LGIH · 10-Q · 2026Q1 · Full report

Income Tax Rate Changes

LGI Homes, Inc. · 2026-04-28 · Importance 65 · Surprise 82

Income tax provision increased to $2.159 million for Q1 2026 from $1.730 million in Q1 2025, a 23.1% increase, driven by a rise in the company’s effective tax rate to 50.0% from 30.2%. Management attributes the higher effective rate primarily to an increase in the rate for compensation cost in excess of deductions for share-based payments, state income taxes (net of federal benefit), and the compensation limitation under Section 162(m) of the IRC. The higher effective rate increased the tax burden in the quarter and contributed to the reduction in net income for the three months ended March 31, 2026. Management discloses these items as causes of the period-over-period tax provision change.

Key facts

• The effective tax rate increased to 50.0% for the three months ended March 31, 2026 from 30.2% for the three months ended March 31, 2025.
• Income tax provision for the three months ended March 31, 2026 was $2.159 million, an increase of $0.429 million, or 23.1%, from $1.730 million for the three months ended March 31, 2025.
• The increase in effective tax rate was primarily due to an increase in the rate for compensation cost in excess of deductions for share-based payments, state income taxes net of federal benefit, and the compensation limitation under Section 162(m) of the Internal Revenue Code.

Impact estimates