Income Taxes

12 Months Ended

Dec. 31, 2025

Income Taxes

Income Taxes

6.    Income Taxes

On July, 4, 2025, new tax law was signed known as the One Big Beautiful Bill Act (“OBBBA”), providing permanent extension for several business tax provisions originally enacted under the Tax Law and Jobs Act and introduced significant changes to the U.S. federal income tax system, effective beginning with the 2025 calendar year. Key provisions of the legislation include the restoration of 100% bonus depreciation. The Company recorded the impacts of the new OBBBA tax provisions in its financial statements for 2025. The primary impact of the legislation was increased tax amortization and depreciation.

An income tax benefit of $2,570,000 was recorded for the year ended December 31, 2025 compared to income tax expense of $1,110,000 for the year ended December 31, 2024. The effective tax rate was approximately 24.5% for the year ended December 31, 2025 compared to 24.3% for the year ended December 31, 2024. The 2024 year to date tax rate was impacted by the transfer of a split dollar life insurance policy in the fourth quarter valued at $1 million to the estate of our previous CEO in accordance with his employment agreement that was a permanent benefit difference between our book and taxable income.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax liabilities and assets are as follows:

	December 31,
	2025		2024
	(In thousands)
Deferred tax liabilities:
Property and equipment	$	3,327	$	3,852
Intangible assets		18,662		23,377
Right of use assets		2,380		1,803
Prepaid expenses		511		470
Total deferred tax liabilities		24,880		29,502
Deferred tax assets:
Allowance for credit losses		211		194
Compensation		1,246		1,259
Lease liability		1,407		1,890
Other accrued liabilities		89		152
		2,953		3,495
Less: valuation allowance		—		—
Total net deferred tax assets		2,953		3,495
Net deferred tax liabilities	$	21,927	$	26,007
Current portion of deferred tax assets	$	425	$	628
Non-current portion of deferred tax liabilities		(22,352)		(26,635)
Net deferred tax liabilities	$	(21,927)	$	(26,007)

Deferred tax assets are required to be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. At December 31, 2025 and December 31, 2024, we do not have a valuation allowance for net deferred tax assets.

At December 31, 2025 and 2024, net deferred tax liabilities include a deferred tax asset of $2,953,000 and $3,495,000, respectively, relating to deferred compensation, stock-based compensation expense, accrued compensation, lease liabilities, the allowance for credit losses, and other accrued expenses.

The significant components of the provision for income taxes are as follows:

	Years Ended December 31,
	2025		2024
	(In thousands)
Current:
Federal	$	1,200	$	940
State		320		285
Total current		1,520		1,225
Deferred:
Federal		(3,340)		(150)
State		(750)		35
Total deferred (benefit)		(4,090)		(115)
Total Income Tax Provision (Benefit)	$	(2,570)	$	1,110

The reconciliation of income tax on income (loss) computed at the U.S. federal statutory tax rates to the recorded income tax expense (benefit) for the Company is as follows:

	Years Ended December 31,
	2025				2024
	Amount		Percent		Amount		Percent
	(In thousands)
Tax expense (benefit) at U.S. statutory rates	$	(2,198)	21.0	%	$	960	21.0	%
State tax expense (benefit), net of federal benefit (1)		(498)	4.8	%		270	5.9	%
Nontaxable or nondeductible items
Tax expense on deficit from restricted stock vesting		156	(1.5)	%		167	3.7	%
Tax benefit from dividends paid on restricted stock		(57)	0.5	%		(144)	(3.2)	%
Other nontaxable and nondeductible items, net		59	(0.6)	%		(134)	(2.9)	%
Other adjustments		(32)	0.3	%		(9)	(0.2)	%
Income tax (benefit) expense	$	(2,570)	24.5	%	$	1,110	24.3	%
(1) In 2025, state taxes in Massachusetts, Wisconsin and Virginia make up the majority of the tax effect in this category. In 2024, state taxes in Massachusetts, Wisconsin, Virginia and New Hampshire make up the majority of the tax effect in this category.

The 2025 effective tax rates exceed the federal statutory rate primarily due to non-deductible compensation related expenses and state income taxes. The 2024 effective tax rate exceeds the federal statutory rate primarily due to the inclusion of state taxes in the income tax amount offset by a permanent benefit difference primarily relating to executive compensation and the transfer of a split dollar life insurance policy to the estate of our former CEO that resulted in a permanent difference between book and taxable income.

The Company files income taxes in the U.S. federal jurisdiction, and in various state and local jurisdictions. The Company is no longer subject to U.S. federal examinations by the Internal Revenue Service (IRS) for years prior to 2023. The Company is subject to examination for income and non-income tax filings in various states and federal income tax.

As of December 31, 2025, and 2024 there were no accrued balances recorded related to uncertain tax positions.

We classify income tax-related interest and penalties that are related to income tax liabilities as a component of income tax expense. For the year ended December 31, 2025 and 2024, we had $362 and $2,000, respectively, in tax-related interest and penalties and had $0 accrued at December 31, 2025 and 2024.