Xenia Hotels & Resorts, Inc.XHR
Xenia Hotels & Resorts, Inc. Income Taxes Disclosure
Income Taxes
The Company elected to be taxed and operates in a manner management believes will allow it to continue to qualify as a REIT under the Code for federal income tax purposes. To qualify as a REIT, the Company must satisfy certain requirements related to, among other things, its sources of income, composition of its assets, amounts it distributes to its stockholders and diversity of its stock ownership. So long as the Company qualifies as a REIT, it generally will not be subject to U.S. federal income tax on REIT taxable income that is distributed annually to its stockholders. Accordingly, no provision for U.S. federal income taxes has been included in the consolidated financial statements for the years ended December 31, 2025, 2024 and 2023 related to REIT taxable income. If the Company fails to qualify as a REIT in any taxable year, without the benefit of certain relief provisions, it will be subject to federal, state and local income tax on REIT taxable income at regular corporate tax rates and will not be eligible to re-elect REIT status for four years following the failure.
The Company is also subject to certain federal, state, and local taxes on its income and assets, including, (i) taxes on any undistributed income, (ii) taxes related to its TRS, (iii) certain state or local income taxes, (iv) franchise taxes, (v) property taxes and (vi) transfer taxes.
The Company has elected to treat certain of its consolidated subsidiaries (and may in the future elect to treat newly formed subsidiaries) as TRSs pursuant to the Code. TRSs may participate in non-real estate related activities and/or perform non-customary services for tenants and are subject to federal and state income tax at regular corporate tax rates. The Company’s hotels are leased, through its Operating Partnership, to certain subsidiaries of the Company’s TRS. Lease revenue at the Operating Partnership and lease expense from the TRS subsidiaries are eliminated in consolidation for financial statement purposes.
For the year ended December 31, 2025 the Company recognized an income tax expense of $1.4 million using an estimated federal and state statutory combined rate of 2.04%. The income tax expense was primarily related to current taxable income not offset with net operating loss carryforwards and state gross margins taxes levied on gross revenues.
For the year ended December 31, 2024, the Company recognized an income tax benefit of $3.7 million using an estimated federal and state statutory combined rate of 28.48%. The income tax benefit was primarily related to the release of a valuation allowance related to certain state deferred tax assets which was partially offset by current taxable income not offset with net operating loss carryforwards and state gross margins taxes levied on gross revenues.
For the year ended December 31, 2023, the Company recognized income tax expense of $1.4 million using an estimated federal and state statutory combined rate of 6.79%. The income tax expense was primarily related to current taxable income not offset with net operating loss carryforwards and state gross margins taxes levied on gross revenues.
The table below presents the provision for income taxes related to continuing operations as of December 31, 2025, 2024 and 2023 (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Current: | |||||||||||||||||
Federal | $ | — | $ | — | $ | 35 | |||||||||||
State | (1,589) | (1,605) | (1,482) | ||||||||||||||
Total current | $ | (1,589) | $ | (1,605) | $ | (1,447) | |||||||||||
Deferred: | |||||||||||||||||
Federal | $ | — | $ | — | $ | — | |||||||||||
State | 198 | 5,345 | — | ||||||||||||||
Total deferred | $ | 198 | $ | 5,345 | $ | — | |||||||||||
Total tax (provision) benefit | $ | (1,391) | $ | 3,740 | $ | (1,447) | |||||||||||
The table below presents a reconciliation between the provision for income taxes and the amount computed by applying the federal statutory income tax rate to net income from continuing operations before income taxes for the years ended December 31, 2025, 2024 and 2023 (in thousands):
| Year Ended December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
| Amount | Percentage | Amount | Percentage | Amount | Percentage | |||||||||||||||||||||
Provision for income taxes at statutory rate | $ | (14,341) | 21.00 | % | $ | (2,757) | 21.00 | % | $ | (4,477) | 21.00 | % | ||||||||||||||
Change in federal valuation allowance | (2,738) | 4.01 | % | (5,987) | 45.60 | % | (2,721) | 12.76 | % | |||||||||||||||||
State and local income taxes, net of federal income tax effect(1) | (1,057) | 1.55 | % | 4,077 | (31.05) | % | (1,171) | 5.49 | % | |||||||||||||||||
Other Adjustments: | ||||||||||||||||||||||||||
| Tax impact related to REIT operations | 16,798 | (24.60) | % | 8,340 | (63.52) | % | 6,850 | (32.13) | % | |||||||||||||||||
Other | (53) | 0.08 | % | 67 | (0.52) | % | 72 | (0.34) | % | |||||||||||||||||
Total tax (provision) benefit | $ | (1,391) | 2.04 | % | $ | 3,740 | (28.48) | % | $ | (1,447) | 6.79 | % | ||||||||||||||
(1)For the year ended December 31, 2025, state taxes in Texas made up the majority (greater than 50%) of the tax effect in this category. For the year ended December 31, 2024, state taxes in California made up the majority (greater than 50%) of the tax effect in this category. For the year ended December 31, 2023, state taxes in Texas made up the majority (greater than 50%) of the tax effect in this category.
Net deferred tax assets and liabilities are included within other assets in the consolidated balance sheets and are attributed to the activity of the Company's TRS. The components of the deferred tax assets and liabilities at December 31, 2025 and 2024 were as follows (in thousands):
| December 31, 2025 | December 31, 2024 | ||||||||||
Net operating loss | $ | 23,078 | $ | 19,152 | |||||||
Deferred income | 1,833 | 2,050 | |||||||||
Other | 238 | 130 | |||||||||
Total deferred tax assets | $ | 25,149 | $ | 21,332 | |||||||
Less: Valuation allowance | (19,605) | (15,987) | |||||||||
Net deferred tax assets | $ | 5,544 | $ | 5,345 | |||||||
Income taxes paid (received) (net of refunds) for the years ended December 31, 2025, 2024 and 2023 were as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Federal | $ | — | $ | (2,237) | $ | (15,448) | |||||||||||
State and local | 1,938 | 1,530 | 2,519 | ||||||||||||||
Total income taxes paid (received) | $ | 1,938 | $ | (707) | $ | (12,929) | |||||||||||
Income taxes paid (received) (net of refunds) exceeded 5% of total income taxes paid (received) (net of refunds) in the following jurisdictions: | |||||||||||||||||
Florida | (170) | * | * | ||||||||||||||
| Oregon | 240 | 220 | * | ||||||||||||||
City of Philadelphia | 427 | * | * | ||||||||||||||
City of Portland | 185 | * | * | ||||||||||||||
Texas | 1,100 | 919 | * | ||||||||||||||
* Jurisdiction below threshold for the period presented.
At December 31, 2025 and 2024, the Company had federal net operating loss carryforwards of $56.4 million and $42.8 million and established valuation allowances of $56.4 million and $42.8 million, respectively.
At December 31, 2025 and 2024, the Company had state net operating loss carryforwards of $213.4 million and $201.9 million and established valuation allowances of $124.4 million and $115.8 million, respectively.
Deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of available evidence, including future reversal of existing taxable temporary differences, future projected taxable income, and tax-planning strategies. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company has considered various factors, including cumulative losses, future reversals of existing taxable temporary differences, projected future taxable income and tax-planning strategies when assessing the realizability of its deferred tax assets. During the year ended December 31, 2024, the Company had determined there is sufficient positive evidence to conclude it was more likely than not that a portion of the deferred tax assets related to certain state net operating loss carryforwards was realizable and therefore recorded a $5.3 million reduction in the related valuation allowance. Further, the amount of the deferred tax assets that continue to be considered unrealizable could change in the near-term.
Uncertain Tax Positions
The Company had no unrecognized tax benefits as of or during the three-year period ended December 31, 2025. The Company expects no significant increases or decreases in unrecognized tax benefits due to changes in tax positions within one year of December 31, 2025. The Company has not recognized material interest expense or penalties relating to income taxes in the consolidated statements of operations and comprehensive income for the years ended December 31, 2025, 2024 and 2023 or in the consolidated balance sheets as of December 31, 2025 and 2024. As of December 31, 2025, the Company’s 2025, 2024 and 2023 tax years remain subject to examination by U.S. and various state tax jurisdictions.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Mar 2, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Feb 25, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 28, 2017 | |
| 2015 | Mar 10, 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.