Income Taxes (Tables)

12 Months Ended

Dec. 31, 2025

Schedule of Earnings from Continuing Operations Before Income Taxes

Earnings from operations before income taxes for the years ended December 31 were as follows:


($ in millions)	2025		2024		2023
United States	$	697	$	555	$	484
Non-U.S.	476		531		612
Total	$	1,173	$	1,086	$	1,096

Income taxes paid, net of refunds received, by jurisdiction for the year ended December 31 is as follows:


($ in millions)	2025
Federal	$	71
State	$	29
Brazil	$	16
China	$	12
Germany	$	44
Other Foreign	$	63
Total Taxes Paid	$	235

Schedule of Provision for Income Taxes

The provision for income taxes for the years ended December 31 were as follows:


($ in millions)	2025		2024		2023
Current:
Federal U.S.	$	109	$	116	$	86
Non-U.S.	136		184		169
State and local	37		27		27
Deferred:
Federal U.S.	(34)		(45)		(19)
Non-U.S.	(12)		(29)		(4)
State and local	(3)		—		(2)
Income tax provision	$	233	$	253	$	257

Schedule of Effective Income Tax Rate from Operations

The effective income tax rate from operations for the years ended December 31 varies from the U.S. statutory federal income tax rate as follows. Periods presented that are prior to the adoption of ASU 2023-09 have not been adjusted.


	2025
($ in millions, except % of pretax earnings)	$ Value		% of Pretax Earnings
Statutory federal income tax rate	$	246	21.0	%
Increase (decrease) in tax rate resulting from:
State income taxes (net of Federal income tax benefit) (a)	26		2.2
Foreign tax effects:
Germany:
Statutory rate difference	14		1.2
Other	9		0.8
Other foreign jurisdictions	(7)		(0.6)
Effect of cross-border tax laws:

Foreign derived intangible income	(28)		(2.4)
Subpart F, net of foreign tax credits	(26)		(2.2)
Other	2		0.2

Nontaxable or nondeductible items	4		0.3
Tax credits	(8)		(0.7)

Changes in unrecognized tax benefits	(1)		(0.1)
Other	2		0.2
Effective income tax rate	$	233	19.9	%

(a) States that make up 50% of provision include: CA, CT, IL, NY, PA, and VA


	Percentage of Pretax Earnings
	2024		2023
Statutory federal income tax rate	21.0	%	21.0	%
Increase (decrease) in tax rate resulting from:
State income taxes (net of Federal income tax benefit)	2.0		1.9
Non-U.S. rate differential	2.1		3.5
US Taxation of Foreign Earnings	(4.2)		(2.1)
Change in uncertain tax positions	3.2		—
R&D and other tax credits	(0.9)		(1.3)
Other	0.7		1.0
Net excess tax benefits from stock-based compensation	(0.6)		(0.6)
Effective income tax rate	23.3	%	23.4	%

Schedule of Deferred Income Tax Assets and Liabilities

Significant components of the Company’s deferred tax assets and liabilities from operations at the end of each fiscal year were as follows:


($ in millions)	2025		2024
Deferred tax assets:
Allowance for credit losses	$	7	$	6
Inventories	15		18
Employee benefit plans	15		8

Other accruals and prepayments	129		112
Stock-based compensation expense	20		17
Operating lease liabilities	46		37
Capitalized research and development costs	102		86
Tax credit, operating loss and capital loss carryforwards	40		57
Net investment hedge	15		—


Valuation allowances	(21)		(32)
Total deferred tax assets	368		309
Deferred tax liabilities:
Depreciation	(16)		(13)


Operating lease right-of-use assets	(43)		(35)

Goodwill and other intangible assets	(263)		(270)
Net investment hedge	—		(3)
Total deferred tax liability	(322)		(321)
Net deferred tax assets (liabilities)	$	46	$	(12)

Schedule of Reconciliation of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding amounts accrued for potential interest and penalties, is as follows:


($ in millions)	2025		2024		2023
Unrecognized tax benefits, beginning of year	$	156	$	97	$	94
Additions based on tax positions related to the current year	26		46		—
Additions for tax positions of prior years	7		15		7
Reductions for tax positions of prior years	(16)		—		(3)
Acquisitions, divestitures and other	—		—		4
Statute of limitations expirations	(1)		(1)		(1)
Settlements	(1)		—		(4)
Effect of foreign currency translation	4		(1)		—
Unrecognized tax benefits, end of year	$	175	$	156	$	97

Veralto Corp 10-K