SECURITY NATIONAL FINANCIAL CORP Income Taxes Disclosure

 

17)	Income Taxes

 

Refer to Note 1 regarding the adoption of ASU 2018-12 and ASU 2023-09.

 

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes provisions that allow for the immediate expensing of domestic research and development expenses, immediate expensing of certain capital expenditures, and other changes to the U.S. taxation of profits derived from foreign operations. OBBBA did not have a material impact on the Company’s estimated effective tax rate for 2025.

 

The Company’s income tax liability is summarized as follows:

 Summary of Income Tax Liability

		December 31,
		2025				2024
Current		$	516,851			$	(725,175	)
Deferred			25,403,711				25,265,687
Total		$	25,920,562			$	24,540,512

 

The significant components of the Company’s deferred tax assets and liabilities are approximately as follows:

 Schedule of Deferred Tax Assets and Liabilities

		December 31,
		2025				2024
Assets
Future policy benefits		$	8,538,993			$	4,663,986
Loan loss reserve and allowances			1,431,236				1,395,203
Unearned premium			383,207				422,453
Net operating loss			687,524				1,245,888
Deferred compensation			2,388,705				2,033,686
Total deferred tax assets			13,429,665				9,761,216
Liabilities
Deferred policy acquisition costs			21,138,853				20,061,762
Basis difference in property, equipment and real estate			8,700,097				8,973,198
Value of business acquired			1,492,929				1,596,529
Deferred gains			1,042,235				1,365,803
Trusts			1,064,387				1,064,387
Intangibles			848,497				717,336
Other			917,003				534,311
Tax on unrealized appreciaton			3,629,375				713,577
Total deferred tax liabilities			38,833,376				35,026,903
Net deferred tax liability		$	25,403,711			$	25,265,687

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2025 and 2024

 

17)	Income Taxes (Continued)

 

The Company’s income tax expense is summarized as follows:

 Schedule of Components of Income Tax Expense (Benefit)

		December 31,
		2025				2024
Current
Federal		$	7,683,833			$	7,182,377
State			119,260				73,654
Total Current Income Tax Expense (Benefit)			7,803,093				7,256,031
Deferred
Federal			1,391,114				876,424
State			63,067				122,273
Total Deferred Income Tax Expense (Benefit)			1,454,181				998,697
Total		$	9,257,274			$	8,254,728

 

The following table provides a rate reconciliation between income tax expense (benefit) and the statutory expectations.

 Schedule of Effective Income Tax Rate Reconciliation between Income Tax Expense (Benefit) and Statutory Expectations

		December 31, 2025								December 31, 2024
		Amount				Percent				Amount				Percent
U.S. Federal statutory tax rate		$	8,696,017				21.0	%		$	7,848,518				21.0	%
State and local tax expense, net of federal income tax effect (1)			144,038				0.4	%			154,782				0.4	%
Nontaxable or nondeductible items			392,641				0.9	%			224,851				0.6	%
Other, net			24,578				0.1	%			26,577				0.1	%
Effective tax rate		$	9,257,274				22.4	%		$	8,254,728				22.1	%

 

(1)	State taxes in Texas and Utah made up the majority (greater than 50%) of the tax effect in this category.

 

The Company’s overall effective tax rate for 2025 and 2024 was 22.4% and 22.1% respectively. The Company’s effective tax rates differ from the U.S. federal statutory rate of 21% partially due to its provision for state income taxes. The increase in the effective tax rate when compared to the prior year was partially due to an increase in non-deductible items.

 

As of December 31, 2025, the Company had no significant unrecognized tax benefits. As of December 31, 2025, the Company does not expect any material changes to the estimated amount of unrecognized tax benefits in the next twelve months. Federal and state income tax returns for 2022 through 2025 are subject to examination by taxing authorities.

 

Net Operating Losses and Tax Credit Carryforwards:

 Summary of Operating Loss Carryforwards

Year of Expiration
2026		$	–
2027			–
2028			–
2029			–
2030			–
Thereafter up through 2037			568,300
Indefinite carryforwards			–
		$	568,300

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2025 and 2024