AMETEK INC/AME
AMETEK INC/ Income Taxes Disclosure
Income Taxes
The components of income before income taxes and the details of the provision for income taxes were as follows for the years ended December 31:
| 2025 | 2024 | 2023 | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Income before income taxes: | |||||||||||||||||
| Domestic | $ | 1,062,732 | $ | 991,681 | $ | 1,026,113 | |||||||||||
| Foreign | 735,607 | 669,858 | 580,299 | ||||||||||||||
| Total | $ | 1,798,339 | $ | 1,661,539 | $ | 1,606,412 | |||||||||||
| Provision for income taxes: | |||||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 167,392 | $ | 120,367 | $ | 206,477 | |||||||||||
| Foreign | 197,051 | 155,055 | 144,476 | ||||||||||||||
| State | 24,470 | 22,936 | 34,173 | ||||||||||||||
| Total current | 388,913 | 298,358 | 385,126 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | (32,883) | (437) | (69,956) | ||||||||||||||
| Foreign | (26,329) | (14,317) | (15,113) | ||||||||||||||
| State | (11,504) | 1,811 | (6,833) | ||||||||||||||
| Total deferred | (70,716) | (12,943) | (91,902) | ||||||||||||||
| Total provision | $ | 318,197 | $ | 285,415 | $ | 293,224 | |||||||||||
Significant components of the deferred tax (asset) liability were as follows at December 31:
| 2025 | 2024 | ||||||||||
| (In thousands) | |||||||||||
| Non-current deferred tax (asset) liability: | |||||||||||
Differences in basis of property and accelerated depreciation (1) | $ | 44,913 | $ | 49,513 | |||||||
| Reserves not currently deductible | (127,953) | (117,420) | |||||||||
| Pensions | 102,992 | 89,508 | |||||||||
| Differences in basis of intangible assets and accelerated amortization | 838,916 | 849,768 | |||||||||
| Net operating loss carryforwards | (159,047) | (116,611) | |||||||||
| Share-based compensation | (14,973) | (14,614) | |||||||||
| Foreign Tax Credit Carryforwards | (9,375) | (2,840) | |||||||||
| Unremitted earnings | 20,127 | 13,906 | |||||||||
| Other | (54,295) | (19,626) | |||||||||
| 641,305 | 731,584 | ||||||||||
| Less: Valuation allowance | 33,547 | 21,305 | |||||||||
| 674,852 | 752,889 | ||||||||||
| Portion included in non-current assets | 114,063 | 78,141 | |||||||||
| Gross non-current deferred tax liability | $ | 788,915 | $ | 831,030 | |||||||
______________________
(1)Presented net of deferred tax assets of approximately $59.5 million and $48.8 million at December 31, 2025 and 2024, respectively, resulting from lease obligations.
The Company’s effective tax rate reconciles to the U.S. Federal statutory rate as follows for the years ended December 31 (amounts in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||
| U.S. Federal statutory tax rate | $ | 377,651 | 21.0 | % | $ | 348,923 | 21.0 | % | $ | 337,346 | 21.0 | % | |||||||||||||||||||||||
State and local income taxes, net of federal income tax effects(1) | 7,286 | 0.4 | 22,876 | 1.4 | 20,431 | 1.3 | |||||||||||||||||||||||||||||
| Foreign Tax Effects | |||||||||||||||||||||||||||||||||||
| Luxembourg | |||||||||||||||||||||||||||||||||||
| Nontaxable or Nondeductible items | |||||||||||||||||||||||||||||||||||
| Treaty Exempt Earnings | (36,704) | (2.0) | (31,542) | (1.9) | (21,435) | (1.3) | |||||||||||||||||||||||||||||
| Other Adjustments | |||||||||||||||||||||||||||||||||||
| Pillar Two Min. Tax | 17,300 | 0.9 | 3,000 | 0.2 | — | — | |||||||||||||||||||||||||||||
| Other | 1,435 | 0.1 | — | — | — | — | |||||||||||||||||||||||||||||
| Other foreign jurisdictions | 13,826 | 0.8 | 25,650 | 1.5 | 17,192 | 1.0 | |||||||||||||||||||||||||||||
| Effect of changes in tax laws or rates enacted in the current period | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Effect of Cross-Border tax laws | |||||||||||||||||||||||||||||||||||
| Global intangible low-taxed income / Subpart F | 3,140 | 0.1 | 9,754 | 0.6 | 1,553 | 0.1 | |||||||||||||||||||||||||||||
| Foreign-derived intangible income | (34,515) | (1.9) | (35,937) | (2.2) | (35,840) | (2.2) | |||||||||||||||||||||||||||||
| Cross-border financing | (38,133) | (2.1) | (35,676) | (2.1) | (33,264) | (2.1) | |||||||||||||||||||||||||||||
| Platform Contribution Transaction | — | — | 20,790 | 1.3 | — | — | |||||||||||||||||||||||||||||
| Tax Credits | |||||||||||||||||||||||||||||||||||
| Research and development tax credits | (16,547) | (0.9) | (20,860) | (1.3) | (16,652) | (1.0) | |||||||||||||||||||||||||||||
| Changes in valuation allowances | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Nontaxable or Nondeductible items | |||||||||||||||||||||||||||||||||||
| Other | 1,991 | 0.1 | (1,533) | (0.1) | (4,721) | (0.3) | |||||||||||||||||||||||||||||
| Changes in Unrecognized Tax Benefits | 23,187 | 1.3 | (19,078) | (1.1) | 27,672 | 1.7 | |||||||||||||||||||||||||||||
| Other Adjustments | |||||||||||||||||||||||||||||||||||
| Other | (1,720) | (0.1) | (952) | (0.1) | 942 | 0.1 | |||||||||||||||||||||||||||||
| Effective Tax Rate | $ | 318,197 | 17.7 | % | $ | 285,415 | 17.2 | % | $ | 293,224 | 18.3 | % | |||||||||||||||||||||||
_________________
(1)State taxes in California, Illinois, New Jersey, New Hampshire, Massachusetts, and Minnesota make up the majority (greater than 50 percent) of the tax effect in this category.
Cash paid for income taxes (net of refunds) are as follows for the years ended December 31:
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| US Federal | $ | 198,247 | $ | 132,795 | $ | 190,259 | ||||||||||||||
| US State and Local | ||||||||||||||||||||
Other (1) | 28,826 | 30,257 | 32,539 | |||||||||||||||||
| Foreign | ||||||||||||||||||||
| United Kingdom | 29,691 | 30,124 | 27,175 | |||||||||||||||||
| Germany | 50,292 | 32,051 | 32,033 | |||||||||||||||||
| Canada | 37,813 | 27,797 | 12,886 | |||||||||||||||||
| Other | 59,294 | 47,205 | 39,954 | |||||||||||||||||
| Total | $ | 404,163 | $ | 300,229 | $ | 334,846 | ||||||||||||||
_________________
(1)No individual state meets the 5% disaggregation threshold
The Company elected to pay the cash tax cost of the one-time mandatory tax on previously deferred earnings of non-U.S. subsidiaries over an eight-year period. As of December 31, 2025, the Company has a remaining cash tax obligation of $15.2 million, all of which is classified as current.
The Company has evaluated the impact of the global intangible low-taxed income (“GILTI”) section of the Tax Act and has made a tax accounting policy election to record the annual tax cost of GILTI as a current period expense when incurred and, as such, will not be measuring an impact of GILTI in its determination of deferred taxes.
The Company intends to reinvest its earnings indefinitely in operations outside the United States except to the extent of the previously taxed earnings and profits ("PTEP") . There has been no provision for U.S. deferred income taxes for the undistributed earnings over PTEP at December 31, 2025 and 2024. The determination of this unrecognized deferred tax liability at each balance sheet date is not practicable.
As of December 31, 2025, and 2024, the Company recorded deferred income taxes totaling $20.1 million and $13.9 million respectively in state income and foreign withholding taxes expected to be incurred when the cash amounts related to the previously taxed income are ultimately repatriated to the U.S.
The Company is acquisitive and at times acquires entities with tax attributes (net operating losses or tax credits) that carry over to post-acquisition tax periods of the Company. At December 31, 2025, the Company had tax effected benefits, net of uncertain tax positions of $159.0 million related to net operating loss carryforwards, which will be available to offset future income taxes payable, subject to certain annual or other limitations based on foreign and U.S. tax laws. This amount includes net operating loss carryforwards of $5.8 million for federal income tax purposes with no valuation allowance; $17.5 million for state income tax purposes with a valuation allowance of $4.1 million, and $135.7 million for foreign income tax purposes with a valuation allowance of $14.9 million. The state net operating loss carryforwards, if not used, will expire between 2026 and 2045. The majority of the federal and foreign net operating loss carryforwards can be carried forward indefinitely with the remaining portion set to expire between 2031 and 2045, if not used.
At December 31, 2025, the Company had tax effected benefits of $30.5 million related to tax credit carryforwards, which will be available to offset future income taxes payable, subject to certain annual or other limitations based on foreign and U.S. tax laws. This includes federal tax credit carryforwards of $16.5 million with no valuation allowance, $11.7 million for state income tax purposes with a valuation allowance of $8.5 million, and
$2.3 million for foreign income tax purposes with a valuation allowance of $0.6 million. These tax credit carryforwards, if not used, will expire between 2026 and 2045.
The Company maintains a valuation allowance to reduce certain deferred tax assets to amounts that are more likely than not to be realized. This allowance relates to deferred tax assets established for federal, state, and foreign net operating losses, credit carryforwards, and other miscellaneous timing items. In 2025, the Company recorded a net increase of $12.2 million in the valuation allowance.
The increase in the valuation allowance primarily relates to $9.3 million recorded against foreign NOL which have been deemed more likely than not to go unused.
At December 31, 2025, the Company had gross unrecognized tax benefits of $229.3 million, of which $186.5 million, if recognized, would impact the effective tax rate. At December 31, 2024, the Company had gross unrecognized tax benefits of $201.6 million, of which $158.2 million, if recognized, would impact the effective tax rate.
At December 31, 2025 and 2024, the Company reported $23.2 million and $15.3 million, respectively, related to interest and penalty exposure as accrued income tax expense in the consolidated balance sheet. During 2025, the Company recognized a net expense of $7.9 million, and in 2024 a net benefit of $3.0 million, for interest and penalties related to uncertain tax positions in the consolidated statement of income as a component of income tax expense.
Approximately 46% of the Company’s overall tax liability is incurred in the United States. The Company files income tax returns in various other state and foreign tax jurisdictions, in some cases for multiple legal entities per jurisdiction. Generally, the Company has open tax years subject to tax audit on average of between three and six years in these jurisdictions. The Company has not materially extended any other statutes of limitation for any significant location and has reviewed and accrued for, where necessary, tax liabilities for open periods including state and foreign jurisdictions that remain subject to examination. There have been no penalties asserted or imposed by the IRS related to substantial understatement of income, gross valuation misstatement or failure to disclose a listed or reportable transaction.
During 2025, the Company added $65.4 million of tax, interest and penalties related to identified uncertain tax positions and reversed $29.9 million of tax and interest related to statute expirations and settlement of prior uncertain positions. During 2024, the Company added $65.5 million of tax, interest and penalties related to identified uncertain tax positions and reversed $100.5 million of tax and interest related to statute expirations and settlement of prior uncertain positions.
The following is a reconciliation of the liability for uncertain tax positions at December 31:
| 2025 | 2024 | 2023 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Balance at the beginning of the year | $ | 201.6 | $ | 233.5 | $ | 174.7 | |||||||||||
| Additions for tax positions related to the current year | 47.3 | 37.2 | 32.1 | ||||||||||||||
| Additions for tax positions of prior years | 5.1 | 18.1 | 34.0 | ||||||||||||||
| Reductions for tax positions of prior years | (1.5) | (22.8) | (0.6) | ||||||||||||||
| Reductions related to settlements with taxing authorities | (0.4) | (1.3) | (0.1) | ||||||||||||||
| Reductions due to statute expirations | (22.8) | (63.1) | (6.6) | ||||||||||||||
| Balance at the end of the year | $ | 229.3 | $ | 201.6 | $ | 233.5 | |||||||||||
In 2025, the additions above primarily reflect the increase in tax liabilities for uncertain tax positions related to higher transfer pricing risks, and incentives for R&D related activities. The reductions above primarily relate to statute expirations. The net increase of $27.7 million in uncertain tax positions resulted in an increase of
$25.8 million (including interest and penalties) to income tax expense and the remainder in other balance sheet accounts. At December 31, 2025, tax, interest and penalties of $247.9 million were classified as a non-current liability and $4.6 million was reflected as a reduction against deferred tax assets.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 17, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 21, 2023 | |
| 2021 | Feb 22, 2022 | |
| 2020 | Feb 18, 2021 | |
| 2019 | Feb 20, 2020 | |
| 2018 | Feb 21, 2019 | |
| 2017 | Feb 22, 2018 | |
| 2016 | Feb 23, 2017 | |
| 2015 | Feb 25, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.