Ryan Specialty Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2024

The components of income before income taxes are as follows:

The components of income tax expense are as follows:


	Year Ended December 31,
	2024	2023	2022
Current income tax expense
Federal	$3,494	$9,179	$408
State	3,704	3,338	1,840
Foreign	9,126	5,438	4,701
Current income tax expense	$16,324	$17,955	$6,949
Deferred income tax expense (benefit)
Federal	20,497	31,941	13,164
State	7,429	(5,454)	(4,198)
Foreign	(1,609)	(997)	20
Deferred income tax expense	$26,317	$25,490	$8,986
Income tax expense	$42,641	$43,445	$15,935

Reconciliations of income tax expense computed at the U.S. federal statutory income tax rate to the recognized income tax

expense and the U.S. statutory income tax rate to our effective tax rates are as follows:


	Year Ended December 31,
	2024		2023		2022
Income taxes at U.S. federal statutory rate	$57,236	21.0%	$49,964	21.0%	$37,630	21.0%
Income attributable to non-controlling interests and nontaxable income	(29,998)	(11.0)	(26,195)	(11.0)	(18,662)	(10.4)
Nondeductible expenses	3,215	1.2	2,943	1.2	2,474	1.4
State and local taxes, net of federal benefit	7,804	2.9	6,642	2.8	4,671	2.6
Equity-based compensation	(13,876)	(5.1)	(2,481)	(1.0)	(2,374)	(1.3)
Common Control Reorganizations	9,519	3.5	18,356	7.7	—	—
Foreign rate differential	190	0.1	259	0.1	376	0.2
Change in state rate	2,968	1.1	(12,091)	(5.1)	(7,477)	(4.2)
Change in valuation allowance	3,571	1.3	2,908	1.2	—	—
Other TRA related (income) loss	(772)	(0.3)	2,785	1.2	—	—
Other	2,784	1.0	355	0.1	(703)	(0.4)
Income tax expense	$42,641	15.7%	$43,445	18.2%	$15,935	8.9%

The components of deferred tax assets and liabilities are as follows:


	As of December 31,
	2024	2023
Deferred tax assets
Net operating losses	$14,687	$1,681
Investment in the LLC	429,850	375,218
Start-up costs	6,246	6,820
Equity-based compensation	1,628	686
Tax credits	5,491	2,908
Capitalized research and development	890	—
Other accrued items	151	—
Total deferred tax assets	$458,943	$387,313
Valuation allowances	(7,759)	(3,272)
Deferred tax assets, net of valuation allowance	$451,184	$384,041
Deferred tax liabilities
Intangibles	(42,817)	(53)
Fixed assets	—	(149)
Other accrued items	—	(78)
Deferred tax liabilities	$(42,817)	$(280)
Net Deferred tax assets	$408,367	$383,761

The following summarizes activity related to the Tax Receivable Agreement liabilities:


	Exchange Tax Attributes	Pre-IPO M&A Tax Attributes	TRA Payment Tax Attributes	TRA Liabilities
Balance at December 31, 2022	$150,311	$85,016	$60,020	$295,347
Exchange of LLC Common Units	47,409	6,489	14,689	68,587
Remeasurement – change in state rate	5,910	905	3,549	10,364
Interest expense	—	—	806	806
Payments	(8,962)	(6,596)	(648)	(16,206)
Balance at December 31, 2023	$194,668	$85,814	$78,416	$358,898
Exchange of LLC Common Units	73,433	5,660	21,982	101,075
Remeasurement – change in state rate	(932)	(391)	(1,183)	(2,506)
Remeasurement – foreign tax credits	(895)	—	—	(895)
Interest expense	—	—	1,302	1,302
Payments	(13,041)	(7,668)	(869)	(21,578)
Balance at December 31, 2024	$253,233	$83,415	$99,648	$436,296

The following table summarizes the tax effects on the components of Other comprehensive income (loss):


	Year Ended December 31,
	2024	2023	2022
Gain on interest rate cap	$(1,945)	$(1,628)	$(2,727)
Gain on interest rate cap reclassified to earnings	3,101	2,734	—
Foreign currency translation adjustments	1,370	(272)	538
Change in share of equity method investment in related party	(842)	173	713