CITIZENS, INC.

(11) INCOME TAXES

CICA International is considered a controlled foreign corporation for federal income tax purposes. As a result, the insurance activity of CICA International is subject to Subpart F of the Internal Revenue Code ("IRC") and is included in Citizens’ taxable income. The Government of Puerto Rico approved a tax exemption decree for CICA International which freezes the income tax rate at 0% on taxable earnings up to $1.2 million and 4% on any taxable earnings in excess of $1.2 million for a minimum of 15 years.

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A summary of the income (loss) before federal income tax expense, by jurisdiction, is as follows:

Federal income tax expense (benefit) consists of:

A reconciliation between the U.S. corporate income tax rate and the effective income tax rate is as follows:

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A summary of the total federal income tax payments made and refunds received by jurisdiction is as follows:

The components of deferred federal income taxes are as follows:

A summary of changes in the components of deferred federal and state income taxes is as follows:

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The Company and our subsidiaries have $7.1 million in net operating loss carryforwards in the U.S. at December 31, 2025. The Company and our subsidiaries have capital loss carryforwards of $2.9 million in the U.S. and $0.2 million in Puerto Rico at December 31, 2025, which begin expiring in 2026 and 2031, respectively.

At December 31, 2025 and 2024, we determined it was more likely than not that a portion of our capital deferred tax assets would not be realized in their entirety. Thus, the Company holds valuation allowances of $4.3 million and $5.1 million in other comprehensive income (loss) at December 31, 2025 and 2024, respectively.

The Company recognizes only the impact of tax positions that, based on their technical merits, are more likely than not to be sustained upon an audit by the taxing authority. The Company does not have any unrecognized tax benefits for December 31, 2025 and 2024.

The Company’s practice is to recognize interest and penalties related to income tax matters in income tax expense. In the consolidated statements of operations and comprehensive income (loss), we received $0.1 million of interest income related to refunds for the year ended December 31, 2025 andnone in 2024.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company had an immaterial impact to our income tax expense or effective tax rate for the enactment of OBBBA for the year ended December 31, 2025.

The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted on March 27, 2020 in response to the COVID-19 pandemic. The CARES Act, among other things, permitted net operating losses incurred in 2018, 2019 and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes.

The Company's federal income tax return is filed on a consolidated basis with the following entities:

CICA Life Insurance Company of America

Magnolia Guaranty Life Insurance Company

Security Plan Life Insurance Company

Computing Technology, Inc.

The method of tax allocation among companies is subject to a written tax sharing agreement, approved by the Board of Directors, whereby allocation is made primarily on a separate return basis pursuant to the wait-and-see method. Under this method, consolidated group members are not given current credit or refunds for net operating losses until taxable income on a separate return basis is generated. Intercompany tax balances are settled at least annually.

The Company and our subsidiaries file income tax returns in the U.S. federal jurisdiction and various U.S. states. Our subsidiaries are subject to examination by U.S. tax authorities for tax years ending after December 31, 2022.

The Company's Puerto Rico subsidiaries are subject to examination by Puerto Rico tax authorities for tax years ending after December 31, 2022.

(12) OTHER COMPREHENSIVE INCOME (LOSS)

The changes in the components of other comprehensive income (loss) are reported net of the effects of income taxes of 21% for domestic entities and 4% for Puerto Rican entities for the twelve months ended December 31,

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2025 and 2024. The following table provides a rollforward of accumulated other comprehensive income (loss) for the periods indicated below.

(13) STOCK COMPENSATION

Citizens grants stock-based compensation in the form of restricted stock units ("RSUs") and beginning in 2024, performance share units ("PSUs"). All stock awards are granted pursuant to the Citizens, Inc. Omnibus Incentive Plan (the "Plan"), which was approved by our shareholders in 2017. There were 3,000,000 shares authorized to be granted under the Plan. Awards may be granted under the Plan until June 5, 2027.

Restricted Stock Units. RSUs consist of time-vested grants and give the grantee the right to receive one share of our Class A common stock in the future for each RSU granted, subject to certain restrictions and a risk of forfeiture. For non-employee directors, RSUs are granted annually on the date of the annual shareholders meeting and vestone year from the date of grant, subject to continued service on the Board. Employee RSU grants vest over three years, subject to continued employment (except in the case of retirement, death or disability).

The following table provides a rollforward of RSU activity for the two-year period ended December 31, 2025.

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In 2025, we recognized compensation expense of $2.5 million and $1.4 million in 2025 and 2024, respectively, related to RSU awards that were granted and vested during these periods. The aggregate intrinsic value of RSUs vested during the years ended December 31, 2025 and 2024 was $2.1 million and $1.2 million, respectively. As of December 31, 2025, unrecognized compensation costs for RSU awards was $1.8 million and is expected to be amortized overtwo years.

Performance Share Units. The Board of Directors granted PSUs to a limited number of senior executives in 2024 and 2025. PSUs have a three-year performance period and give the grantee the right to receive one share of our Class A common stock in the future for each PSU granted, subject to certain restrictions and a risk of forfeiture. While the PSU grant specifies a stated target number of shares, the grantees can earn up to 200% of the target PSUs awarded based on the achievement of the Board approved metric over the performance period. PSUs are not settled in shares until the Board certifies that the approved performance metrics have been met. Employees must continue to be employed during the performance period in order to receive shares, except in the case of death or disability, change in control, retirement (settled pro-rata) or certain involuntary terminations (settled pro-rata).

The following table provides a rollforward of PSU activity for the period beginning on the first date of grant and ending on December 31, 2025.

(1) Represents the base number of PSUs that may vest. The actual number of PSUs that vest will be between 0 and 0.6 million, depending on the Company's achievement of certain performance goals.

We recognized $0.3 million and $0.1 million of expense for the PSU grants in 2025 and 2024, respectively, while $0.5 million was unrecognized and is expected to be amortized over the next one to three years depending on the vesting schedule of the grants. The vesting of PSUs occurs after a three-year performance period, and the actual quantity of shares awarded is determined by how well the Company fulfills established performance goals. As of December 31, 2025, management estimates that the probability of achieving the performance targets was 50% for the shares granted in 2024 and 100% for shares granted in 2025.

(14) BENEFIT PLANS

The Company sponsors a defined contribution retirement plan. The plan was initially established as the Citizens, Inc. Profit Sharing Plan and was restated as the Citizens, Inc. 401(k) Retirement and Profit Sharing Plan effective March 1, 2016. There have beenno profit sharing contributions since 2014.

The 401(k) plan automatically enrolls employees who have completed three months of service. Voluntary contributions are made by employees and the Company provides a matching contribution based upon the employee's level of contribution. The Company's expense was $0.8 million in both 2025 and 2024.

(15) RELATED PARTY TRANSACTIONS

The Company has various routine related party transactions in conjunction with our holding company structure, such as management service agreements related to costs incurred, a tax sharing agreement between entities, and inter-company dividends and capital contributions. We perform an expense study on an annual basis, utilizing an enterprise-wide time study, and we adjust cost allocations among entities as needed based upon this review. Any

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allocation changes are reflected in the segment operations, but do not impact consolidated expenses. There were no changes related to these relationships during the year ended December 31, 2025 and no additional related party transactions.

(16) QUARTERLY FINANCIAL INFORMATION (Unaudited)

The following table contains selected unaudited financial data for each quarter.

(17) SUBSEQUENT EVENTS

The Company has evaluated the impact of subsequent events as defined by the accounting guidance through the date this report was issued and determined that no subsequent events need to be recognized or disclosed.

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