Income Taxes

12 Months Ended

Dec. 31, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes:

Following the Merger, the Company is subject to U.S. federal and state income taxes as a corporation. We are subject to the statutory requirements of the locations in which we conduct business, and state and local income taxes are accrued as deemed required in the best judgment of management based on analysis and interpretation of respective tax laws.

As previously discussed in Note 3, the Company adopted the required expanded presentation and disclosure requirements of ASU 2023-09 for the 2025 annual reporting period on a prospective basis. Information for income taxes paid, net of refunded amounts for the year ended December 31, 2025 is presented in Note 20.

The U.S. and non-U.S. components of income before income tax expense for the year ended December 31, 2025 were as follows:

(Millions)
U.S.	$	1,168.2
Non-U.S.	—
Total	$	1,168.2

Income tax benefit as reported in the accompanying consolidated statements of income (loss) was comprised of the following for the years ended December 31:

(Millions)	2025		2024		2023
Current:
Federal	$	2.9	$	0.3	$	0.8
State	(9.9)		(1.7)		(0.8)
Total current expense	(7.0)		(1.4)		—
Deferred:
Federal	113.6		14.8		53.2
State	29.9		4.1		15.3
Total deferred benefit	143.5		18.9		68.5
Total income tax benefit	$	136.5	$	17.5	$	68.5

An income tax expense reconciliation between the U.S. statutory tax rate and the effective tax rate for the year ended December 31, 2025 was as follows:

(Millions)	Amount		Percent
Income before income taxes	$	1,168.2
Income tax expense at U.S. statutory federal rate	$	(245.3)	(21.0)	%
United States:
State and local income taxes, net of federal effect (a)	20.0		1.7
Nontaxable or nondeductible items:
Settlement of pre-existing relationships	353.6		30.3
Other	(11.4)		(1.0)
Other adjustments:
Deferred tax impact of REIT liquidation	562.9		48.1
Other	(3.9)		(0.3)
Changes in valuation allowance	(542.4)		(46.4)
Foreign tax effects	—		—
Changes in unrecognized tax benefits	3.0		0.3
Total income tax benefit	$	136.5	11.7	%

(a)State taxes in Alabama, California, Georgia, Pennsylvania, and local municipalities comprise greater than 50% of the tax effect in this category.

An income tax expense reconciliation between the U.S. statutory tax rate and the effective tax rate was as follows for the years ended December 31:

(Millions)	2024		2023
Income (loss) before income taxes	$	75.9	$	(150.2)
Income tax (expense) benefit at U.S. statutory federal rate	$	(16.0)	$	31.6
Increases (decreases) resulting from:
State taxes, net of federal benefit	1.7		11.2
Benefit of REIT status	31.9		24.8
Return to accrual	0.1		1.3
Permanent differences	(0.2)		(0.4)
Income tax benefit	$	17.5	$	68.5

The effective tax rate on income from continuing operations for the years ended December 31, 2024 and 2023 differs from tax at the statutory rate primarily due to our former status as a REIT.

Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

The Company holds all of its assets and conducts all of its activities through an entity that is taxed as a partnership for U.S. income tax purposes, New Uniti Holdco, LP (“NUH”), which is wholly owned by the Company. In addition, the corporate subsidiary through which we operate Uniti Fiber, Uniti Fiber Holdings remains a separately taxable entity owned by NUH and is subject to U.S. federal, state and local corporate income taxes. The Company has elected to look through the partnership for purposes of determining deferred income tax assets and liabilities and as a result has not provided for deferred taxes on the portion of the basis difference in its investment in NUH that relates to nondeductible goodwill resulting from the Merger as well as outside basis differences in certain corporate subsidiaries.

The Company has a book-tax basis difference in its investment in NUH. As of December 31, 2025, the outside book-tax basis difference, excluding the nondeductible goodwill resulting from the Merger as well as outside basis differences in certain corporate subsidiaries, is $447.0 million of tax basis in excess of carrying value, which is equal to the aggregate of the book-tax basis differences of the assets and liabilities inside NUH. The below table reflects the significant components of the inside basis differences in the assets and liabilities of NUH and all other deferred tax balances not included within NUH:

(Millions)	December 31, 2025		December 31, 2024
Deferred income tax assets:
Deferred revenue	$	53.4	$	35.9
Stock-based compensation	5.2		0.8
Asset retirement obligation	—		1.7
Excess business interest expense	251.5		35.1
Lease asset liability	96.7		12.0
Settlement obligation	—		0.5
Debt discount and interest expense	32.2		0.1
Other intangible amortization	15.4		20.9
Postretirement and other employee benefits	21.8		—
Property, plant and equipment	127.8		—
Other	62.4		3.9
Net operating loss carryforwards	326.4		169.5
Deferred income tax assets, gross	992.8		280.4
Valuation allowance	(638.3)		—
Deferred income tax assets	$	354.5	$	280.4
Deferred income tax liabilities:
Property, plant and equipment	$	—	$	(100.3)
Goodwill and other intangible assets	(266.5)		(34.6)
Right of use asset	(100.4)		(13.5)
Other	(5.3)		(4.0)
Deferred income tax liabilities	$	(372.2)	$	(152.4)
Deferred income tax (liability) asset, net	$	(17.7)	$	128.0

As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred income tax assets.

The Company has evaluated the positive and negative evidence, including reversal of existing temporary differences and projected future income. The Company believes that it is more likely than not that the benefit from its deferred income tax assets in excess of the reversal of existing deferred income tax liabilities will not be realized. In addition, certain tax planning strategies which were considered in the Company’s evaluation of the need for a valuation allowance in previous years are no longer available post-Merger. Therefore, as of December 31, 2025, the Company recorded a total valuation allowance of approximately $638.3 million to reduce our deferred income tax assets to amounts expected to be realized.

In connection with the Merger, the Company recorded an opening net deferred income tax liability through purchase price accounting (see Note 4) of $290.2 million related to the difference between carrying values and tax bases of the assets and liabilities of Windstream that were acquired, as well as tax attribute carryforwards. Additionally, the Company has recorded net deferred income tax assets, net of valuation allowance, through income tax expense of $283.4 million related to the historical Uniti leasing operations that formerly benefited from status as a REIT, and through other comprehensive income of $0.6 million. Finally, due to the effects of the Merger, the Company re-evaluated the realizability of the deferred income tax assets of Uniti Fiber Holdings and recorded valuation allowance against the deferred income tax assets, resulting in a net deferred income tax liability of $11.5 million. These components result in the net deferred income tax liability of $17.7 million in the table above.

On July 4, 2025, H.R.1, also known as the One Big Beautiful Bill Act (the “Act”), was signed into law in the U.S. and contains a broad range of tax reform provisions affecting businesses. We evaluated the Act during the year ended December 31, 2025. The change in law, specifically to IRC Sec. 163(j), will reduce the amount of interest expense that is disallowed annually and is factored into the Company’s assessment of the realizability of its deferred income tax assets, including disallowed interest expense carryforward. We expect the Act will change the timing of our cash tax payments in future periods.

The Company and its subsidiaries have federal net operating loss (“NOL”) carryforwards as of December 31, 2025 of approximately $179.7 million, which will expire between 2030 and 2037, and approximately $1,134.2 million, which will not expire but the utilization of which will be limited to 80% of taxable income annually under provisions enacted in the Tax Cut and Jobs Act. As of December 31, 2025, tax effected state NOL carryforwards were approximately $45.9 million and expire annually in varying amounts from 2026 through 2045.

As of December 31, 2025, the Company and its subsidiaries have federal IRC Sec. 163(j) interest expense carryforwards of approximately $1,053.1 million which can be carried forward indefinitely and utilized in future years. The Company also has tax effected state interest expense carryforwards of $30.3 million in states that conform to the limitations of IRC Sec. 163(j).

As a result of the Merger, Uniti Fiber Holdings experienced a change of ownership as defined by the Internal Revenue Code Section 382, which results in an annual limitation on the future utilization of certain tax attributes. The Merger did not result in a change of ownership for Windstream as defined by Internal Revenue Code Section 382. Certain Windstream tax attributes acquired in the Merger remain subject to historical limitations on usage from previous transactions.

With the few exceptions due to NOL carryforward availability, our 2022 returns forward remain open to examination. Certain entities and tax periods with NOLs available to carry forward will generally remain open to examination several years after the applicable loss carryforwards have been utilized or expire.

The Company or its subsidiaries file tax returns in the U.S. federal jurisdiction, various state and local jurisdictions, and certain foreign jurisdictions. A reconciliation of the Company’s beginning and ending liability for unrecognized tax benefits is as follows:

(Millions)	2025		2024
Balance as of January 1	$	1.7	$	1.7
Reversal of unrecognized tax benefits due to expiration of statute	(1.7)		—
Balance as of December 31	$	—	$	1.7

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as additional tax expense. The Company recorded $1.3 million reversal of interest expense and penalties due to the expiration of statute for the period ending December 31, 2025. There were no amounts accrued for interest and penalties related to unrecognized tax benefits as of December 31, 2025.