LendingTree, Inc.TREE
LendingTree, Inc. Income Taxes Disclosure
INCOME TAXES
Income Tax Provision
The components of the income tax expense (benefit) are as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current income tax (benefit) expense: | |||||||||||||||||
| Federal | $ | 104 | $ | 587 | $ | 1,155 | |||||||||||
| State | (637) | 940 | 1,022 | ||||||||||||||
| Current income tax (benefit) expense | (533) | 1,527 | 2,177 | ||||||||||||||
| Deferred income tax (benefit) expense: | |||||||||||||||||
| Federal | (100,510) | 947 | (3,383) | ||||||||||||||
| State | (29,241) | 1,846 | (1,309) | ||||||||||||||
| Deferred income tax (benefit) expense | (129,751) | 2,793 | (4,692) | ||||||||||||||
| Income tax (benefit) expense | $ | (130,284) | $ | 4,320 | $ | (2,515) | |||||||||||
Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 2—Significant Accounting Policies, the reconciliation of the income tax expense (benefit) to the amounts computed by applying the statutory federal income tax rate to income (loss) before income taxes is shown as follows (in thousands, except for percentages):
| Year Ended December 31, | |||||||||||
| 2025 | |||||||||||
| Federal statutory income tax | $ | 4,415 | 21.0 | % | |||||||
| State and local income taxes, net of federal effect | (23,711) | (112.8) | % | ||||||||
| Foreign tax effects | 57 | 0.3 | % | ||||||||
| Effect of cross-border tax laws: | |||||||||||
| Global intangible low-taxed income inclusion | 420 | 2.0 | % | ||||||||
| Tax credits: | |||||||||||
| Research and experimentation tax credit | (1,547) | (7.4) | % | ||||||||
| Increase (decrease) in valuation allowance | (114,973) | (546.9) | % | ||||||||
| Nontaxable or nondeductible items: | |||||||||||
| Nondeductible executive compensation | 3,562 | 16.9 | % | ||||||||
| Excess tax deductions on non-cash compensation | 799 | 3.8 | % | ||||||||
| Other nontaxable or nondeductible | 359 | 1.7 | % | ||||||||
| Changes in unrecognized tax benefits | 232 | 1.1 | % | ||||||||
| Other, net | 103 | 0.5 | % | ||||||||
| Income tax expense (benefit) | $ | (130,284) | (619.7) | % | |||||||
State and local income taxes, net of federal benefit decreased the effective tax rate by 112.8% for the year ended December 31, 2025. The decrease was primarily due to the releases of valuation allowances against deferred tax assets in multiple state jurisdictions where the Company concluded it is more likely than not that certain deferred tax assets will be realized. Valuation allowances remain in place where realization of deferred tax assets is not considered more likely than not. The most significant impacts related to California and Illinois, which together represented more than 50% of the total state tax benefit. The remaining decrease was attributable to a combination of several other state jurisdictions.
The reconciliation of the income tax expense (benefit) to the amounts computed by applying the statutory federal income tax rate to income (loss) before income taxes for the years ended December 31, 2024 and 2023 in accordance with the guidance prior to the adoption of ASU 2023-09 was as follows (in thousands):
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Federal statutory income tax | $ | (7,851) | $ | (26,233) | |||||||
| State income taxes, net | (502) | (2,883) | |||||||||
| Excess tax deductions on non-cash compensation | 3,633 | 6,373 | |||||||||
| Research and experimentation tax credit | (1,500) | (1,512) | |||||||||
| Nondeductible executive compensation | 3,245 | 2,174 | |||||||||
| Increase (decrease) in valuation allowance | 5,045 | 17,087 | |||||||||
| Remeasurement of state deferred tax | 776 | 73 | |||||||||
| Expiration of state net operating loss carryforwards | 535 | 595 | |||||||||
| Global intangible low-taxed income inclusion | 420 | 420 | |||||||||
| Other, net | 519 | 1,391 | |||||||||
| Income tax expense (benefit) | $ | 4,320 | $ | (2,515) | |||||||
Deferred Income Taxes
The tax effects of cumulative temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows (in thousands):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Provision for accrued expenses | $ | 4,303 | $ | 1,541 | |||||||
| Leasing | 11,991 | 19,053 | |||||||||
Net operating loss carryforwards (a) | 45,032 | 38,746 | |||||||||
| Capitalized research and experimentation | 16,577 | 35,861 | |||||||||
Non-cash compensation expense(b) | 22,931 | 23,953 | |||||||||
| Property and equipment | 1,985 | 833 | |||||||||
| Intangible assets | — | 1,882 | |||||||||
| Interest | 24,641 | 22,422 | |||||||||
| Equity investment | 16,538 | 19,659 | |||||||||
| Tax credits | 16,995 | 15,522 | |||||||||
| Other | 61 | 71 | |||||||||
| Total gross deferred tax assets | 161,054 | 179,543 | |||||||||
Less: valuation allowance (c) | (18,008) | (167,549) | |||||||||
| Total deferred tax assets, net of the valuation allowance | 143,046 | 11,994 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Leasing | (10,080) | (16,379) | |||||||||
| Intangible and other assets | (7,617) | — | |||||||||
| Prepaid expenses | (482) | (484) | |||||||||
| Other | — | (15) | |||||||||
| Total gross deferred tax liabilities | (18,179) | (16,878) | |||||||||
| Net deferred taxes | $ | 124,867 | $ | (4,884) | |||||||
(a)At December 31, 2025, the Company had pre-tax consolidated federal net operating losses (“NOLs”) of $148.8 million. The federal NOLs no longer expire under the Tax Cuts and Jobs Act. The Company's NOLs will be available to offset taxable income, subject to the Internal Revenue Code Section 382 annual limitation. In addition, the Company has state NOLs of approximately $423.1 million at December 31, 2025, a portion of which will expire at various times between 2026 and 2055.
(b)Certain out-of-the-money stock options are expected to expire unexercised, and as a result may be required to reverse the related deferred tax asset for share-based compensation, which could increase income tax expense and our effective tax rate in a future period.
(c)The valuation allowance is related to items for which it is “more likely than not” that the tax benefit will not be realized.
Deferred income taxes are presented in the accompanying consolidated balance sheets as follows (in thousands):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred income tax assets | $ | 124,867 | $ | — | |||||||
| Deferred income tax liabilities | — | (4,884) | |||||||||
| Net deferred taxes | $ | 124,867 | $ | (4,884) | |||||||
Valuation Allowance
A valuation allowance is provided on deferred tax assets if it is determined that it is “more likely than not” that the deferred tax asset will not be realized. As of each reporting date, management considers both positive and negative evidence regarding the likelihood of future realization of the deferred tax assets.
During 2025, the Company recorded a tax benefit of $149.5 million to reduce the valuation allowance the Company established in 2022 against its net deferred tax assets. Management determined upon review of the deferred tax assets for recoverability that sufficient positive evidence existed to conclude a substantial portion of the valuation allowance was no longer needed. Based on sustained profitability, improved forecasts of future taxable income, and the reversal of existing temporary differences, management concluded that it is more likely than not that we will be able to utilize the deferred tax assets. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. The Company maintains a valuation allowance of $18.0 million primarily related to certain states for which it estimates the net operating losses will expire prior to being utilized and other deferred tax assets related to equity investments for which it is not more likely than not that the deferred tax assets will be realized. In determining the amount of the remaining valuation allowance, the Company considered the scheduled reversal of deferred tax liabilities. Should there be a change in the valuation allowance in the future, the income tax provision would increase or decrease in the period in which the allowance is changed.
A reconciliation of the beginning and ending balances of the deferred tax valuation allowance is as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance, beginning of the period | $ | 167,549 | $ | 162,504 | $ | 145,401 | |||||||||||
| Charges to earnings | (149,541) | 5,045 | 17,103 | ||||||||||||||
| Balance, end of the period | $ | 18,008 | $ | 167,549 | $ | 162,504 | |||||||||||
Unrecognized Tax Benefits
A reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding interest and penalties, is as follows (in thousands):
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Balance, beginning of the period | $ | 3,721 | $ | 3,424 | |||||||
| Additions based on tax positions of the current period | 225 | 225 | |||||||||
| Additions (subtractions) based on tax positions of the prior period | 7 | 72 | |||||||||
| Balance, end of the period | $ | 3,953 | $ | 3,721 | |||||||
Interest and, if applicable, penalties are recognized related to unrecognized tax benefits in income tax expense. Interest and penalties on unrecognized tax benefits included in income tax expense of an immaterial amount has been recognized for the tax years ended December 31, 2024 and 2023. For the year ended December 31, 2025 interest is not currently required to be recorded, as there have been no tax attributes included in income tax returns filed for those tax periods to require consideration of interest expense.
As of December 31, 2025 and 2024, the accrual for unrecognized tax benefits, including interest, was $4.0 million and $3.7 million, respectively, which would benefit the effective tax rate if recognized.
Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 2—Significant Accounting Policies, cash paid for income taxes, net of refunds, during the year ended December 31, 2025 was as follows (in thousands):
| Federal | $ | 305 | |||
| Illinois | 780 | ||||
| Other U.S. state and local | 314 | ||||
| Foreign - India | 135 | ||||
| Total income taxes paid, net of refunds received | $ | 1,534 | |||
Tax Audits
LendingTree is subject to audits by federal, state and local authorities in the area of income tax. These audits include questioning the timing and the amount of deductions and the allocation of income among various tax jurisdictions. Income taxes payable include amounts considered sufficient to pay assessments that may result from examination of prior year returns; however, any amounts paid upon resolution of issues raised may differ from the amount provided. Differences between the reserves for tax contingencies and the amounts owed by the Company are recorded in the period they become known. As of December 31, 2025, the Company is subject to a federal income tax examination for the tax years 2015 through 2024. In addition, the Company is subject to state and local tax examinations for the tax years 2020 through 2024.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 9, 2026 | Showing above |
| 2024 | Mar 7, 2025 | |
| 2023 | Feb 29, 2024 | |
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.