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Income Taxes | 12 Months Ended
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Dec. 31, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The components of the provision for income taxes were as follows (in thousands):
| Years Ended December 31,
| 2025 | 2024 | 2023
Current provision for income taxes: |  |  |
Federal | $ | 158,426 |  | $ | 325,858 |  | $ | 355,393 |
State | 75,122 |  | 84,662 |  | 91,586 |
Total current provision for income taxes | 233,548 |  | 410,520 |  | 446,979 |
Deferred provision (benefit) for income taxes: |  |  |
Federal | 66,574 |  | (66,056) |  | (56,539) |
State | (13,639) |  | (10,188) |  | (11,915) |
Total deferred provision (benefit) for income taxes | 52,935 |  | (76,244) |  | (68,454) |
Provision for income taxes | $ | 286,483 |  | $ | 334,276 |  | $ | 378,525 |
The following table reflects a reconciliation of the U.S. federal statutory income tax rates to the Company’s effective income tax rates:
| Year Ended December 31, 2025
| Amount | %
Federal at statutory income tax rates | $ | 241,413 |  | 21.0 | %
State income taxes, net of federal benefit (1) | 47,832 |  | 4.2 |
Tax credits: |  |
General business credits | (9,914) |  | (0.9) |
Changes in unrecognized tax benefits | 9,717 |  | 0.8 |
Nontaxable or nondeductible items: |  |
Share-based payment awards | (4,163) |  | (0.4) |
Other | 1,598 |  | 0.2 |
Effective income tax rate | $ | 286,483 |  | 24.9 | %
(1) State taxes in California, Illinois, New York, Pennsylvania, New Jersey, and Minnesota made up the majority (greater than 50%) of the tax effect in this category. The following table reflects a reconciliation of the U.S. federal statutory income tax rates to the Company’s effective income tax rates in accordance with the guidance in effect prior to the adoption of the new income tax disclosure requirements during the year ended December 31, 2025:
| Years Ended December 31,
| 2024 | 2023
Federal statutory income tax rates | 21.0 | % | 21.0 | %
State income taxes, net of federal benefit | 4.2 |  | 5.0 |
Non-deductible expenses | 0.2 |  | 0.9 |
Federal research and development credits | (0.7) |  | (0.6) |
Share-based compensation | (0.8) |  | (0.2) |
Other | 0.1 |  | 0.1 |
Effective income tax rates | 24.0 | % | 26.2 | %
The Company’s effective income tax rate differs from the federal corporate tax rate of 21.0% primarily as a result of state taxes, non-deductible expenses, uncertain tax position reserves, tax credits and benefits from the vesting and exercise of share-based compensation. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of the net deferred income taxes included in the consolidated statements of financial condition were as follows (in thousands):
| December 31,
| 2025 | 2024
Deferred tax assets: |  |
Deferred compensation | $ | 290,055 |  | $ | 230,757 |
Operating lease liabilities | 55,072 |  | 40,240 |
Tax credit carryforwards | 28,999 |  | 24,244 |
Finance lease liabilities | — |  | 28,383 |
Forgivable loans | 89,783 |  | 41,003 |
Capitalized research and development expenditures | 2,062 |  | 22,164 |
Accrued liabilities | 33,369 |  | 29,813 |
Share-based compensation | 17,433 |  | 15,323 |
Other | 14,290 |  | 19,329 |
Deferred tax assets | 531,063 |  | 451,256 |
Less: valuation allowance | (24,131) |  | (23,215) |
Total deferred tax assets | 506,932 |  | 428,041 |
Deferred tax liabilities: |  |
Internally developed software | (201,680) |  | (43,053) |
Depreciation of property and equipment | (33,901) |  | (55,334) |
Amortization of other intangibles | (110,091) |  | (147,574) |
Operating lease assets | (47,019) |  | (32,167) |
Unrealized gains and losses | (31,276) |  | (15,842) |
Other | (4,743) |  | (4,169) |
Total deferred tax liabilities | (428,710) |  | (298,139) |
Deferred tax assets, net | $ | 78,222 |  | $ | 129,902 |
The decrease in deferred tax assets, net as of December 31, 2025 compared to December 31, 2024 was primarily driven by tax acceleration of Section 174 research and development expenditures. At December 31, 2025, there were $22.3 million of tax credits that can be carried forward 15 years and will begin to expire during 2032, and $6.7 million of tax credits that can be carried forward 10 years and will begin to expire during 2032. We believe that it is more likely than not that a portion of the tax credit carryforwards will not be realized and have recorded a valuation allowance of $24.1 million on the deferred tax assets related to these tax credit carryforwards. The following table reflects a reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits (in thousands):
| December 31,
| 2025 | 2024 | 2023
Balance — beginning of year | $ | 46,519 |  | $ | 61,592 |  | $ | 52,270 |
Increases for tax positions taken during the current year | 5,384 |  | 7,795 |  | 10,433 |
Increases for tax positions taken in the prior years | 10,074 |  | 2,950 |  | 10,606 |
Reductions as a result of a lapse of the applicable statute of limitations and decreases in prior-year tax positions | (9,223) |  | (25,818) |  | (11,717) |
Balance — end of year | $ | 52,754 |  | $ | 46,519 |  | $ | 61,592 |
At December 31, 2025 and 2024, there were $45.5 million and $40.1 million, respectively, of unrecognized tax benefits that if recognized, would favorably affect the effective income tax rate in any future periods. The Company accrues interest and penalties related to unrecognized tax benefits in its provision for income taxes within the consolidated statements of financial condition. At December 31, 2025 and 2024, the liability for unrecognized tax benefits included accrued interest of $12.0 million and $9.4 million, respectively, and penalties of $4.6 million and $4.1 million, respectively. The Company and its subsidiaries file federal, state and local income tax returns, which are subject to routine examinations by the respective taxing authorities. The Company is not currently under exam for federal purposes. The tax years of 2022 to 2024 remain open to examination in the federal jurisdiction. The tax years of 2015 to 2024 remain open to examination in the state jurisdictions. Net cash paid (refunds received) for income taxes consisted of the following (in thousands):
| Year Ended December 31, 2025
Federal | $ | 257,101 |
Aggregated state and local jurisdictions (1) | 71,459 |
Net cash paid for income taxes | $ | 328,560 |
(1) No individual state taxing jurisdiction comprised more than 5% of net cash paid (refunds received). On July 4, 2025, the One Big Beautiful Bill Act (the “Act”) was enacted into law. The Act includes several changes to the corporate income tax system, including accelerated tax deductions for qualified property and U.S. based research expenditures, and modifications to computations of the business interest expense limitation. The Act did not meaningfully impact our effective tax rate for 2025; however, the Act reduced our cash tax payments made during 2025.

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