AXCELIS TECHNOLOGIES INC Income Taxes Disclosure

Note 18. Income Taxes

​

Income before income taxes is as follows:

​

​

​

Provision for income taxes is as follows:

​

​

​

Reconciliation of income taxes at the United States Federal statutory rate to the effective income tax rate of 13.0% is as follows:

​

​

* The states that contribute to the majority (greater than 50%) of the tax effect in this category include California, Texas, and Utah in 2025, Oregon, New York, and Maine for 2024, and Oregon, Minnesota, and Vermont for 2023.

​

The amounts of cash paid for income taxes (net of refunds) during the years ended December 31, 2025, 2024 and 2023 are as follows:

​

​

*The amount of income taxes paid during the years ended December 31, 2024 and 2023 does not meet the 5% disaggregation threshold and is included in ‘Other’.

​

Deferred income taxes reflect the effect of temporary differences between the carrying amounts of assets and liabilities recognized for financial reporting purposes and the amounts recognized for tax purposes. The tax effects of the temporary differences were as follows:

​

​

At December 31, 2025, we had a balance of $1.5 million related to deferred tax liabilities recorded within other long-term liabilities on the Consolidated Balance Sheets.

Changes in tax rates and tax laws are accounted for in the period of enactment. Our deferred tax assets and liabilities are measured at the enacted tax rate expected to apply when these temporary differences are expected to be realized or settled.

At December 31, 2025, we maintained a $16.0 million valuation allowance in the U.S. against federal and state tax credit carryforwards of the same amount. The valuation allowance was recorded due to the uncertainty of their realization based on long-term Company forecasts and the expiration dates on these attributes. This represents an increase of $1.3 million from the prior year.

​

At December 31, 2025, we had research and development and other tax credit carryforwards of $19.3 million. These carry forwards are fully valued and are also subject to an uncertain tax position reserve of $3.4 million. These credits can be used to reduce future federal and state income tax liabilities and expire principally between 2026 and 2040.

​

We consider the undistributed earnings of our foreign subsidiaries as of December 31, 2025 to be indefinitely reinvested and, accordingly, no U.S. income taxes have been provided thereon. As of December 31, 2025, there is no excess cash associated with indefinitely reinvested foreign earnings. We did not, nor do we anticipate the need to, repatriate funds to the United States to satisfy domestic liquidity needs arising in the ordinary course of business.

​

We and our subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. We and most foreign subsidiaries are subject to income tax examinations by tax authorities for all years dating back to 2022. We are under an IRS income tax audit for the year ended December 31, 2023. Such jurisdictions may assess

additional income tax against us. The final determination of tax audits or any administrative appeals relating thereto could be materially different from our income tax provisions and accruals. The ultimate result of any current or future audit could have a material adverse effect on our results of operations and cash flows in the period or periods for which that determination is made. Our policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as operating expenses. We believe that we have appropriate support for the income tax positions taken and to be taken on our tax returns and that our accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter.

​

At December 31, 2025, we had unrecognized tax benefits related to uncertain tax positions of $12.7 million, $9.3 million of which is recorded as a long-term liability, and the remainder of which reduced the Company’s state deferred tax assets and the offsetting valuation allowance. We recognized $0.7 million in interest and penalty expenses for the year ended December 31, 2025 relating to these uncertain tax positions. These unrecognized tax benefits, if recognized, would reduce the effective tax rate and also reverse associated accrued interest and penalty expenses included in profit before tax.

​

A reconciliation of the beginning and ending balance of unrecognized tax benefits are as follows:

​

​