Income Taxes (Notes)

12 Months Ended

Dec. 31, 2025

The Company's income (loss) before income taxes and income tax (benefit) expense, each by tax jurisdiction, consists of the following (dollars in thousands):


	Year ended December 31,
	2025		2024		2023
Income (loss) before income taxes:
Domestic	$	(7,590)	$	(31,200)	$	3,890
Foreign	31,850		27,020		31,960
Total income (loss) before income taxes	$	24,260	$	(4,180)	$	35,850
Current income tax (benefit) expense:
Federal	$	(10,530)	$	(6,260)	$	1,280
State and local	(1,230)		250		580
Foreign	5,510		8,010		8,810
Total current income tax (benefit) expense	(6,250)		2,000		10,670
Deferred income tax (benefit) expense:
Federal	(44,850)		(1,100)		(220)
State and local	1,510		(670)		(430)
Foreign	1,540		(2,460)		(3,710)
Total deferred income tax (benefit) expense	(41,800)		(4,230)		(4,360)
Income tax (benefit) expense	$	(48,050)	$	(2,230)	$	6,310

The components of deferred taxes are as follows (dollars in thousands):


	December 31, 2025		December 31, 2024
Deferred tax assets:
Accounts receivable	$	740	$	900
Inventories	1,040		1,790

Accrued liabilities and other long-term liabilities	16,210		18,460
Operating lease liability	7,970		8,220
Research and experimentation costs	—		5,000
Tax loss and credit carryforwards	26,410		27,520
Outside basis difference on held for sale assets (Aerospace Group)	53,900		—
Other	(740)		(290)
Gross deferred tax asset	105,530		61,600
Valuation allowances	(14,940)		(15,500)
Net deferred tax asset	90,590		46,100
Deferred tax liabilities:
Property and equipment	(19,740)		(20,810)
Right of use asset	(7,280)		(7,670)
Goodwill and other intangible assets	(26,950)		(24,050)
Investment in foreign affiliates, including withholding tax	(660)		(390)

Gross deferred tax liability	(54,630)		(52,920)
Net deferred tax asset (liability)	$	35,960	$	(6,820)

During the fourth quarter of 2025, the Company entered into an agreement to sell Aerospace, with the transaction expected to close in 2026. As a result of this planned divestiture, the Company concluded that the outside basis difference in its Aerospace investment is expected to reverse in the foreseeable future. Accordingly, the Company recognized a deferred tax asset of $53.9 million for the excess of the tax basis over the book basis of the Aerospace investment, in accordance with ASC 740‑30‑25‑9 and 25‑10.

The Company has recorded deferred tax assets on $45.0 million of various state operating loss carryforwards and $86.3 million of various foreign operating loss carryforwards. The majority of the state tax loss carryforwards expire between 2026 and 2032 and the majority of the foreign losses have indefinite carryforward periods.

The Company recognizes a valuation allowance for the deferred tax asset associated with its foreign tax credits due to the uncertainty in the ability to utilize these credits in future years.

The Company has not made a provision for U.S. or additional foreign withholding taxes related to investments in foreign subsidiaries that are indefinitely reinvested since any excess of the amount for financial reporting over the tax basis in these investments is not significant as of December 31, 2025.

As of December 31, 2025, the Company adopted ASU 2023-09 “Income Taxes (Topic 740): Improvements To Income Tax Disclosures” on a prospective basis. As required by ASU 2023-09, the following table presents the differences between income taxes from continuing operations for financial reporting purposes and the U.S. statutory rate of 21% for the year ended December 31, 2025 (dollars in thousands):


	Year ended December 31, 2025
	Amount		Percent
U.S. federal statutory tax rate	$	5,100	21.0	%
State and local income taxes, net of federal income tax effect	240		1.0	%
Foreign tax effects
Brazil
Statutory tax rate difference between foreign jurisdictions and United States	870		3.6	%
Other	10		—	%
China
Statutory tax rate difference between foreign jurisdictions and United States	320		1.3	%
Other	150		0.6	%
Germany
Net operating losses utilization from German Profit and Loss Sharing Agreement	(1,030)		(4.2)	%
Other	(210)		(0.9)	%
Italy
Italy regional tax (IRAP)	390		1.6	%
Tax effect of special depreciation incentives (Hyper/Super Depreciation)	(420)		(1.7)	%
Other	30		0.1	%
Netherlands
Deduction of loss from liquidation of foreign subsidiary	(1,180)		(4.9)	%
Global Minimum Tax (Pillar Two)	840		3.5	%
Other	(310)		(1.3)	%
United Kingdom
Statutory tax rate difference between foreign jurisdictions and United States	540		2.2	%
Other	(590)		(2.4)	%
Other foreign jurisdictions	350		1.4	%
Effect of cross-border tax laws	(70)		(0.3)	%
Tax credits
Research and development tax credits	(350)		(1.4)	%
Nontaxable or nondeductible items
Share-based compensation	590		2.4	%
Interest expense	1,330		5.5	%
Other	90		0.4	%
Changes in unrecognized tax	(150)		(0.6)	%
Other adjustments
Outside basis difference on held for sale assets (Aerospace Group)	(53,900)		(222.2)	%
Realized outside basis difference on sale of Arrow Engine	(650)		(2.7)	%
Other	(40)		(0.2)	%
Total tax benefit / Effective tax rate	$	(48,050)	(198.1)	%

For 2025, the effect of the state and local income tax category was primarily attributable to California, and the effect of the foreign tax category was primarily attributable to the Netherlands.

The following is a reconciliation of income tax expense computed at the U.S. federal statutory rate to income tax expense allocated to income before income taxes (dollars in thousands) for years ended December 31, 2024 and 2023:


	Year ended December 31,
	2024			2023
U.S. federal statutory rate	21		%	21		%
Tax at U.S. federal statutory rate	$	(870)		$	7,520
State and local taxes, net of federal tax benefit	(560)			160
Differences in statutory foreign tax rates	2,080			3,080
Change in recognized tax benefits	(420)			(120)





Share-based compensation	330			430
Tax credits and incentives	(1,230)			(1,330)

Net change in valuation allowance	(1,280)			(2,920)
Nondeductible compensation	(430)			560


Other, net	150			(1,070)
Income tax (benefit) expense	$	(2,230)		$	6,310

Unrecognized Tax Benefits

The Company had $0.5 million and $0.6 million of unrecognized tax benefits ("UTBs") as of December 31, 2025 and 2024, respectively. If the UTBs were recognized, the impact to the Company's effective tax rate would be to reduce reported income tax expense for the years ended December 31, 2025 and 2024 by $0.5 million and $0.6 million, respectively.

A reconciliation of the change in the UTBs for the years ended December 31, 2025 and 2024 is as follows (dollars in thousands):


	Unrecognized Tax Benefits
Balance at December 31, 2023	$	830
Tax positions related to current year:
Additions	120
Tax positions related to prior years:
Additions	—
Reductions	(20)
Settlements	—
Lapses in the statutes of limitations	(340)
Balance at December 31, 2024	$	590
Tax positions related to current year:
Additions	110
Tax positions related to prior years:
Additions	—
Reductions	(10)
Settlements	—
Lapses in the statutes of limitations	(210)
Balance at December 31, 2025	$	480

In addition to the UTBs summarized above, the Company has recorded $0.2 million and $0.3 million in potential interest and penalties associated with uncertain tax positions as of December 31, 2025 and 2024, respectively.

The Company is subject to U.S. federal, state and local, and certain non-U.S. income tax examinations for tax years 2015 through 2025. In addition, there are currently several state and foreign income tax examinations in process. The Company does not believe that the results of these examinations will have a significant impact on the Company's tax position or its effective tax rate.

Management monitors changes in tax statutes and regulations and the issuance of judicial decisions to determine the potential impact to UTBs and is not aware of, nor does it anticipate, any subsequent events that could have a significant impact on the Company's financial position during the next twelve months.

As required by ASU 2023-09, income taxes paid (refunded) are as follows (dollars in thousands):


	Year ended December 31, 2025
Federal	$	2,330
State	(690)
California	(820)
Other	130
Foreign	8,990
Brazil	2,240
China	2,080
Germany	970
Italy	1,470
United Kingdom	1,230
Other	1,000
Total paid (refunded), net	$	10,630

- Definition

The entire disclosure for income tax.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 942
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

TRIMAS CORP 10-K