v3.25.4

Income Taxes | 12 Months Ended
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Dec. 31, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The Company is taxed as a corporation for income tax purposes and is subject to federal, state, and local taxes with respect to its allocable share of any net taxable income from the LLC. The LLC is a limited liability company taxed as a partnership for income tax purposes, and its taxable income or loss is passed through to its members, including the Company. The LLC is subject to income taxes on its taxable income in certain foreign countries, in certain state and local jurisdictions that impose income taxes on partnerships, and on the taxable income of its U.S. corporate subsidiaries. The components of income before income taxes were as follows:
| Year Ended December 31, |
| 2025 |  | 2024 |  | 2023 |
United States | $314,465 |  | $270,345 |  | $224,813 |
Foreign | (21,281) |  | 2,209 |  | 13,112 |
Income before income taxes | $293,184 |  | $272,554 |  | $237,925 |
The components of income tax expense were as follows:
| Year Ended December 31, |
| 2025 |  | 2024 |  | 2023 |
Current income tax expense (benefit) |  |  |  |  |  |
Federal | $(3,935) |  | $3,494 |  | $9,179 |
State | 3,353 |  | 3,704 |  | 3,338 |
Foreign | 4,965 |  | 9,126 |  | 5,438 |
Current income tax expense | $4,383 |  | $16,324 |  | $17,955 |
Deferred income tax expense (benefit) |  |  |  |  |  |
Federal | 67,371 |  | 20,497 |  | 31,941 |
State | 16,310 |  | 7,429 |  | (5,454) |
Foreign | (9,037) |  | (1,609) |  | (997) |
Deferred income tax expense | $74,644 |  | $26,317 |  | $25,490 |
Total income tax expense (benefit) |  |  |  |  |  |
Federal | 63,436 |  | 23,991 |  | 41,120 |
State | 19,663 |  | 11,133 |  | (2,116) |
Foreign | (4,072) |  | 7,517 |  | 4,441 |
Total income tax expense | $79,027 |  | $42,641 |  | $43,445 |
Reconciliations of income tax expense computed at the U.S. federal statutory income tax rate to the recognized income tax expense and the U.S. statutory income tax rate to the Company’s effective tax rates are as follows:
| Year Ended December 31, |
| 2025 |  | 2024 |  | 2023 |
Income taxes at U.S. federal statutory rate | $61,569 |  | 21.0% |  | $57,236 |  | 21.0% |  | $49,964 |  | 21.0% |
Nontaxable and nondeductible items |  |  |  |  |  |  |  |  |  |  |  |
Income attributable to non-controlling interests and nontaxable income | (33,937) |  | (11.6%) |  | (29,898) |  | (10.9%) |  | (27,265) |  | (11.6%) |
Nondeductible expenses | 3,960 |  | 1.4% |  | 2,579 |  | 0.9% |  | 2,286 |  | 1.0% |
Effect of cross-border tax laws | (1,636) |  | (0.6%) |  | (1,449) |  | (0.5%) |  | 256 |  | 0.1% |
Changes in valuation allowances | — |  | —% |  | 2,191 |  | 0.8% |  | 2,908 |  | 1.2% |
Equity-based compensation | (13,770) |  | (4.7%) |  | (11,209) |  | (4.1%) |  | (1,994) |  | (0.8%) |
Common Control Reorganizations 1 | 39,260 |  | 13.4% |  | 7,116 |  | 2.6% |  | 15,142 |  | 6.4% |
Change in fair value of contingent consideration 2 | 3,930 |  | 1.3% |  | — |  | —% |  | — |  | —% |
Other federal | (409) |  | (0.1%) |  | (2,106) |  | (0.8%) |  | 2,573 |  | 1.1% |
State and local income tax expense (benefit), net of federal benefit 3 | 19,663 |  | 6.7% |  | 11,133 |  | 4.1% |  | (2,116) |  | (0.9%) |
Foreign tax effects |  |  |  |  |  |  |  |  |  |  |  |
United Kingdom |  |  |  |  |  |  |  |  |  |  |  |
Nondeductible acquisition expenses | 272 |  | 0.1% |  | 4,309 |  | 1.6% |  | — |  | —% |
Nontaxable dividends and profit distributions | — |  | —% |  | — |  | —% |  | (2,971) |  | (1.2%) |
Other | (2,074) |  | (0.7%) |  | 264 |  | 0.1% |  | 1,564 |  | 0.7% |
Spain |  |  |  |  |  |  |  |  |  |  |  |
Nondeductible profit distributions | — |  | —% |  | — |  | —% |  | 3,844 |  | 1.6% |
Other | 509 |  | 0.2% |  | 533 |  | 0.2% |  | (599) |  | (0.3%) |
Other foreign jurisdictions | 1,690 |  | 0.6% |  | 1,942 |  | 0.7% |  | (147) |  | (0.1%) |
Income tax expense | $79,027 |  | 27.0% |  | $42,641 |  | 15.7% |  | $43,445 |  | 18.2% |
1 The total non-cash deferred income tax expense resulting from CCRs for the years ended December 31, 2025, 2024, and 2023, was $48.6 million, $9.5 million, and $18.4 million, respectively, of which $39.3 million, $7.1 million, and $15.1 million, respectively, was included in Domestic federal, and the remaining $9.3 million, $2.4 million, and $3.3 million, respectively, was included in S tate and local income tax expense (benefit), net of federal benefit. Refer to the Common Control Reorganization section below for more information. 2 Represents the income tax expense impact from the change in fair value of contingent consideration recognized for acquisitions that resulted in CCRs. 3 For the year ended December 31, 2025, state and local income taxes in California, New York, New York City, and Texas comprised the majority of this category. For the year ended December 31, 2024, state and local income taxes in California, Illinois, New York, and New York City comprised the majority of this category. For the year ended December 31, 2023, state and local income taxes in California, Illinois, and New York comprised the majority of this category. Common Control Reorganizations (CCRs) Subsequent to the acquisition of Velocity, which was acquired by a wholly owned subsidiary of Ryan Specialty Holdings, Inc., the Company converted Velocity into an LLC (“Velocity LLC”) and transferred Velocity LLC to the LLC. This legal entity reorganization was considered a transaction between entities under common control. The CCR, inclusive of impacts from the Velocity measurement period adjustments, resulted in a reduction of deferred tax assets in the Company’s basis difference in its investment in the LLC of $146.0 million and a non-cash deferred income tax expense of $48.9 million for the year ended December 31, 2025. Additionally, the difference between the carrying value and the fair value of the investment transferred under common control resulted in an increase of $29.8 million to Non-controlling interests on the Consolidated Statements of Stockholders’ Equity during the year ended December 31, 2025. Subsequent to the acquisition of Innovisk, which was purchased by Ryan Specialty Holdings, Inc., the Company reorganized Innovisk and transferred the resulting LLCs and foreign subsidiaries to the LLC. This legal entity reorganization was considered a transaction between entities under common control. The CCR resulted in deferred tax liabilities of $40.7 million and a non-cash deferred income tax expense of $11.4 million for the year ended December 31, 2024. Additionally, the difference between the carrying value and the fair value of the investments transferred under common control resulted in an increase of $7.3 million to Non-controlling interests on the Consolidated Statements of Stockholders’ Equity during the year ended December 31, 2024. During the year ended December 31, 2025, as a result of measurement period adjustments for Innovisk, the Company recognized $0.3 million of non-cash deferred income tax benefit. Subsequent to the acquisitions of Socius and AccuRisk, which were purchased by a wholly owned subsidiary of Ryan Specialty Holdings, Inc., the Company converted Socius to an LLC and reorganized AccuRisk and transferred those LLCs to the LLC. These legal entity reorganizations were considered transactions between entities under common control. The CCRs resulted in a net, non-cash deferred income tax expense of $18.4 million for the year ended December 31, 2023. Additionally, the difference between the carrying value and the fair value of the investments transferred under common control resulted in an increase of $18.9 million to Non-controlling interests on the Consolidated Statements of Stockholders’ Equity during the year ended December 31, 2023. During the year ended December 31, 2024, as a result of measurement period adjustments for AccuRisk, the Company recognized $1.9 million of non-cash deferred income tax benefit. Uncertain Tax Positions The Company does not believe it has any significant uncertain tax positions and therefore has no unrecognized tax benefits as of December 31, 2025, that if recognized would affect the annual effective tax rate. The 2022 through 2024 tax years for the Company, the LLC, and the Company’s C-Corporation subsidiaries are considered open for purposes of federal examination. The 2021 through 2024 tax years for the Company’s material foreign tax jurisdictions, the United Kingdom and Spain, are considered open for purposes of examination. As of the issuance date of this Form 10-K, one of the LLC’s subsidiaries is under state examination for the 2020 tax year. There are no other ongoing U.S. federal, state, or foreign tax audits or examinations as of the date of issuance of this Form 10-K. Deferred Tax Assets and Liabilities The components of deferred tax assets and liabilities were as follows:
| As of December 31, |
| 2025 |  | 2024 |
Deferred tax assets |  |  |  |
Net operating losses | $23,895 |  | $14,687 |
Investment in the LLC | 287,978 |  | 429,850 |
Start-up costs | 5,702 |  | 6,246 |
Equity-based compensation | 2,287 |  | 1,628 |
Tax credits | 4,239 |  | 5,491 |
Capitalized research and development | 874 |  | 890 |
Other accrued items | 786 |  | 151 |
Total deferred tax assets | $325,761 |  | $458,943 |
Valuation allowances | (11,162) |  | (7,759) |
Deferred tax assets, net of valuation allowances | $314,599 |  | $451,184 |
Deferred tax liabilities |  |  |  |
Intangibles | (54,237) |  | (42,817) |
Fixed assets | (58) |  | — |
Other accrued items | — |  | — |
Deferred tax liabilities | $(54,295) |  | $(42,817) |
Net Deferred tax assets | $260,304 |  | $408,367 |
During the year ended December 31, 2025, the decrease in Deferred tax assets was primarily driven by reductions in the investment in the LLC’s deferred tax assets arising from the CCRs described above. As of December 31, 2025, the Company had $60.4 million of federal net operating loss (“NOL”) carryforwards with an indefinite carryforward period, $40.5 million of state NOL carryforwards that will begin to expire in 2030, and $33.2 million of foreign NOL carryforwards that will begin to expire in 2030. The Company has recorded valuation allowances of $15.5 million and $23.1 million against the state and foreign NOLs, respectively. As of December 31, 2025, the Company had $4.2 million in foreign tax credit carryforwards that will begin to expire in 2026. The Company assessed the available positive and negative evidence, including tax planning strategies and recent results of foreign operations, to determine whether it was more likely than not that the existing deferred tax asset would be realized. A significant piece of objective negative evidence evaluated was the inability to use all available foreign tax credits for the year ended December 31, 2025. On the basis of this evaluation, a full valuation allowance of $4.2 million was recorded with respect to this deferred tax asset as of December 31, 2025. The amount of the deferred tax asset considered realizable, however, could be adjusted in the future if estimates of the Company’s ability to use the available foreign tax credits change. With the exception of the NOLs and tax credits discussed above, as of December 31, 2025, the Company concluded that, based on the weight of all available positive and negative evidence, the majority of the Company’s deferred tax assets are more likely than not to be realized. As such, no other valuation allowances have been recognized against those deferred tax assets. The valuation allowances recognized will be maintained until there is sufficient evidence to support the reversal of all or some portion of the allowances. Cash Paid for Income Taxes The cash paid for income taxes, net of refunds was as follows:
| Year Ended December 31, |
| 2025 |  | 2024 |  | 2023 |
Federal | $200 |  | $13,485 |  | $7,339 |
State and local |  |  |  |  |  |
Texas | 1,122 |  | — |  | — |
New York City | 1,026 |  | 1,268 |  | 1,399 |
Other state and local | 737 |  | 1,333 |  | 690 |
Foreign |  |  |  |  |  |
United Kingdom | 3,056 |  | 4,291 |  | 2,248 |
Netherlands | 2,250 |  | 570 |  | — |
Spain | 4,240 |  | 3,778 |  | 2,076 |
Sweden | 1,286 |  | 2,528 |  | 2,551 |
Other foreign | 427 |  | 78 |  | 98 |
Total cash paid for income taxes, net of refunds | $14,344 |  | $27,331 |  | $16,401 |
Tax Receivable Agreement (TRA) The Company recognizes a liability on the Consolidated Balance Sheets based on the undiscounted estimated future payments under the TRA. The amounts payable under the TRA will vary depending upon a number of factors, including the amount, character, and timing of the taxable income of the Company in the future. Based on current projections, the Company anticipates having sufficient taxable income to be able to realize the benefits and has recorded Tax Receivable Agreement liabilities of $459.0 million related to these benefits on the Consolidated Balance Sheets as of December 31, 2025. The following summarizes activity related to the Tax Receivable Agreement liabilities:
| Exchange Tax Attributes |  | Pre-IPO M&A Tax Attributes |  | TRA Payment Tax Attributes |  | TRA Liabilities |
Balance at December 31, 2023 | $194,668 |  | $85,814 |  | $78,416 |  | $358,898 |
Exchange of LLC Common Units | 73,433 |  | 5,660 |  | 21,982 |  | 101,075 |
Remeasurement – change in state rate | (932) |  | (391) |  | (1,183) |  | (2,506) |
Remeasurement – foreign tax credits | (895) |  | — |  | — |  | (895) |
Interest expense | — |  | — |  | 1,302 |  | 1,302 |
Payments | (13,041) |  | (7,668) |  | (869) |  | (21,578) |
Balance at December 31, 2024 | $253,233 |  | $83,415 |  | $99,648 |  | $436,296 |
Exchange of LLC Common Units | 34,813 |  | 2,466 |  | 9,479 |  | 46,758 |
Interest expense | — |  | — |  | 1,112 |  | 1,112 |
Payments | (16,067) |  | (8,532) |  | (570) |  | (25,169) |
Balance at December 31, 2025 | $271,979 |  | $77,349 |  | $109,669 |  | $458,997 |
The increases in the TRA liabilities due to exchanges of LLC Common Units for Class A common stock were recognized in Additional paid-in capital on the Consolidated Statements of Stockholders’ Equity and increases in the TRA liabilities due to accrued interest were recognized in Other non-operating loss (income) on the Consolidated Statements of Income. During the year ended December 31, 2024, the Company remeasured the TRA liabilities due to changes in state tax rates, which decreased its estimated cash tax savings from 26.12% to 26.00%. The changes were recognized in Other non- operating loss (income) on the Consolidated Statements of Income. Total realized tax savings in 2025 for the year ended December 31, 2024, from each of the tax attributes associated with the TRA were $28.9 million; $24.6 million, exclusive of the related accrued interest, was paid to current and certain former LLC unitholders, representing 85% of the realized tax savings. The remaining 15%, or $4.3 million, of the realized tax savings was retained by the Company. Non-controlling Interest Holders’ Tax Distributions The Company declared tax distributions to the non-controlling interest holders of $62.5 million, $84.8 million, and $74.6 million during the years ended December 31, 2025, 2024, and 2023, respectively. Non-controlling interest holders’ tax distributions for quarterly estimates are generally paid throughout the year they relate to, and a final payment is made in the first half of the subsequent year. Other Comprehensive Income (Loss) The following table summarizes the tax effects on the components of OCI:
| Year Ended December 31, |
| 2025 |  | 2024 |  | 2023 |
Gain on interest rate cap | $(1,359) |  | $(1,945) |  | $(1,628) |
Gain on interest rate cap reclassified to earnings | 1,867 |  | 3,101 |  | 2,734 |
Foreign currency translation adjustments | (5,901) |  | 1,370 |  | (272) |
Change in share of equity method investments’ other comprehensive income (loss) | (101) |  | (842) |  | 173 |

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