Tradeweb Markets Inc.TW
Tradeweb Markets Inc. Income Taxes Disclosure
Income Taxes
The Corporation is subject to U.S. federal, state and local income taxes with respect to its taxable income, including its allocable share of any taxable income of TWM LLC, and is taxed at prevailing corporate tax rates. The Company’s actual effective tax rate is impacted by the Corporation’s ownership share of TWM LLC, which will continue to increase as Continuing LLC Owners that continue to hold LLC Interests redeem or exchange their LLC Interests for shares of Class A common stock or Class B common stock, as applicable, or the Corporation purchases LLC Interests from such Continuing LLC Owners. The Company’s consolidated effective tax rate also varies from period to period depending on changes in the mix of earnings, tax legislation and tax rates in various jurisdictions. The Company’s provision for income taxes includes U.S., federal, state, local and foreign taxes.
The components of income before taxes were attributable to the following regions:
| Year Ended | ||||||||||||||||||||
| December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Domestic | $ | 1,137,412 | $ | 720,570 | $ | 533,677 | ||||||||||||||
| Foreign | 37,562 | 33,832 | 14,303 | |||||||||||||||||
| Income before taxes | $ | 1,174,974 | $ | 754,402 | $ | 547,980 | ||||||||||||||
The provision for income taxes consists of the following:
| Year Ended | ||||||||||||||||||||
| December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Current: | ||||||||||||||||||||
| Federal | $ | 103,039 | $ | 95,266 | $ | 15,168 | ||||||||||||||
| State and local | 45,679 | 42,453 | 20,748 | |||||||||||||||||
| Foreign | 12,438 | 14,406 | 2,665 | |||||||||||||||||
| Total current tax expense | $ | 161,156 | $ | 152,125 | $ | 38,581 | ||||||||||||||
| Deferred: | ||||||||||||||||||||
| Federal | $ | 69,265 | $ | 20,225 | $ | 79,264 | ||||||||||||||
| State and local | 24,902 | 9,852 | 9,707 | |||||||||||||||||
| Foreign | (1,849) | 2,237 | 925 | |||||||||||||||||
| Total deferred tax expense | $ | 92,318 | $ | 32,314 | $ | 89,896 | ||||||||||||||
Total federal – Current and deferred tax expense | $ | 172,304 | $ | 115,491 | $ | 94,432 | ||||||||||||||
Total state and local – Current and deferred tax expense | 70,581 | 52,305 | 30,455 | |||||||||||||||||
Total foreign – Current and deferred tax expense | 10,589 | 16,643 | 3,590 | |||||||||||||||||
| Total provision for income taxes | $ | 253,474 | $ | 184,439 | $ | 128,477 | ||||||||||||||
A reconciliation of the U.S. federal statutory tax rate to the effective rate using both dollars and percentages is as follows:
| Year Ended | |||||||||||||||||||||||||||||
| December 31, | |||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||
| Statutory U.S. federal tax rate | $ | 246,745 | 21.0 | % | $ | 158,424 | 21.0 | % | $ | 115,076 | 21.0 | % | |||||||||||||||||
| Effect of cross-border tax laws | |||||||||||||||||||||||||||||
| Foreign-derived intangible income | (19,137) | (1.6) | (7,300) | (1.0) | (3,175) | (0.6) | |||||||||||||||||||||||
| Other | — | — | 7 | — | 2,505 | 0.5 | |||||||||||||||||||||||
| Tax credits | |||||||||||||||||||||||||||||
| Other | (7,869) | (0.6) | (7,421) | (1.0) | (2,727) | (0.5) | |||||||||||||||||||||||
| Nontaxable or nondeductible items | |||||||||||||||||||||||||||||
| Non-controlling Interest | (21,368) | (1.8) | (13,056) | (1.7) | (10,452) | (1.9) | |||||||||||||||||||||||
| Other | 1,355 | 0.1 | (624) | (0.1) | 3,526 | 0.6 | |||||||||||||||||||||||
| Other | (6,648) | (0.6) | (1,436) | (0.2) | (2,525) | (0.4) | |||||||||||||||||||||||
State and local income taxes, net of federal income tax effect (1) | 45,449 | 3.9 | 37,033 | 4.9 | 22,821 | 4.0 | |||||||||||||||||||||||
| Foreign tax effects | 2,770 | 0.2 | 9,605 | 1.3 | 627 | 0.1 | |||||||||||||||||||||||
| Changes in unrecognized tax benefits | 12,177 | 1.0 | 9,207 | 1.2 | 2,801 | 0.6 | |||||||||||||||||||||||
| Effective income tax rate | $ | 253,474 | 21.6 | % | $ | 184,439 | 24.4 | % | $ | 128,477 | 23.4 | % | |||||||||||||||||
(1)State taxes in New York and California made up the majority (greater than 50%) of the tax effect in this category.
The effective tax rate for the year ended December 31, 2025 was approximately 21.6%, compared with 24.4% for the year ended December 31, 2024 and 23.4% for the year ended December 31, 2023. The effective tax rate for the years ended December 31, 2025, 2024 and 2023 differed from the U.S. federal statutory rate of 21.0% primarily due to state and local taxes net of the benefit related to the effect of non-controlling interests and foreign-derived intangible income.
The components of the Company’s net deferred tax asset (liability) are as follows:
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (dollars in thousands) | ||||||||||||||
| Deferred tax assets | ||||||||||||||
| Investment in partnership | $ | 414,967 | $ | 516,665 | ||||||||||
| Net operating losses | 930 | 2,311 | ||||||||||||
| Tax Receivable Agreement – Interest | 15,167 | 16,939 | ||||||||||||
| Employee compensation | 106,907 | 74,465 | ||||||||||||
| Transferable tax credits | — | 23,857 | ||||||||||||
| Other tax credits | 5,868 | 4,743 | ||||||||||||
| Other | 614 | 5,950 | ||||||||||||
| Deferred tax assets, gross | 544,453 | 644,930 | ||||||||||||
| Valuation allowance | (3,022) | (1,654) | ||||||||||||
| Total deferred tax assets, net of valuation allowance | 541,431 | 643,276 | ||||||||||||
| Deferred tax liabilities | ||||||||||||||
| Goodwill and intangibles | (22,610) | (26,966) | ||||||||||||
| Total deferred tax liabilities | (22,610) | (26,966) | ||||||||||||
| Total net deferred tax asset (liability) | $ | 518,821 | $ | 616,310 | ||||||||||
The Company has obtained, and expects to obtain, an increase in its share of the tax basis of the assets of TWM LLC when LLC Interests are redeemed or exchanged by Continuing LLC Owners and in connection with certain other qualifying transactions. This increase in tax basis has had, and may in the future have, the effect of reducing the amounts that the Corporation would otherwise pay in the future to various tax authorities. Pursuant to the Tax Receivable Agreement, the Corporation is required to make cash payments to the Continuing LLC Owners equal to 50% of the amount of U.S. federal, state and local income or franchise tax savings, if any, that the Corporation actually realizes (or in some circumstances are deemed to realize) as a result of certain future tax benefits to which the Corporation may become entitled. The Corporation expects to benefit from the remaining 50% of tax benefits, if any, that the Corporation may actually realize. See Note 10 – Tax Receivable Agreement for further details. The tax benefit has been recognized in deferred tax assets on the consolidated statements of financial condition.
As of December 31, 2025, the Company had no tax effected U.S. federal net operating loss carryforwards for income tax purposes, state and local net operating loss carryforwards of $0.8 million and foreign net operating loss carryforwards of $0.1 million. If not utilized, the state and local net operating loss carryforwards will begin to expire in 2035. The foreign net operating loss carryforwards can be carried forward indefinitely.
The gross activity during the year in the Company’s unrecognized tax benefits relating to its uncertain tax positions are as follows:
| Amount | ||||||||
| (dollars in thousands) | ||||||||
| Gross unrecognized tax benefits – January 1, 2025 | $ | 19,616 | ||||||
| Increase in current year tax positions | 11,267 | |||||||
| Increase in prior year tax positions | 657 | |||||||
| Decrease in prior year tax positions | (1,598) | |||||||
| Acquired tax positions | — | |||||||
| Settlements | — | |||||||
| Gross unrecognized tax benefits – December 31, 2025 | $ | 29,942 | ||||||
The Company recognizes interest and penalties related to income taxes within the provision for income taxes in the consolidated statements of income. Accrued interest and penalties are included within accounts payable, accrued expenses and other liabilities in the consolidated statements of financial condition. The total amount of interest and penalties payable as of December 31, 2025 was $2.6 million and $0.2 million, respectively.
Cash paid for income taxes, net of refunds consists of the following:
| Year Ended | ||||||||||||||||||||
| December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Federal | $ | 1,410 | $ | 115,786 | $ | 11,441 | ||||||||||||||
| State and local jurisdictions | ||||||||||||||||||||
| New York City | 23,749 | 16,224 | 12,936 | |||||||||||||||||
New York State (1) | 3,664 | — | — | |||||||||||||||||
Illinois (1) | 3,129 | — | — | |||||||||||||||||
| Other | 8,673 | 9,013 | 1,795 | |||||||||||||||||
| Total state and local | 39,215 | 25,237 | 14,731 | |||||||||||||||||
| Foreign | ||||||||||||||||||||
UK (2) | 14,784 | 9,326 | — | |||||||||||||||||
| Other | 2,652 | 1,663 | 2,469 | |||||||||||||||||
| Total foreign | 17,436 | 10,989 | 2,469 | |||||||||||||||||
| Total income taxes paid, net of refunds | $ | 58,061 | $ | 152,012 | $ | 28,641 | ||||||||||||||
(1)The amount of income taxes paid during the years ended December 31, 2024 and 2023 did not meet the five percent disaggregation threshold.
(2)The amount of income taxes paid during the year ended December 31, 2023 did not meet the five percent disaggregation threshold.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 5, 2026 | Showing above |
| 2024 | Feb 7, 2025 | |
| 2023 | Feb 9, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 21, 2020 | |
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.