v3.25.4
Income Taxes
 12 Months Ended
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 Reorganizations1
39,260
13.4%
7,116
2.6%
15,142
6.4%
Change in fair value of contingent consideration2
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 benefit3
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 State 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