||||
| U.S. State | 48,344 | 43,506 | 44,152 | |||||||||||||||||
| Total current provision (benefit) | 197,400 | 224,638 | 220,129 | |||||||||||||||||
| Deferred provision (benefit): | ||||||||||||||||||||
| U.S. Federal | 47,181 | (19,032) | (20,687) | |||||||||||||||||
| U.S. State | 3,135 | (15,295) | (2,537) | |||||||||||||||||
| Total deferred provision (benefit) | 50,316 | (34,327) | (23,224) | |||||||||||||||||
| Provision for income tax expense | $ | 247,716 | $ | 190,311 | $ | 196,905 | ||||||||||||||
The tax effect of temporary differences that give rise to deferred tax assets and liabilities is summarized below.
| As of December 31, (dollars in thousands) | 2025 | 2024 | ||||||||||||
| Deferred tax assets: | ||||||||||||||
| Loan reserves | $ | 381,894 | $ | 376,029 | ||||||||||
| Net unrealized losses | 13,446 | 21,209 | ||||||||||||
| Accrued expenses not currently deductible | 18,384 | 19,841 | ||||||||||||
| Unrecorded tax benefits | 13,574 | 12,008 | ||||||||||||
| Research and development costs | — | 38,119 | ||||||||||||
| Stock-based compensation plans | 12,508 | 12,885 | ||||||||||||
| Acquired intangible assets | 14,173 | 16,394 | ||||||||||||
| Other | 1,129 | 1,785 | ||||||||||||
| Total deferred tax assets | 455,108 | 498,270 | ||||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Student loan premiums and discounts, net | 25,303 | 22,873 | ||||||||||||
| Fixed assets | 9,806 | 7,708 | ||||||||||||
| Federal deferred for state receivable | 1,344 | 1,908 | ||||||||||||
| Research and development costs | 5,972 | — | ||||||||||||
| Other | 3,821 | 402 | ||||||||||||
| Total deferred tax liabilities | 46,246 | 32,891 | ||||||||||||
| Net deferred tax assets | $ | 408,862 | $ | 465,379 | ||||||||||
Included in operating loss carryovers are state net operating losses of $179 million and $234 million as of December 31, 2025 and 2024, respectively. The Company has recorded a valuation allowance against these net operating losses of $179 million and $234 million, respectively. Also included in operating loss carryovers is a capital loss of $12 million and $23 million as of December 31, 2025 and 2024, respectively. The Company has recorded a full valuation allowance against this capital loss. The valuation allowance is primarily attributable to deferred tax assets for state net operating losses and capital losses that management believes are more likely than not to expire prior to being realized. There is no valuation allowance included in net unrealized losses as of December 31, 2025. There is a valuation allowance of $5 million included in net unrealized losses as of December 31, 2024.
The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income of the appropriate character (i.e., capital or ordinary) during the period in which the temporary differences become deductible. Management considers, among other things, the scheduled reversals of deferred tax liabilities and the history of positive taxable income in evaluating the realizability of the deferred tax assets. Management believes that it is more likely than not that the results of future operations will generate sufficient taxable income to realize our deferred tax assets (other than state net operating loss and capital loss carryovers as outlined above).
As of December 31, 2025, the state net operating loss carryforwards will begin to expire in 2030 and the capital losses began to expire in 2025.
Accounting for Uncertainty in Income Taxes
The following table summarizes changes in unrecognized tax benefits:
| As of December 31, (dollars in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Unrecognized tax benefits at beginning of year | $ | 48,407 | $ | 68,123 | $ | 79,366 | ||||||||||||||
| Increases resulting from tax positions taken during a prior period | 816 | 1,232 | 1,204 | |||||||||||||||||
| Decreases resulting from tax positions taken during a prior period | (1) | (1,890) | (250) | |||||||||||||||||
| Increases resulting from tax positions taken during the current period | 3,203 | 3,218 | 2,711 | |||||||||||||||||
| Decreases related to settlements with taxing authorities | — | (18,349) | (10,089) | |||||||||||||||||
| Reductions related to the lapse of statute of limitations | (1,832) | (3,927) | (4,819) | |||||||||||||||||
| Unrecognized tax benefits at end of year | $ | 50,593 | $ | 48,407 | $ | 68,123 | ||||||||||||||
As of December 31, 2025, the gross unrecognized tax benefits are $51 million. Included in the $51 million are $41 million of unrecognized tax benefits that, if recognized, would favorably impact the effective tax rate.
Tax-related interest and penalty expense is reported as a component of income tax expense. As of December 31, 2025, 2024, and 2023, the total amount of income tax-related accrued interest and penalties, net of related benefit, recognized in the consolidated balance sheets was $15 million, $11 million, and $8 million, respectively.
For the years ended December 31, 2025, 2024, and 2023, the total amount of income tax-related accrued interest, net of related tax benefit, recognized in the consolidated statements of income was $4 million, $3 million, and $2 million, respectively.
The Company or one of its subsidiaries files income tax returns at the U.S. federal level and in most U.S. states. U.S. federal income tax returns filed for years 2021 and prior are no longer subject to examination. Various combinations of subsidiaries, tax years, and jurisdictions remain open for review, subject to statute of limitations periods (typically to prior years). We do not expect the resolution of open audits to have a material impact on our unrecognized tax benefits.
Cash Taxes Paid
We adopted ASU 2023-09 on a prospective basis for the year ended December 31, 2025 and have included the following table as a result of our adoption, which presents income taxes paid (net of refunds received) for the year ended December 31, 2025:
| Year ended December 31, (dollars in thousands) | 2025 | |||||||
| Income taxes paid (net of refunds received): | ||||||||
| U.S. federal | $ | 129,000 | ||||||
| U.S. state and local: | ||||||||
| California | 9,400 | |||||||
| Other | 28,803 | |||||||
| Total U.S. state and local | 38,203 | |||||||
| Total income taxes paid (net of refunds received) | $ | 167,203 | ||||||
Below is a summary of income taxes paid for the years ended December 31, 2024 and 2023:
| Years ended December 31, (dollars in thousands) | 2024 | 2023 | ||||||||||||
| Cash disbursement made for: | ||||||||||||||
| Income taxes paid | $ | 243,341 | $ | 191,690 | ||||||||||
| Income taxes refunded | (1,395) | (8,201) | ||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Feb 23, 2018 | |
| 2016 | Feb 24, 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.