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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the temporary differences between the recognition of revenue and expenses for income tax and financial reporting purposes and between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements. The Company records the effect of a tax rate or law change on the Company’s deferred tax assets and liabilities in the period of enactment. The amounts and related disclosures below are based on the continuing operations of the Company, unless otherwise noted. Components of Income Before Taxes
| Years Ended December 31,
(in thousands) | 2025 |  | 2024 |  | 2023
United States | $ | 830,266 |  |  | $ | 808,476 |  |  | $ | 601,370 |
Foreign | 3,546 |  |  | 6,694 |  |  | 3,013 |
Income (loss) from continuing operations before income taxes and equity in net earnings (losses) of equity method investee | $ | 833,812 |  |  | $ | 815,170 |  |  | $ | 604,383 |
Components of Income Tax Benefit (Expense)(1)
| Years Ended December 31,
(in thousands) | 2025 |  | 2024 |  | 2023
Current: |  |  |  |  |
Federal | $ | (52,668) |  |  | $ | 1,027 |  |  | $ | (358) |
State | (35,746) |  |  | (13,829) |  |  | (57,024) |
Foreign | (1,156) |  |  | (2,096) |  |  | (923) |
Current income tax benefit (expense) | (89,570) |  |  | (14,898) |  |  | (58,305) |
Deferred: |  |  |  |  |
Federal | (127,530) |  |  | (105,711) |  |  | (136,457) |
State | (14,505) |  |  | (33,702) |  |  | 11,704 |
Foreign | (155) |  |  | (170) |  |  | (194) |
Deferred income tax benefit (expense) | (142,190) |  |  | (139,583) |  |  | (124,947) |
Total income tax benefit (expense) | $ | (231,760) |  |  | $ | (154,481) |  |  | $ | (183,252) |
___________________ (1)The components of tax benefit (expense) include both continuing and discontinued operations for all periods presented in accordance with Accounting Standards Codification (“ASC”) 740. This presentation is to reflect the Company’s tax structure and filings. Income tax benefit (expense) is included in the Consolidated Statements of Operations as follows:
| Years Ended December 31,
(in thousands) | 2025 |  | 2024 |  | 2023
Continuing Operations: |  |  |  |  |
Federal | $ | (181,437) |  |  |  |  |
State | (50,546) |  |  |  |  |
Foreign | (1,311) |  |  |  |  |
Continuing operations(1) | $ | (233,294) |  |  | $ | (195,780) |  |  | $ | (160,585) |
Discontinued operations | 1,534 |  |  | 41,299 |  |  | (22,667) |
Total income tax benefit (expense) | $ | (231,760) |  |  | $ | (154,481) |  |  | $ | (183,252) |
___________________ (1)The components of income tax benefit (expense) from continuing operations are only required for the year ended December 31, 2025 due to the Company’s adoption of ASU 2023-09 on a prospective basis. Effective Tax Rate Reconciliations
| Year Ended December 31, 2025(1)
| Amount ($) |  | Percent (%)
U.S. federal statutory tax rate | $ | 175,101 |  |  | 21.0 | %
State and local income taxes, net of federal income tax effects(2) | 39,993 |  |  | 4.8 | %
Foreign tax effects | 1,330 |  |  | 0.2 | %
Tax Credits | (1,452) |  |  | (0.2) | %
Nontaxable or nondeductible items | 10,673 |  |  | 1.3 | %
Changes in unrecognized tax benefits | 6,408 |  |  | 0.8 | %
Other adjustments | 1,241 |  |  | 0.1 | %
Income tax expense (benefit) and effective tax rate | $ | 233,294 |  |  | 28.0 | %
___________________ (1)The Company adopted ASU 2023-09 effective January 1, 2025, on a prospective basis, which is reflected in the table above. (2)The following state taxes made up the majority (greater than 50%) of the tax effect in this category: California, Florida, New York, New Jersey, Illinois.
|  |  | Years Ended December 31,
|  |  | 2024 |  | 2023
Statutory federal tax rate |  |  | 21.0 | % |  | 21.0 | %
State income taxes, net of federal benefits |  |  | 5.4 | % |  | 6.1 | %
Non-U.S. tax |  |  | 0.3 | % |  | 0.2 | %
Non-deductible and non-taxable charges |  |  | 0.8 | % |  | 1.0 | %
Unrecognized tax benefits |  |  | (4.0) | % |  | (1.0) | %
Share-based compensation |  |  | 0.1 | % |  | — | %
Non-deductible goodwill on dispositions |  |  | — | % |  | 0.7 | %
Federal credits |  |  | 0.1 | % |  | (0.6) | %
Acquisitions and dispositions |  |  | 1.2 | % |  | (0.9) | %
Legislative changes |  |  | (0.4) | % |  | 0.6 | %
Prior year return adjustments |  |  | (0.6) | % |  | (0.6) | %
Other |  |  | 0.1 | % |  | 0.1 | %
Effective tax rate |  |  | 24.0 | % |  | 26.6 | %
Income Taxes Paid (Net of Refunds Received)
| Year Ended December 31,
(in thousands) | 2025
Federal | $ | 105,500 |
State | 35,259 |
Foreign | 1,409 |
Total (1) | $ | 142,168 |
___________________ (1)The Company adopted ASU 2023-09, effective January 1, 2025, on a prospective basis, which is reflected in the table above. Deferred Tax Assets and Deferred Tax Liabilities The components of the Company's net deferred tax assets (liabilities) were as follows:
| December 31,
(in thousands) | 2025 |  | 2024
Deferred tax assets: |  |  |
Accrued liabilities and reserves | $ | 94,183 |  |  | $ | 94,084 |
Tax loss and credit carryforwards | 37,579 |  |  | 75,927 |
Disallowed interest carryforward | 177,546 |  |  | 230,048 |
Deferred revenue | 184,415 |  |  | 218,639 |
Other | 64,051 |  |  | 91,892 |
Total deferred tax assets | 557,774 |  |  | 710,590 |
Valuation allowance | (12,264) |  |  | (12,264) |
Deferred tax assets, net of valuation allowance | $ | 545,510 |  |  | $ | 698,326 |
Deferred tax liabilities: |  |  |
Subscriber system assets | $ | (707,458) |  |  | $ | (757,046) |
Intangible assets | (1,063,710) |  |  | (1,051,499) |
Other | (41,095) |  |  | (56,994) |
Total deferred tax liabilities | (1,812,263) |  |  | (1,865,539) |
Net deferred tax assets (liabilities) | $ | (1,266,753) |  |  | $ | (1,167,213) |
The valuation allowance for deferred tax assets relates to the uncertainty of the utilization of certain U.S. federal and state deferred tax assets. In evaluating the Company’s ability to recover its deferred tax assets, the Company considers all available positive and negative evidence, which includes its past operating results, the existence of cumulative losses in the most recent years, and its forecast of future taxable income. In estimating future taxable income, the Company develops assumptions related to the amount of future pre-tax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates the Company is using to manage its underlying businesses. The Company believes that it is more-likely-than-not that it will generate sufficient future taxable income to realize its deferred tax assets, net of valuation allowance. The changes in the valuation allowance for deferred tax assets were as follows:
| Years Ended December 31,
(in thousands) | 2025 |  | 2024 |  | 2023
Beginning balance | $ | (12,264) |  |  | $ | (12,264) |  |  | $ | (57,715) |
Income tax benefit (expense)(1) | — |  |  | — |  |  | 43,277 |
Write-offs and other | — |  |  | — |  |  | 2,174 |
Ending balance | $ | (12,264) |  |  | $ | (12,264) |  |  | $ | (12,264) |
__________________ (1)During 2023, the change is primarily related to the utilization of capital loss carryforwards against which a valuation allowance was previously recorded. The utilization is attributable to capital gains generated in connection with the Commercial Divestiture. As of December 31, 2025, the Company has no remaining financial statement federal net operating loss (“NOL”) carryforwards. As of December 31, 2025, the Company’s valuation allowance for deferred tax assets was primarily related to capital loss carryforwards in Canada primarily generated in connection with the sale of ADT Canada during 2019. The Tax Cuts and Jobs Act of 2017 introduced IRC Section 163(j), which limits the deductibility of interest expense and allows for the excess to be carried forward indefinitely. As of December 31, 2025, the Company has not recorded a valuation allowance against the disallowed interest carryforward as the Company believes it has sufficient sources of future taxable income to realize the related tax benefit. Unrecognized Tax Benefits The Company recognizes positions taken or expected to be taken in a tax return in the consolidated financial statements when it is more-likely-than-not (i.e., a likelihood of more than 50%) that the position would be sustained upon examination by tax authorities. A recognized tax position is then measured at the largest amount of benefit with greater than 50% likelihood of being realized upon ultimate settlement. The Company records liabilities for positions that have been taken but do not meet the more-likely-than-not recognition threshold. The Company adjusts the liabilities for unrecognized tax benefits in light of changing facts and circumstances; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a change to the estimated liabilities. The Company includes interest and penalties associated with unrecognized tax benefits as income tax expense and as a component of the recorded balance of unrecognized tax benefits, which is reflected in other liabilities, or net of related tax loss carryforwards in the Consolidated Balance Sheets. Interest and penalties associated with unrecognized tax benefits were not material to the Company's consolidated financial statements for the periods presented. The following is a roll-forward of unrecognized tax benefits:
| Years Ended December 31,
(in thousands) | 2025 |  | 2024 |  | 2023
Beginning balance | $ | 24,606 |  |  | $ | 48,823 |  |  | $ | 56,177 |
Additions for tax positions of prior years | 17,715 |  |  | 9,933 |  |  | 517 |
Reductions for tax positions of prior years | — |  |  | (5,108) |  |  | — |
Additions for tax positions related to current year | 15,057 |  |  | — |  |  | — |
Reductions related to settlements | (517) |  |  | — |  |  | — |
Reductions related to lapse of statute of limitation | — |  |  | (29,042) |  |  | (7,871) |
Ending balance | $ | 56,861 |  |  | $ | 24,606 |  |  | $ | 48,823 |
Unrecognized tax benefits that would affect the effective tax rate | $ | 31,398 |  |  | $ | 24,606 |  |  | $ | 48,823 |
The Company’s unrecognized tax benefits relate to tax years that are subject to audit by the taxing authorities in the U.S. federal, state and local, and foreign jurisdictions. Based on the current tax statutes and status of its income tax audits, the Company does not expect unrecognized tax benefits to change significantly in the next twelve months. Open Tax Years by Jurisdiction
Jurisdiction | Years Open to Audit
Federal | 2022 - 2024
State | 2019 - 2024
Canada | 2021 - 2024
The Company files a consolidated return for its U.S. entities and separate returns for each Canadian entity. These income tax returns are subject to audit by the taxing authorities that may culminate in proposed assessments which may ultimately result in a change to the estimated income taxes. Federal Tax Legislation One Big Beautiful Bill Act - The One Big Beautiful Bill Act (the “OBBBA”) was signed into law in July 2025. It includes a broad range of tax reform provisions, some of which were favorable in 2025 to cash taxes. The Company has evaluated the impact of the OBBBA on future periods and determined that the impact on cash taxes will likely be neutral.

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