Company: ACEL
Filing Date: 2025-11-04
Form Type: 10-Q
Source: 0001698991-25-000051
Chunk: 38

Company: Accel Entertainment, Inc.
Filing Date: 2025-11-04
Form: 10-Q
Item: Item 1
Chunk 38
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 for the three and nine months ended September 30, 2024, respectively. Stock-based compensation expense is included within general and administrative expenses in the condensed consolidated statements of operations and other comprehensive income.

Note 16. Income Taxes

The Company recognized income tax expense of $4.5 million and $14.6 million for the three and nine months ended September 30, 2025, respectively. In comparison, the Company recognized income tax expense of $3.6 million and $12.3 million for the three and nine months ended September 30, 2024, respectively.The Company calculates its provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate to its year-to-date pretax book income or loss. The effective tax rate (income taxes as a percentage of income before income taxes) was 25.2% and 29.3% for the three and nine months ended September 30, 2025, respectively, compared to 42.2% and 31.3% for the three and nine months ended September 30, 2024, respectively. The Company’s effective income tax rate can vary from period to period depending on, among other factors, the amount of permanent tax adjustments and discrete items. The change in the fair value of the contingent earnout shares is considered a discrete item for income tax purposes and was the primary driver for the fluctuations in the tax rate year over year.

The One Big Beautiful Bill Act (the “Act”) was signed into law on July 4, 2025. The Act contains significant tax law changes impacting business tax payers with various effective dates, with certain provisions effective in 2025 and others to be implemented through 2027. Among the tax law changes that impact the Company are those that relate to the timing of certain tax deductions including depreciation expense, interest expense and research and development expenditures. Because these tax law changes impact the timing of these deductions, they will not reduce the Company’s overall effective tax rate. However, these tax law changes have resulted in a favorable reduction in the Company’s current tax expense which is offset by an increase to deferred tax expense. 

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Table of ContentsAccel Entertainment, Inc. and SubsidiariesNotes to Condensed Consolidated Financial Statements — (Continued)

Note 17. Commitments and Contingencies

Lawsuits and claims are filed against the Company from time to time in the ordinary course of business, including related to employee matters, employment of