TruBridge, Inc.TBRG
TruBridge, Inc. Income Taxes Disclosure
INCOME TAXES
Income (loss) before taxes by jurisdiction consisted of the following at December 31, 2025, 2024, and 2023:
| (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Federal | $ | 2,021 | $ | (11,310) | $ | (57,464) | ||||||||||||||
| Foreign | 1,848 | 842 | — | |||||||||||||||||
| Total | $ | 3,869 | $ | (10,468) | $ | (57,464) | ||||||||||||||
The components of the income tax (benefit) provision for the years ended December 31, 2025, 2024, and 2023 were as follows:
| (In thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Current provision: | |||||||||||||||||
| Federal | $ | (2,418) | $ | 4,925 | $ | 1,661 | |||||||||||
| State | 412 | 3,086 | 218 | ||||||||||||||
| Foreign | 805 | 261 | — | ||||||||||||||
| Deferred provision: | |||||||||||||||||
| Federal | 523 | (1,780) | (8,801) | ||||||||||||||
| State | 285 | 3,985 | (2,409) | ||||||||||||||
| Foreign | (92) | — | — | ||||||||||||||
| Total income tax (benefit) provision | $ | (485) | $ | 10,477 | $ | (9,331) | |||||||||||
The difference between the effective tax rate reflected in the (benefit) provision for income taxes and the U.S. federal statutory rate was as follows for the year ended December 31, 2025 pursuant to the prospective application of ASU 2023-09:
| 2025 | |||||||||||
(In thousands) | Amount | Percent | |||||||||
| Income taxes at U.S. federal statutory rate | $ | 812 | 21.0 | % | |||||||
State and local income tax, net of federal income tax effect (1) | 551 | 14.3 | % | ||||||||
| Foreign tax effects: | |||||||||||
| India: | |||||||||||
| Statutory tax rate differential | 74 | 1.9 | % | ||||||||
| Tax receivable true up | 332 | 8.6 | % | ||||||||
| Other | (81) | (2.1) | % | ||||||||
| Nondeductible or nontaxable items: | |||||||||||
Stock-based compensation (2) | (719) | (18.6) | % | ||||||||
| Limitations on executive compensation | 607 | 15.7 | % | ||||||||
| Other | 59 | 1.5 | % | ||||||||
| Tax credits: | |||||||||||
| R&D tax credit | (667) | (17.2) | % | ||||||||
| Change in valuation allowance | (4,681) | (121.0) | % | ||||||||
| Changes in unrecognized tax benefits | 106 | 2.7 | % | ||||||||
| Other reconciling items | |||||||||||
| Capital loss write off | 2,854 | 73.8 | % | ||||||||
| Fixed asset basis adjustment | 172 | 4.4 | % | ||||||||
| Other | 96 | 2.5 | % | ||||||||
| Total income tax (benefit) provision | $ | (485) | (12.5) | % | |||||||
| (1) During the year ended December 31, 2025, state taxes in Texas and Missouri made up the majority (greater than 50%) of the tax effect in this category (state and local income tax). | |||||||||||
| (2) Stock-based compensation is classified as a part of the “Nondeductible or nontaxable items” section and represents both windfalls and shortfalls on the Company’s restricted stock awards. | |||||||||||
The difference between income taxes at the U.S. federal statutory income tax rate of 21% for the years ended December 31, 2024, and 2023, and the total income tax provision (benefit) reported in the consolidated statements of operations for such years is as follows (prior to the adoption of ASU 2023-09):
| (In thousands) | 2024 | 2023 | |||||||||
| Income taxes at U.S. federal statutory rate | $ | (2,200) | $ | (12,068) | |||||||
| State income tax, net of federal tax effect | 6,411 | (2,249) | |||||||||
| Foreign rate differential on pretax book income | 75 | — | |||||||||
| Provision-to-return adjustments | (152) | (999) | |||||||||
| Tax credits | (1,084) | (2,481) | |||||||||
| Capital loss on sale of AHT stock | (3,175) | — | |||||||||
| Goodwill impairment | — | 7,542 | |||||||||
| Stock-based compensation | 772 | 65 | |||||||||
| Change in valuation allowance | 9,514 | — | |||||||||
| Non-deductible compensation - section 162(m) | 97 | 15 | |||||||||
| Other | 219 | 844 | |||||||||
| Total income tax provision (benefit) | $ | 10,477 | $ | (9,331) | |||||||
Deferred tax assets and liabilities were comprised of the following as of December 31, 2025 and 2024:
(In thousands) | 2025 | 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Accounts receivable and financing receivables | $ | 1,818 | $ | 1,781 | |||||||
| Stock-based compensation | 1,545 | 1,003 | |||||||||
| Deferred revenue | 183 | 988 | |||||||||
| Research expenditures | 19,585 | 26,449 | |||||||||
| Accrued liabilities | 1,327 | 236 | |||||||||
| Lease liabilities | 517 | 561 | |||||||||
| Capital loss on sale of AHT stock | — | 3,323 | |||||||||
| Credits | 1,043 | 891 | |||||||||
| Other | 3,946 | 2,938 | |||||||||
| Net operating loss | 4,333 | 1,835 | |||||||||
| Deferred tax assets | 34,297 | 40,005 | |||||||||
| Less: Valuation allowance | 9,357 | 13,585 | |||||||||
| Total deferred tax assets | $ | 24,940 | $ | 26,420 | |||||||
| Deferred tax liabilities: | |||||||||||
| Intangible assets | $ | 12,437 | $ | 15,118 | |||||||
| Capitalized software | 10,208 | 9,993 | |||||||||
| Fixed assets | 150 | 237 | |||||||||
| Right of use asset | 491 | $ | 796 | ||||||||
| Other | 4,237 | $ | 2,139 | ||||||||
| Total deferred tax liabilities | $ | 27,523 | $ | 28,283 | |||||||
| Total net deferred tax liability | $ | (2,583) | $ | (1,863) | |||||||
On July 4, 2025, H.R. 1, or the “One Big Beautiful Bill Act” (“OBBBA”), was signed into law in the U.S., which contains a broad range of tax reform provisions affecting businesses. For the Company, the most significant impact relates to the immediate expensing of domestic research and development expenditures. The OBBBA reduced the Company’s 2025 expected current tax liability as a result of the ability to deduct domestic research and development expenses.
The Company has federal net operating loss carryforwards of $8.9 million and state net operating loss carryforwards of $49.6 million. $8.1 million of the federal net operating losses will be carried forward indefinitely and $0.8 million of the federal net operating losses will expire in 2036. $10.7 million of the state net operating losses will be carried forward indefinitely and $38.9 million of the state net operating losses will expire on various dates beginning in 2026 through 2055.
Deferred income taxes arise from the temporary differences in the recognition of income and expenses for tax purposes. A valuation allowance is established when the Company believes that it is more likely than not that some portion of its deferred tax assets will not be realized. The valuation allowance for deferred tax assets as of December 31, 2025 and 2024 was $9.4 million and $13.6 million, respectively. The net change in the total valuation allowance during the year ended December 31, 2025 was a decrease of $4.2 million. The valuation allowance as of December 31, 2025 is recorded as, in the judgment of management, the deferred tax assets are not more likely than not to be realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income and capital gains during the periods in which those temporary differences are deductible.
The Company asserts that any foreign earnings will be indefinitely reinvested. The Company has not recorded a liability for taxes associated with these undistributed earnings. If the Company determines that all or a portion of such foreign earnings are no longer indefinitely reinvested, the Company may be subject to additional foreign withholding taxes and U.S. state income taxes. The Company has not determined the potential deferred tax liability on its indefinitely reinvested foreign earnings, as such a determination is not practicable.
Income tax payments, net of refunds, of $6.0 million, $5.3 million, and $3.7 million were made in December 31, 2025, 2024, and 2023, respectively.
Income tax payments, net of refunds, by jurisdiction for the year ended December 31, 2025 were as follows (pursuant to the prospective application of ASU 2023-09):
| (In thousands) | 2025 | ||||
| U.S. federal | $ | 5,600 | |||
| State: | |||||
| Alabama | (772) | ||||
| Texas | 305 | ||||
| Other | 233 | ||||
| State subtotal | (233) | ||||
| Foreign: | |||||
| India | 676 | ||||
| Total cash paid for income taxes (net of refunds) | $ | 6,042 | |||
The Company continues to assess whether it is more likely than not that a tax position will be sustained upon examination based on the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the consolidated financial statements.
A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows for the year ended December 31, 2025:
| (In thousands) | 2025 | |||||||
| Unrecognized tax benefits at beginning of year | $ | 355 | ||||||
| Increases related to tax positions taken in current year | 55 | |||||||
| Increases related to tax positions taken in prior years | 12 | |||||||
| Decreases related to tax positions taken in prior years (including releases) | — | |||||||
| Decreases related to settlements | — | |||||||
| Unrecognized tax benefits at end of year | $ | 422 | ||||||
The federal returns for tax years 2022 through 2024 remain open to examination. Tax years 2021 through 2024 remain open to examination by certain other taxing jurisdictions to which the Company is subject. Additional years may be open to the extent attributes are being carried forward to an open year.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 31, 2026 | Showing above |
| 2024 | Mar 17, 2025 | |
| 2023 | Mar 15, 2024 | |
| 2022 | Mar 16, 2023 | |
| 2021 | Mar 15, 2022 | |
| 2020 | Mar 12, 2021 | |
| 2019 | Mar 11, 2020 | |
| 2018 | Mar 18, 2019 | |
| 2017 | Mar 14, 2018 | |
| 2016 | Mar 15, 2017 | |
| 2015 | Mar 14, 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.