Income Taxes

12 Months Ended

Dec. 31, 2025

7. Income Taxes

Income (loss) before income taxes subject to taxes in the following jurisdictions is as follows:



	Twelve Months Ended December 31,
(In millions)	2025		2024		2023
United States	$	961.4	$	659.8	$	732.4
Outside of the United States	127.0		49.2		(22.0)
Total	$	1,088.4	$	709.0	$	710.4

Significant components of the provision for income taxes are as follows:



	Twelve Months Ended December 31,
(In millions)	2025		2024		2023
Current:
Federal	$	37.1	$	157.4	$	149.1
State	7.1		16.5		18.1
Foreign	25.7		2.7		56.7
Total current income taxes	69.9		176.6		223.9
Deferred:
Federal	169.7		(55.2)		(93.7)
State	16.0		(2.0)		14.6
Foreign	(3.5)		13.4		24.1
Total deferred income taxes	182.2		(43.8)		(55.0)
Total	$	252.1	$	132.8	$	168.9

Income taxes paid are as follows:



	Twelve Months Ended December 31,
(In millions)	2025
Federal	$	68.0
State	10.6
Foreign	15.8
Total	$	94.4

Significant loss and tax credit carryforwards and years of expiration are as follows:



	December 31,				Year of Expiration
(In millions)	2025		2024
Net operating loss:
Federal	$	3.8	$	12.1	2028
California	162.0		162.0		2037
Other states	5.1		5.8		2028



Tax credits:
Federal

Foreign tax credits	1.2		0.1		2032
California R&D credits	134.6		124.9		Indefinite
California AMT Credits	$	0.5	$	0.5	Indefinite

Utilization of net operating losses and credit carryforwards is subject to an annual limitation due to ownership change limitations provided by Section 382 and 383 of the Internal Revenue Code of 1986, as amended, and similar state provisions. An ownership change limitation occurred in February 2009 resulting in an immaterial amount of U.S. research and development tax credits that will expire unused, and therefore, are not reflected in the credit carryforwards above or in the related deferred tax assets in the table below.

Significant components of our deferred tax assets and liabilities as of December 31, 2025 and 2024 are shown below. Significant judgment is required to evaluate the need for a valuation allowance against deferred tax assets. We review all available positive and negative evidence, including projections of pre-tax book income, earnings history, reliability of forecasting, and reversal of temporary differences. A valuation allowance is established when it is more likely than not that some or all of the deferred tax assets will not be realized. Realization of deferred tax assets is dependent upon future earnings in applicable tax jurisdictions.



	December 31,
(In millions)	2025		2024
Deferred tax assets:
Net operating loss carryforwards	$	12.6	$	14.4
Capitalized research and development expenses	103.6		265.0
Tax credits	85.6		79.2
Share-based compensation	20.6		22.5
Fixed and intangible assets	187.3		263.6
Accrued liabilities and reserves	86.8		87.4
Convertible debt	11.3		16.0

Total gross deferred tax assets	507.8		748.1
Less: valuation allowance	(160.7)		(221.9)
Total net deferred tax assets	347.1		526.2
Deferred tax liabilities:
Fixed assets and acquired intangibles assets	(45.8)		(59.3)
Net unrealized gain on equity investments	(18.4)		—
Other	—		(0.3)
Total deferred tax liabilities	(64.2)		(59.6)
Net deferred tax assets (liabilities)	$	282.9	$	466.6

We maintain a valuation allowance of $160.7 million against our California research and development tax credits, foreign tax credits, and certain foreign intangible assets. During the year ended December 31, 2025, the valuation allowance decreased by $61.2 million primarily in connection with the intra-entity transfer of certain intellectual property and the generation of California research and development tax credits.

The reconciliation between our effective tax rate on income from continuing operations and the statutory rate, after the adoption of ASU 2023-09 on a prospective basis, is as follows:


	Twelve Months Ended December 31,
(In millions)	2025

U.S. Federal Statutory Rate	$	228.6	21.0	%
Increase (Decrease) Resulting From:
State and Local Income Tax, Net of Federal Income Tax Effect	16.4		1.5	%

Foreign Tax Effects
Ireland
Change in Rate	63.6		5.8	%
Change in Valuation Allowance	(74.5)		(6.8)	%
Other	5.8		0.5	%
Malaysia
Foreign rate differential	(14.8)		(1.4)	%
Other	8.9		0.8	%
Other foreign jurisdictions	6.7		0.6	%



Effect of Cross-Border Taxes	3.0		0.3	%

Tax Credits
Research and development credits	(13.6)		(1.2)	%


Changes in Valuation Allowance	0.4		—	%

Nontaxable or Nondeductible Items
Stock and officers compensation	16.1		1.5	%
Other	2.5		0.2	%

Changes in Unrecognized Tax Benefits	4.4		0.4	%

Other	(1.4)		(0.1)	%

Total	$	252.1	23.2	%

State taxes in Colorado and Florida made up the majority (greater than 50%) of the tax effect in the state and local income tax category.

The reconciliation between our effective tax rate on income from continuing operations and the statutory rate for prior years not impacted by the adoption of ASU 2023-09 is as follows:



	Twelve Months Ended December 31,
(In millions)		2024		2023
U.S. federal statutory tax rate		$	148.9	$	149.2
State income tax, net of federal benefit		10.2		7.8
Permanent items		10.5		(2.7)
Research and development credits		(24.6)		(28.3)
Foreign tax credit		(1.2)		—
Foreign rate differential		1.6		15.8
Stock and officers compensation		3.8		5.6
Collaboration agreement milestone share-based payment		(32.2)		(72.1)
Change in statutory tax rates		51.5		19.4
Intellectual property transfer		—		63.9
Other		6.7		0.3
Change in valuation allowance		(42.4)		10.0
Income taxes at effective rates		$	132.8	$	168.9

The following table summarizes the activity related to our gross unrecognized tax benefits:



(In millions)
Balance at January 1, 2023	$	52.0
Increases related to prior year tax positions	0.8
Increases related to current year tax positions	6.6
Balance at December 31, 2023	59.4
Increases related to prior year tax positions	0.1
Increases related to current year tax positions	6.7
Balance at December 31, 2024	66.2
Increases related to prior year tax positions	0.2
Increases related to current year tax positions	5.7
Decreases related to prior year tax positions	(3.0)
Balance at December 31, 2025	$	69.1

Of the total unrecognized tax benefits at December 31, 2025, 2024, and 2023, $40.8 million, $40.7 million and $37.0 million, respectively, would affect our annual effective tax rate if recognized. The indirect effect of the unrecognized tax benefits that, if recognized, would affect our annual effective tax rate is not material for all years presented. Also, the amount of unrecognized tax benefits that, if recognized, would result in adjustments to other tax accounts, is not material for all years presented. Interest and penalties are classified as a component of income tax expense and are not material for all years presented.

Due to our global business activities, we file income tax returns and are subject to routine compliance audits in numerous jurisdictions, including those material jurisdictions listed in the following table. The U.S. net operating losses generated since 2007 and utilized in recent years are open for examination. The years remaining subject to audit, by major jurisdiction, are as follows:



Jurisdiction			Fiscal Year
United States (Federal and state)			2007 - 2025
United Kingdom			2022 - 2025
Malaysia			2020 - 2025
Ireland			2023 - 2025

We currently operate under a Special Corporate Income Tax Preferential rate in the Philippines, which is in effect through 2031. The prior tax holiday ended in 2023. The impact of both the tax holiday and preferential rate is immaterial for all years presented. We have been granted a tax incentive by the Malaysian Investment Development Authority (MIDA) in Malaysia, which provides for a 0% tax holiday of up to 15 years based on our ability to meet certain conditions. The tax incentive had no effect on foreign taxes during 2023. In July 2025, the Malaysia Investment Development Authority, or MIDA, certified our achievement of the milestones and conditions related to our Malaysia income tax holiday. We have recorded a tax benefit related to the retroactive application of the tax holiday back to January 1, 2024.

We assert that any foreign earnings will be indefinitely reinvested, and accordingly, we have not recorded a liability for taxes associated with these undistributed earnings. If we determine that all or a portion of such foreign earnings are no longer indefinitely reinvested, we may be subject to additional foreign withholding taxes and U.S. state income taxes.

On July 4, 2025, the One Big Beautiful Bill Act, or OBBBA, was signed into law in the U.S., and includes a broad range of tax reform provisions which did not have a significant impact to the effective tax rate. The primary impact of this legislation is a reduction in our U.S. income tax liability and deferred tax asset related to the ability to currently deduct U.S.-based research expenses against U.S. income.

The Organization for Economic Co-operation and Development’s, or OECD, Pillar Two Initiative introduced a 15% global minimum tax for certain multinational groups exceeding minimum annual global revenue thresholds. As of December 31, 2025, the global minimum tax rules enacted in countries in which we operate, including the transitional safe harbor provisions, does not have a material impact on our consolidated financial statements.

- Definition

The entire disclosure for income tax.

+ References

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