SERVICE CORP INTERNATIONAL

5. Income Taxes

The provision or benefit for income taxes includes U.S. federal income taxes (determined on a consolidated return basis), foreign income taxes, and state income taxes.

We participate in tax equity investments in renewable energy projects that qualify for federal investment tax credits. These investments are accounted for under the proportional amortization method. Tax credits and other related tax benefits are recognized as a reduction of income tax expense as they are realized, with corresponding amortization of the investment in proportion to the tax benefits received. During 2025, we recognized $5.3 million of investment tax credits and other tax benefits and recorded $5.2 million of amortization related to these investments. The tax credits and related amortization are presented net within the Provision for income taxes in the Consolidated Statement of Operations. As of December 31, 2025, the unamortized balance of renewable energy tax credit investments was $51.1 million, and unfunded commitments related to these investments totaled $40.8 million. These amounts are included in Deferred charges and other assets and Accounts payable and accrued liabilities, respectively, on the Consolidated Balance Sheet.

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Income before income taxes was composed of the following components:

Income tax provision consisted of the following:

In December 2023, the FASB amended income tax disclosure guidance to require enhanced transparency in the effective tax rate reconciliation and additional disclosures related to income taxes paid. We adopted this guidance for the year ended December 31, 2025 and applied the disclosure requirements retrospectively to all prior periods presented.

The table below reflects those disclosures for the years ended December 31, 2025, 2024 and 2023.

(1)In 2025, state tax in California, Maryland, and Illinois comprise the majority of the tax effect in this category. In 2024, state tax in California, Texas, and Illinois comprise the majority of the tax effect in this category. In 2023, state tax in California and Texas comprise the majority of the tax effect in this category.

The higher effective tax rate in 2025 was primarily due to a decrease in excess tax benefits recognized on the settlement of employee share-based awards. The effective tax rate for the year ended December 31, 2025 was higher than the federal statutory tax rate of 21% primarily due to state and foreign income taxes.

The table below presents the income taxes paid, net of refunds received, by jurisdiction for the years ended December 31, 2025, 2024 and 2023.

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(1)The blank cells indicate that the amount of income tax paid during the year is either immaterial or does not meet the 5% disaggregation threshold.

Deferred taxes are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates. The tax effects of temporary differences and carryforwards that give rise to significant portions of deferred tax assets and liabilities consisted of the following:

Deferred tax assets and deferred income tax liabilities are recognized in our Consolidated Balance Sheet as follows:

As of December 31, 2025, foreign withholding taxes have not been provided on the estimated $306.5 million of undistributed earnings and profits (E&P) of our foreign subsidiaries as we intend to permanently reinvest these foreign E&P in the respective businesses outside the U.S. However, if we were to repatriate such foreign E&P, the foreign withholding tax liability is estimated to be $15.8 million. Additionally, if we were to repatriate E&P in excess of our previously taxed income under the Tax Cuts and Jobs Act of 2017, such excess repatriation may cause us to incur an additional U.S. federal income tax of approximately $7.7 million related to our hybrid debt structure between Canada and the United States that was eliminated in 2022.

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The following table summarizes the activity related to our gross unrecognized tax benefits from January 1, 2023 to December 31, 2025 (in thousands):

Our total unrecognized tax benefits that, if recognized, would affect our effective tax rates were $0.4 million, $0.8 million and $1.3 million as of December 31, 2025, 2024 and 2023, respectively.

We include potential accrued interest and penalties related to unrecognized tax benefits within our income tax provision account. We have accrued $0.3 million, $0.4 million and $1.0 million for the payment of interest, net of tax benefits, and penalties as of December 31, 2025, 2024 and 2023, respectively. We recorded a decrease of interest and penalties of $0.1 million, $0.6 million and an increase of $0.1 million for years ended December 31, 2025, 2024 and 2023, respectively. To the extent interest and penalties are not assessed with respect to uncertain tax positions or the uncertainty of deductions in the future, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision.

We file income tax returns, including tax returns for our subsidiaries, with federal, state, local, and foreign jurisdictions. We consider the United States to be our most significant jurisdiction; however, all tax returns are subject to routine compliance review by the taxing authorities in the jurisdictions in which we file tax returns in the ordinary course of business.

The federal statutes of limitations have expired for all tax years prior to 2022. Our 2022 federal income tax return is currently under audit by the IRS. Various state and foreign jurisdictions are auditing years 2020 through 2023. The outcome of each of these audits cannot be predicted at this time.

Following the enactment of the new U.S. tax legislation, Public Law No. 119-21, on July 4, 2025, we adopted the relevant provisions during the third quarter of 2025, including those pertaining to bonus depreciation and interest expense. Consistent with our expectations, the adoption of these provisions did not have a material effect on our consolidated financial statements.

Various subsidiaries have federal, state, and foreign loss carryforwards totaling $2.2 billion with expiration dates ranging through 2043. Such loss carryforwards will expire as follows:

In addition to the above loss carryforwards, we have $1.0 million of federal net operating loss carryforwards and $2.1 million of foreign alternative minimum tax credits, both of which can be carried forward indefinitely.

In assessing the usefulness of deferred tax assets, we consider whether it is more likely than not that some portion or all of the net deferred tax assets will not be realized. The future realization of net deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. During 2025, we recorded a net $3.9 million decrease in our valuation allowance primarily driven by utilization and expiration of state net operating losses, along with legislative changes in certain states. The valuation allowances can be affected in future periods by changes to tax laws, changes to statutory tax rates, and changes in estimates of future taxable income.

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At December 31, 2025, our loss and tax credit carryforward deferred tax assets and valuation allowances by jurisdiction are as follows (presented net of federal benefit).

6. Debt

The components of Debt are:

Current maturities of debt at December 31, 2025 include amounts due under our term loan, mortgage notes and other debt, and finance leases within the next year as well as the portion of unamortized debt issuance costs expected to be recognized in the next twelve months.

Approximately 79% and 84% of our total debt had a fixed interest rate at December 31, 2025 and 2024, respectively.

The components of our weighted average interest rate are as follows:

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The following table summarizes the aggregate maturities of our debt for the five years subsequent to December 31, 2025 and thereafter, excluding unamortized premiums and debt issuance costs (in thousands):

Bank Credit Agreement

In November 2025, we amended our $2.2 billion credit agreement due January 2028 to enter into a new $2.5 billion bank credit agreement due November 2030 with a syndicate of banks. The $2.5 billion bank credit agreement comprises a $1.75 billion Bank Credit Facility, including a sublimit of $100.0 million for letters of credit and a $750.0 million Term Loan, both due November 2030. At closing of the new agreement, there was a net $121.4 million increase in our outstanding Term Loan balance and a net $115.0 million decrease in our outstanding Bank Credit Facility balance.

The bank credit agreement provides us with flexibility for working capital, if needed, and is guaranteed by a majority of our domestic subsidiaries. The subsidiary guaranty is a guaranty of payment of the outstanding amount of the total lending commitment, including letters of credit. The bank credit agreement contains a maximum leverage ratio financial covenant and certain dividend and share repurchase restrictions. As of December 31, 2025, we are in compliance with all of our debt covenants. At December 31, 2025, we issued $47.0 million of letters of credit and pay a quarterly fee on the unused commitment, which was 0.20%. As of December 31, 2025, we have $1,448.0 million in borrowing capacity under the facility.

As of December 31, 2024, we issued $39.0 million of letters of credit.

Debt Issuances and Additions

During the year ended December 31, 2025, we issued or added $1,115.6 million of debt including:

•$685.0 million on our Bank Credit Facility due January 2028;

•$189.5 million in proceeds from certain members of the syndicate of banks in our Term Loan;

•$180.0 million on our Bank Credit Facility due November 2030;

•$54.8 million on our Corporate Headquarters Debt Facility due February 2037; and

•$6.3 million in proceeds from certain members of the syndicate of banks in our Bank Credit Facility.

Net proceeds from newly issued debt during the year ended December 31, 2025 were used to pay down our Bank Credit Facility due January 2028, Term Loan due January 2028 and for general corporate purposes. These transactions resulted in additional debt issuance costs of $5.4 million.

During the year ended December 31, 2024, we issued or added $1,451.1 million of debt including:

•$800.0 million unsecured 5.75% Senior Notes due October 2032;

•$645.0 million on our Bank Credit Facility due January 2028; and

•$6.1 million in other debt.

Net proceeds from newly issued debt during the year ended December 31, 2024 were used to pay down our Bank Credit Facility due January 2028 and for general corporate purposes. These transactions resulted in additional debt issuance costs of $14.3 million.

Debt Extinguishments and Reductions

During the year ended December 31, 2025, we made aggregate debt payments of $825.8 million for scheduled and early extinguishment payments including:

•$575.0 million in aggregate principal of our Bank Credit Facility due January 2028;

•$121.3 million in aggregate principal to certain members of our Bank Credit Facility;

•$68.1 million in aggregate principal to certain members of our Term Loan;

•$40.0 million in aggregate principal of our Bank Credit Facility due November 2030;

•$12.7 million in aggregate principal of our Term Loan due January 2028;

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•$0.1 million of premiums paid on early extinguishment of debt; and

•$8.6 million in other debt.

Certain of the above transactions resulted in the recognition of a loss of $0.5 million recorded in Losses on early extinguishment of debt, net in our Consolidated Statement of Operations for the year ended December 31, 2025.

During the year ended December 31, 2024, we made aggregate debt payments of $1,340.0 million for scheduled and early extinguishment payments including:

•$1,315.0 million in aggregate principal of our Bank Credit Facility due January 2028;

•$16.9 million in aggregate principal of our Term Loan due January 2028;

•$0.5 million in aggregate principal of our 7.5% Senior Notes due April 2027 repurchased in the open market; and

•$7.6 million in other debt.

Additional Debt Disclosures

At both December 31, 2025 and 2024, we had deposits of $0.7 million, respectively, in restricted, interest-bearing accounts that were pledged as collateral for various credit instruments and commercial commitments. These deposits are included in Other current assets and Deferred charges and other assets, net in our Consolidated Balance Sheet.

We had assets of approximately $74.3 million and $81.7 million pledged as collateral for the mortgage notes and other debt at December 31, 2025 and 2024, respectively.

Cash interest payments for the three years ended December 31 were as follows (in thousands):

Expected cash interest payments on our existing long-term debt for the five years subsequent to December 31, 2025 and thereafter are as follows (in thousands):