Income Taxes (Tables)

12 Months Ended

Dec. 31, 2025

Schedule of Components of Income (Loss) from Continuing Operations before Provision for Income Taxes

The components of income from continuing operations before provision (benefit) for income taxes consisted of the following (in thousands):


	Years Ended December 31,
	2025		2024		2023
United States	$	6,396	$	(14,396)	$	(39,708)
Foreign	(3,376)		1,368		(693)
	$	3,020	$	(13,028)	$	(40,401)

Schedule of Provision (Benefit) for Income Taxes

The provision (benefit) for income taxes consisted of the following (in thousands):


	Years Ended December 31,
	2025		2024		2023
Federal:
Current	$	1,190	$	138	$	(220)
Deferred	3,338		(84)		(5,342)
	4,528		54		(5,562)
State:
Current	601		595		277
Deferred	(206)		(1,331)		(1,087)
	395		(736)		(810)
Foreign:
Current	—		—		—
Deferred	6		16		6
	6		16		6
	$	4,929	$	(666)	$	(6,366)

Schedule of Significant Components of Deferred Tax Assets (Liabilities), Net

Significant components of the Company’s deferred tax assets, net consisted of the following (in thousands):


	December 31,
	2025		2024
Deferred Tax Assets:
Accrued expenses and bonuses	$	4,670	$	3,984
Advances and loans and other reserves	21,712		16,611
Deferred compensation and commissions	8,728		12,088
Operating lease liabilities	21,760		22,834
Stock-based compensation	7,125		7,682
Net operating and capital loss carryforwards	6,358		11,341
Other comprehensive income	—		306
Amortizable intangibles and other	4,569		4,526
Other	192		—
Deferred tax assets before valuation allowance	75,114		79,372
Valuation allowance	(5,813)		(4,959)
Deferred Tax Assets	69,301		74,413
Deferred Tax Liabilities:
Property and equipment	(1,271)		(2,744)
Operating lease ROU assets, net	(18,346)		(19,236)
Prepaid expenses	(1,056)		(895)
State taxes	(1,562)		(1,535)
Other comprehensive income	(37)		—
Goodwill and other	(2,443)		(1,923)
Deferred Tax Liabilities	(24,715)		(26,333)
Deferred Tax Assets, Net	$	44,586	$	48,080

Schedule of Components of Provision for Income Taxes and Income before Provision for Income Taxes

The following table is a reconciliation of the U.S. federal statutory tax rate of 21% to the Company's effective tax rate for the year ended December 31, 2025 in accordance with the guidance in ASU No. 2023-09 (in thousands).


	Year Ended December 31,
	2025
	Amount		Rate
Income before provision for income taxes	$	3,020	100.0	%

Income taxes at the federal statutory rate	634		21.0	%
State taxes, net of federal benefit(1)	312		10.3	%
Foreign tax effects:
Statutory rate difference between Canada and US	(186)		(6.2)	%
Changes in valuation allowances	854		28.3	%
Other	46		1.5	%
Effect of cross-border tax laws	(16)		(0.5)	%
Nontaxable/nondeductible items:
Travel and entertainment	739		24.5	%
Officers' compensation	2,053		68.0	%
Parking expense	130		4.3	%
Life insurance investment income	(298)		(9.9)	%
Dividend on unvested awards	(209)		(6.9)	%
Stock based compensation	745		24.7	%
Business gifts	76		2.5	%
Other	49		1.6	%
Provision for income taxes and effective income tax rate	$	4,929	163.2	%

(1)State taxes in California and Texas made up the majority of the tax effect in this category.

The following table is a reconciliation of the U.S federal statutory rate of 21% to the Company's effective rate for the years ended December 31, 2024 and 2023 in accordance with the guidance prior to the adoption of ASU 2023-09 (in thousands):


	Years Ended December 31,
	2024	2023
			Amount		Rate		Amount		Rate
Income tax (benefit) expense at the federal statutory rate			$	(2,736)	21.0	%	$	(8,484)	21.0	%
State income tax (benefit) expense, net of federal benefit			(582)		4.5	%	(602)		1.5	%
Shortfall (windfall) tax benefits, net related to stock-based compensation			1,014		(7.8)	%	1,260		(3.1)	%
Change in valuation allowance			(337)		2.6	%	388		(0.9)	%
Permanent and other items (1)			1,975		(15.2)	%	1,072		(2.7)	%
(Benefit) provision for income taxes			$	(666)	5.1	%	$	(6,366)	15.8	%

(1)Permanent items relate principally to compensation charges (6.8% – 2024), meals and entertainment (5.5% – 2024), qualified transportation fringe benefits, and other items.

Marcus & Millichap, Inc. 10-K