PIPER SANDLER COMPANIES

NOTE 21| INCOME TAXES

Income tax expense is provided using the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between amounts reported for income tax purposes and financial statement purposes, using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The disclosure requirements of ASU 2023-09 have been disclosed on a prospective basis for fiscal year 2025. See Note 3 for additional details on the Company's adoption of this guidance.

The components of income before income tax expense by jurisdiction, in accordance with the updated disclosure requirements of ASU 2023-09, are as follows:

The components of income tax expense are as follows:

A reconciliation of federal income taxes at statutory rate to the Company's effective tax rate for the year ended December 31, 2025, in accordance with the updated disclosure requirements of ASU 2023-09, is as follows:

(1)For the year ended December 31, 2025, state and local income taxes in New York, California, and New York City made up the majority (greater than 50 percent) of the tax effect in this category.

As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the reconciliation of federal income taxes at statutory rate to the Company's effective tax rate is as follows:

In accordance with ASC 740, U.S. income taxes are not provided on undistributed earnings of international subsidiaries that are permanently reinvested. As of December 31, 2025, no deferred taxes have been provided for withholding taxes or other taxes that would result upon repatriation of the Company's foreign earnings to the U.S.

Deferred income tax assets and liabilities reflect the tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for the same items for income tax reporting purposes. The net deferred income tax assets consisted of the following items:

The realization of deferred tax assets is assessed and a valuation allowance is recorded to the extent that it is more likely than not that any portion of the deferred tax asset will not be realized. The Company believes that its future tax profits will be sufficient to recognize its deferred tax assets.

The Company accounts for unrecognized tax benefits in accordance with the provisions of ASC 740, which requires tax reserves to be recorded for uncertain tax positions on the consolidated statements of financial condition. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

As of December 31, 2025 and 2024, $2.2 million and $1.9 million, respectively, of the Company's unrecognized tax benefits included above would impact the annual effective rate, if recognized.

The Company recognizes interest and penalties accrued related to unrecognized tax benefits as a component of income tax expense. The Company had $0.6 million, $0.5 million and $0.4 million accrued related to the payment of interest and penalties at December 31, 2025, 2024 and 2023, respectively. The Company or one of its subsidiaries files income tax returns with the various states and foreign jurisdictions in which the Company operates. The Company is not subject to examination by U.S. federal tax authorities for years before 2022 and is not subject to examination by state and local or non-U.S. tax authorities for taxable years before 2018.

The components of income taxes paid, in accordance with the updated disclosure requirements of ASU 2023-09, are as follows:

As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, income taxes paid were $10.9 million and $19.4 million, respectively.