STEWART INFORMATION SERVICES CORPSTC
STEWART INFORMATION SERVICES CORP Income Taxes Disclosure
Income taxes. As described in Note 1-R, additional disclosures below are presented pursuant to the requirements of ASU 2023-09. Amounts for 2024 and 2023, where applicable, were recast to conform with the 2025 presentation.
Income tax expense consists of the following:
| 2025 | 2024 | 2023 | |||||||||||||||
| (in $ thousands) | |||||||||||||||||
| Current income tax expense: | |||||||||||||||||
| Federal | 12,555 | 7,170 | 5,638 | ||||||||||||||
| State | 583 | 955 | 62 | ||||||||||||||
| Foreign | 13,999 | 13,409 | 16,347 | ||||||||||||||
| 27,137 | 21,534 | 22,047 | |||||||||||||||
| Deferred income tax expense (benefit): | |||||||||||||||||
| Federal | 11,587 | 6,536 | (1,919) | ||||||||||||||
| State | (1,852) | (179) | 107 | ||||||||||||||
| Foreign | (1,461) | (1,736) | (4,972) | ||||||||||||||
| 8,274 | 4,621 | (6,784) | |||||||||||||||
| Total income tax expense | 35,411 | 26,155 | 15,263 | ||||||||||||||
The components of income before taxes and after deducting noncontrolling interests are as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| (in $ thousands) | |||||||||||||||||
Domestic | 107,710 | 56,657 | 4,980 | ||||||||||||||
| Foreign | 43,236 | 42,808 | 40,722 | ||||||||||||||
| 150,946 | 99,465 | 45,702 | |||||||||||||||
Income taxes paid (net of refunds received) by jurisdiction consists of the following:
| 2025 | 2024 | 2023 | |||||||||||||||
| (in $ thousands) | |||||||||||||||||
Federal | 7,200 | 6,960 | (6,085) | ||||||||||||||
State | 1,756 | 1,595 | 1,615 | ||||||||||||||
Foreign: | |||||||||||||||||
Canada | 9,332 | 13,710 | 6,707 | ||||||||||||||
Australia | 5,708 | 2,951 | 2,156 | ||||||||||||||
Mexico | — | 261 | 738 | ||||||||||||||
Other | 300 | 289 | 214 | ||||||||||||||
Total income taxes paid, net | 24,296 | 25,766 | 5,345 | ||||||||||||||
The following table reconciles income tax expense computed at the federal statutory rate with income tax expense as reported using specific categories required by ASU 2023-09. Additionally, categories of at least 5% of the expected tax expense are disaggregated by nature or jurisdiction (in $ thousands, except for income tax rates):
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
Amount | Percent* | Amount | Percent* | Amount | Percent* | ||||||||||||||||||||||||||||||
U.S. federal statutory tax rate (1) | 31,698 | 21.0 | % | 20,888 | 21.0 | % | 9,597 | 21.0 | % | ||||||||||||||||||||||||||
State income tax expense, net of federal benefit (2) | (1,392) | (0.9) | % | 576 | 0.6 | % | 156 | 0.3 | % | ||||||||||||||||||||||||||
Foreign tax effects: | |||||||||||||||||||||||||||||||||||
| Canada: | |||||||||||||||||||||||||||||||||||
| Foreign income tax rate differential | 1,836 | 1.2 | % | 1,787 | 1.8 | % | 1,800 | 3.9 | % | ||||||||||||||||||||||||||
| Other | (496) | (0.3) | % | 147 | 0.1 | % | 326 | 0.7 | % | ||||||||||||||||||||||||||
| Australia: | |||||||||||||||||||||||||||||||||||
| Foreign income tax rate differential | 1,114 | 0.7 | % | 905 | 0.9 | % | 694 | 1.5 | % | ||||||||||||||||||||||||||
| Other | 28 | 0.0 | % | (205) | (0.2) | % | 205 | 0.5 | % | ||||||||||||||||||||||||||
Other: | 976 | 0.6 | % | (173) | (0.2) | % | (332) | (0.7) | % | ||||||||||||||||||||||||||
Effect of changes in laws and tax rates | (2,813) | (1.9) | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
Effect of cross-border tax laws | |||||||||||||||||||||||||||||||||||
Net benefit for the Canadian branch (3) | (856) | (0.6) | % | (2,951) | (3.0) | % | (5,197) | (11.4) | % | ||||||||||||||||||||||||||
Tax credits | |||||||||||||||||||||||||||||||||||
| Research and development credits | (1,730) | (1.2) | % | (1,850) | (1.9) | % | (1,431) | (3.1) | % | ||||||||||||||||||||||||||
Change in valuation allowance | 1,805 | 1.2 | % | 3,650 | 3.7 | % | 5,843 | 12.8 | % | ||||||||||||||||||||||||||
Non-taxable or nondeductible items | |||||||||||||||||||||||||||||||||||
Meals and entertainment | 1,377 | 0.9 | % | 1,224 | 1.2 | % | 1,042 | 2.3 | % | ||||||||||||||||||||||||||
Excess covered employee compensation | 1,986 | 1.3 | % | 1,706 | 1.7 | % | 683 | 1.5 | % | ||||||||||||||||||||||||||
| Share-based compensation | 758 | 0.5 | % | 333 | 0.3 | % | 1,326 | 2.9 | % | ||||||||||||||||||||||||||
| Return-to-provision adjustments | 557 | 0.4 | % | 379 | 0.4 | % | 1,517 | 3.3 | % | ||||||||||||||||||||||||||
| Amended return adjustments | — | — | % | — | — | % | (1,123) | (2.5) | % | ||||||||||||||||||||||||||
| Other — net | 284 | 0.2 | % | (753) | (0.8) | % | (114) | (0.3) | % | ||||||||||||||||||||||||||
Change in uncertain tax positions | 279 | 0.2 | % | 492 | 0.5 | % | 271 | 0.6 | % | ||||||||||||||||||||||||||
| Income tax expense | 35,411 | 23.5 | % | 26,155 | 26.3 | % | 15,263 | 33.4 | % | ||||||||||||||||||||||||||
(1) Calculated using income before taxes and after deducting noncontrolling interests.
(2) State taxes in Alaska, Arizona, California, Illinois, Pennsylvania, and Texas comprise the majority (greater than 50%) of the tax effect in this category.
(3) For U.S. income tax purposes, the Company’s Canadian operation is a branch of Guaranty. As a result, the Canadian net deferred tax liability is offset in the U.S. as a deferred tax asset but not in an equal amount given differing tax rates in Canada and the U.S.
* Amounts presented are rounded to the nearest tenth of a percent and may not foot as presented.
Deferred tax assets and liabilities resulting from the same tax jurisdiction are netted and presented as either an asset or liability on the consolidated balance sheets. Deferred tax assets and liabilities resulting from different tax jurisdictions are not netted on the consolidated balance sheets. Deferred tax assets and liabilities (netted based on the related temporary difference components) as of December 31 are detailed below.
| 2025 | 2024 | ||||||||||
| (in $ thousands) | |||||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss (NOL) carryforwards | 35,541 | 24,917 | |||||||||
| Accrued expenses | 32,025 | 21,842 | |||||||||
| Tax credit carryforwards | 17,006 | 15,201 | |||||||||
| Foreign currency translation adjustments | 6,937 | 6,260 | |||||||||
| Federal offset to Canadian deferred tax liability | 6,273 | 7,166 | |||||||||
Interest expense carryforward related to an acquisition | 2,535 | — | |||||||||
| Allowance for credit losses | 1,711 | 1,741 | |||||||||
| Investments | 942 | 819 | |||||||||
| Capitalized research and development costs | — | 6,722 | |||||||||
| Other | 83 | 230 | |||||||||
| Deferred tax assets – gross | 103,053 | 84,898 | |||||||||
| Valuation allowance | (19,983) | (17,327) | |||||||||
| Deferred tax assets – net | 83,070 | 67,571 | |||||||||
| 2025 | 2024 | ||||||||||
| (in $ thousands) | |||||||||||
| Deferred tax liabilities: | |||||||||||
| Amortization – goodwill and other intangibles | (56,191) | (50,002) | |||||||||
| Other intangible assets from acquisitions | (28,642) | (10,535) | |||||||||
Capitalized research and development costs | (23,769) | — | |||||||||
| Title loss provisions | (8,621) | (17,295) | |||||||||
| Fixed assets | (3,149) | (5,411) | |||||||||
| Deferred compensation on life insurance policies | (2,943) | (2,546) | |||||||||
| Net unrealized gains on investments in securities | (2,455) | (2,940) | |||||||||
| Investments | (1,845) | (1,391) | |||||||||
| Other | (1,122) | (890) | |||||||||
| Deferred tax liabilities - gross | (128,737) | (91,010) | |||||||||
| Net deferred income tax liability | (45,667) | (23,439) | |||||||||
At December 31, 2025, the Company's deferred tax assets related to NOL carryforwards are composed of a $25.0 million U.S. federal NOL carryforward from 2021 and 2025 acquisitions with no expiration dates, various state NOL carryforwards which will expire in varying amounts from 2026 through 2046 or have unlimited carryforwards, and foreign NOL carryforwards which will expire in varying amounts from 2026 through 2044 or have unlimited carryforward periods. The future utilization of all NOL carryforwards is subject to various limitations. At December 31, 2025, the Company had $14.3 million of foreign tax credit carryforwards that will begin to expire in 2029. The future utilization of these credit carryforwards is subject to various limitations.
The Company's valuation allowance at December 31, 2025 relates primarily to foreign tax credit carryforwards, certain research and development credits acquired in 2021, and certain state and foreign NOL carryforwards which the Company believes will not be utilized prior to expiration.
The Company’s income tax returns are routinely subject to examinations by U.S. federal, foreign, and state and local tax authorities. At December 31, 2025, the Company’s 2022 through 2024 U.S. federal income tax returns and 2021 through 2024 Canadian income tax returns remain subject to examination. The Company is subject to routine examinations by state tax jurisdictions and remains subject to examination for 2020 through 2024 tax returns. The Company expects no material adjustments from any ongoing tax return examinations.
On July 4, 2025, H.R. 1, the "One Big Beautiful Bill Act" (OBBBA) was enacted into law. Certain provisions of H.R. 1 affected the Company’s current cash tax liability, primarily due to the acceleration of tax deductions on investments in fixed assets and research & development expenditures. However, these effects had no impact on the Company’s total income tax expense and were not material to the Company’s consolidated financial statements. The Company will continue to monitor regulatory guidance and interpretive developments related to the H.R. 1 and will recognize any additional impact in the period in which they become known.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Feb 27, 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.