Quarterly report [Sections 13 or 15(d)]

INCOME TAXES

v3.25.3
INCOME TAXES
 9 Months Ended
Sep. 30, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Components of the provision for income taxes are as follows (in thousands): 
  Three Months Ended September 30, Nine Months Ended September 30,
  2025 2024 2025 2024
Federal $ 25,115  $ 42,321  $ 94,244  $ 132,783 
State 3,836  11,645  18,241  34,988 
Total $ 28,951  $ 53,966  $ 112,485  $ 167,771 

The effective tax rate for the three and nine months ended September 30, 2025 was 22.6% and 23.4%, respectively, and for the three and nine months ended September 30, 2024 was 21.6% and 21.5%, respectively. The increase in the effective tax
rate for the three and nine months ended September 30, 2025 reflects fewer homes qualifying for the §45L energy-efficient homes federal tax credit under the Internal Revenue Code ("IRC") enacted in the Inflation Reduction Act ("IRA") due to higher construction thresholds required to earn these tax credits beginning in 2025.
At September 30, 2025 and December 31, 2024, we have no unrecognized tax benefits. We believe our current income tax filing positions and deductions will be sustained on audit and we do not anticipate any adjustments that will result in a material change. Our policy is to accrue interest and penalties on unrecognized tax benefits and include them in the provision for income taxes.
We determine our deferred tax assets and liabilities in accordance with ASC 740, Income Taxes. We evaluate our deferred tax assets, including the benefit from net operating losses ("NOLs"), by jurisdiction to determine if a valuation allowance is required. This evaluation considers, among other matters, the nature, frequency and severity of cumulative losses, forecasts of future profitability, the length of statutory carryforward periods, experiences with operating losses and experiences of utilizing tax credit carry forwards and tax planning alternatives. We have no NOLs or credit carryovers, and determined that no valuation allowance on our deferred tax assets is necessary at September 30, 2025.
At September 30, 2025, we had no income taxes payable and $16.2 million income taxes receivable. The income taxes receivable primarily consists of federal and state estimated tax payments and energy tax credits in excess of income tax liability accrued at September 30, 2025. We have accrued income taxes of $11.6 million recorded in Accrued liabilities on the accompanying unaudited consolidated balance sheets at September 30, 2025 that consists primarily of state franchise tax and federal excise tax.

We conduct business and are subject to tax in the U.S. both federally and in several states. With few exceptions, we are no longer subject to U.S. federal, state, or local income tax examinations by taxing authorities for years prior to 2020. We do not have any Federal or state income tax examinations pending resolution at this time.

On July 4, 2025, the President signed into law the One Big Beautiful Bill Act (“OBBBA”), which includes several significant corporate tax changes. The legislation modifies or extends provisions originally enacted under the Tax Cuts and Jobs Act of 2017, including but not limited to the reinstatement of immediate expensing for research and development expenditures and the restoration of 100% bonus depreciation for qualified property. In addition, OBBBA introduces new provisions, including the repeal of the §45L energy-efficient home credit for homes acquired after June 30, 2026, and a new 1% floor on charitable contribution deductions. We have incorporated the effective changes into our provision and continue to evaluate the full impact of the legislation. However, we do not expect the legislative changes to have a material effect on our effective tax rate for the year ending December 31, 2025.