Taylor Morrison Home CorpTMHC
Taylor Morrison Home Corp Income Taxes Disclosure
INCOME TAXES
The provision for income taxes for the years ended December 31, 2025, 2024 and 2023 consisted of the following:
| Year Ended December 31, | |||||||||||||||||
| (Dollars in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 195,994 | $ | 231,758 | $ | 196,464 | |||||||||||
| State | 46,504 | 46,902 | 51,009 | ||||||||||||||
| Current tax provision | $ | 242,498 | $ | 278,660 | $ | 247,473 | |||||||||||
| Deferred: | |||||||||||||||||
| Federal | $ | 7,464 | $ | (8,951) | $ | (1,003) | |||||||||||
| State | 818 | (161) | 1,627 | ||||||||||||||
| Deferred tax provision | $ | 8,282 | $ | (9,112) | $ | 624 | |||||||||||
| Total income tax provision | $ | 250,780 | $ | 269,548 | $ | 248,097 | |||||||||||
A reconciliation of the provision for income taxes and the amount computed by applying the federal statutory income tax rate of 21% to income before provision for income taxes is as follows:
| Year Ended December 31, | ||||||||||||||||||||||||||
| (Dollars in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||||||||
| Tax at federal statutory rate | $ | 218,829 | 21.0 | % | $ | 242,785 | 21.0 | % | $ | 213,746 | 21.0 | % | ||||||||||||||
State income taxes (net of federal benefit)(1) | 37,556 | 3.6 | 36,891 | 3.2 | 41,924 | 4.1 | ||||||||||||||||||||
| Tax credits | — | — | (7,701) | (0.7) | (3,976) | (0.4) | ||||||||||||||||||||
| Changes in valuation allowances | — | — | — | — | (36,054) | (3.5) | ||||||||||||||||||||
| Nontaxable or nondeductible items | (2,610) | (0.3) | (555) | 0.0 | 1,991 | 0.2 | ||||||||||||||||||||
| Changes in unrecognized tax benefits | 1,714 | 0.2 | — | — | — | — | ||||||||||||||||||||
| Other | ||||||||||||||||||||||||||
| Capital loss carryforward | — | — | — | — | 36,054 | 3.5 | ||||||||||||||||||||
| Other adjustments | (4,709) | (0.4) | (1,872) | (0.2) | (5,588) | (0.5) | ||||||||||||||||||||
Effective Rate(2) | $ | 250,780 | 24.1 | % | $ | 269,548 | 23.3 | % | $ | 248,097 | 24.4 | % | ||||||||||||||
(1) State taxes in California and Florida contributed to the majority of the tax effect in this category.
(2) The adoption of ASU 2023-09, Income Taxes has been reflected in our rate reconciliation above including revisions to the presentation of the prior year rate reconciliations for comparative purposes.
Our effective tax rate was 24.1% and 23.3% for the years ended December 31, 2025 and December 31, 2024, respectively. Our effective tax rate for both years was affected by state income taxes, non-deductible executive compensation, and excess tax benefits from stock-based compensation. Additionally, the effective tax rate in 2024 benefitted from certain energy tax credits related to homebuilding activities. We did not pursue the credits in 2025 due to increasing costs to qualify for the credits which outweighed the benefits of obtaining such credits.
We have certain tax attributes available to offset the impact of future income taxes. The components of net deferred tax assets and liabilities at December 31, 2025 and 2024 consisted of timing differences related to real estate inventory
impairments, expense accruals and reserves, net operating loss carryforwards, and intangibles. A summary of these components for the years ending December 31, 2025 and 2024 is as follows:
| Years Ended December 31, | |||||||||||
| (Dollars in thousands) | 2025 | 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Real estate inventory | $ | 25,321 | $ | 26,483 | |||||||
| Accruals and reserves | 66,687 | 73,418 | |||||||||
Net operating losses (1) | 43,242 | 48,996 | |||||||||
Other (2) | 25,962 | 20,666 | |||||||||
| Total deferred tax assets | $ | 161,212 | $ | 169,563 | |||||||
| Deferred tax liabilities: | |||||||||||
Intangibles (2) | $ | (26,516) | $ | (21,526) | |||||||
Other (2) | (12,246) | (10,875) | |||||||||
| Deferred income | (43,503) | (55,186) | |||||||||
| Total Deferred Tax Liabilities | $ | (82,265) | $ | (87,587) | |||||||
| Valuation allowance | (4,584) | (5,728) | |||||||||
| Total net deferred tax assets | $ | 74,363 | $ | 76,248 | |||||||
(1)A portion of our net operating losses is limited by Section 382 of the Internal Revenue Code, stemming from three business acquisitions: 1) the 2011 acquisition of the Company by our former principal equity holders, 2) the 2018 acquisition of AV Homes and 3) the 2022 acquisition of William Lyon Homes. All three acquisitions were deemed to be a change in control as defined by Section 382.
(2)The 2024 deferred tax assets and liabilities have been recast to reflect changes in classifications of certain assets and liabilities for greater clarity in comparison to the classifications reported in 2025. Prior year amounts reported in Real estate inventory and Other deferred tax liabilities have been further broken out into the Intangibles, Other deferred tax assets, and Other deferred tax liabilities categories above.
For the year ended December 31, 2025, we recorded a net valuation allowance of $4.6 million related to certain state deferred taxes which are not expected to be realized. We have approximately $29.7 million of available tax effected federal net operating loss ("NOL") carryforwards and $13.5 million of available tax effected state NOL carryforwards. Federal NOL carryforwards generated prior to January 1, 2018 may be used to offset future taxable income for a period of 20 years or indefinitely and begin to expire in 2029. State NOL carryforwards may be used to offset future taxable income for a period of 10 to 20 years or indefinitely and certain NOLs expire between 2026-2036. On an ongoing basis, we will continue to review all available evidence to determine if we expect to realize our deferred tax assets and federal and state NOL carryovers or if a valuation allowance is necessary.
We account for uncertain tax positions in accordance with ASC 740. ASC 740 requires a company to recognize the financial statement effect of a tax position when it is more likely than not based on the technical merits of the position that the position will be sustained upon examination. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to be recognized in the financial statements based upon the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Interest and penalties related to uncertain tax positions are recognized as a component of the income tax provision.
As of December 31, 2025, we had $6.4 million of unrecognized tax benefits related to current and prior tax positions taken on certain deferred temporary differences. If recognized, no amount would impact our effective tax rate. We recognized interest and penalties of $1.7 million as a component of the income tax provision as of December 31, 2025. There were no unrecognized tax benefits, penalties or interest accrued as of December 31, 2024.
A reconciliation of the change in the unrecognized tax benefits is as follows:
| Year Ended December 31, | |||||||||||
| (Dollars in thousands) | 2025 | 2024 | |||||||||
| Unrecognized tax benefits - January 1, | $ | — | $ | — | |||||||
| Increases related to positions taken during a current period | 1,446 | — | |||||||||
Decreases related to positions taken during a current period | — | — | |||||||||
| Increases related to positions taken during a prior period | 4,986 | — | |||||||||
| Decreases related to positions taken during a prior period | — | — | |||||||||
| Decreases related to settlements with taxing authorities | — | — | |||||||||
| Reductions related to lapse of the applicable statute of limitations | — | — | |||||||||
| Unrecognized tax benefits - December 31, | $ | 6,432 | $ | — | |||||||
The statute of limitations for our major taxing jurisdictions remains open for examination for tax years through 2025. We are currently under exam by the IRS for certain federal income tax returns for tax years 2015 through 2018 and 2021. The outcome of these examinations is not yet determinable, but we believe our tax positions meet the more-likely-than-not threshold.
A reconciliation of taxes paid during 2025, net of refunds received, is as follows:
| Year Ended December 31, | |||||||||||||||||
| (Dollars in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Federal | $ | 252,500 | $ | 212,227 | $ | 157,229 | |||||||||||
| State | |||||||||||||||||
California | * | 14,908 | 16,604 | ||||||||||||||
| Florida | 21,491 | 14,877 | 11,350 | ||||||||||||||
| Other | 29,974 | 22,413 | 19,091 | ||||||||||||||
| Subtotal state taxes paid | 51,465 | 52,198 | 47,045 | ||||||||||||||
| Total taxes paid | $ | 303,965 | $ | 264,425 | $ | 204,274 | |||||||||||
*The amount of income taxes paid during the year does not meet the 5% disaggregation threshold
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 18, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Feb 19, 2020 | |
| 2018 | Feb 20, 2019 | |
| 2017 | Feb 21, 2018 | |
| 2016 | Feb 21, 2017 | |
| 2015 | Feb 25, 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.