Amneal Pharmaceuticals, Inc.AMRX
Amneal Pharmaceuticals, Inc. Income Taxes Disclosure
Income Taxes
Provision for Income Taxes
The components of the Company's income (loss) before income taxes were as follows (in thousands):
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| United States | $ | 151,706 | $ | (69,020) | $ | (59,781) | |||||||||||
| International | (12,497) | 14,007 | 19,511 | ||||||||||||||
| Total income (loss) before income taxes | $ | 139,209 | $ | (55,013) | $ | (40,270) | |||||||||||
The provision for income taxes was comprised of the following (in thousands):
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | (1,884) | $ | 3,332 | $ | 256 | |||||||||||
| State and local | 1,698 | 4,982 | 2,214 | ||||||||||||||
| Foreign | 11,462 | 10,549 | 5,982 | ||||||||||||||
| Total current income tax | $ | 11,276 | $ | 18,863 | $ | 8,452 | |||||||||||
For the years ended December 31, 2025, 2024, and 2023, the Company did not record a provision for deferred income taxes as a result of recording a full valuation allowance on its DTAs.
Effective Tax Rate Reconciliation
A reconciliation of the U.S. federal statutory rate to the Company’s effective tax rates were as follows (in thousands, except percentages):
| Year Ended December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| U.S. federal statutory tax rate | $ | 29,234 | 21.0 | % | $ | (11,553) | 21.0 | % | $ | (8,457) | 21.0 | % | |||||||||||||||||||||||
State and local income taxes, net of federal income tax effect (1) | 1,431 | 1.0 | 3,900 | (7.1) | 2,297 | (5.7) | |||||||||||||||||||||||||||||
| Foreign tax effects: | |||||||||||||||||||||||||||||||||||
| India: | |||||||||||||||||||||||||||||||||||
| India statutory tax rate difference between India and U.S. | 1,178 | 0.9 | 1,113 | (2.0) | 2,106 | (5.2) | |||||||||||||||||||||||||||||
| Change in prior year estimates | 2,652 | 1.9 | 942 | (1.7) | (3,348) | 8.3 | |||||||||||||||||||||||||||||
| Change in valuation allowance | 1,700 | 1.2 | 3,438 | (6.3) | 3,291 | (8.2) | |||||||||||||||||||||||||||||
| Nontaxable or nondeductible items | 1,610 | 1.2 | (394) | 0.7 | 1,050 | (2.6) | |||||||||||||||||||||||||||||
| Tax credits/incentives | — | — | (723) | 1.3 | (3,877) | 9.6 | |||||||||||||||||||||||||||||
| Foreign NOLs | 11 | — | 245 | (0.4) | 3,278 | (8.1) | |||||||||||||||||||||||||||||
| Other | 351 | 0.3 | (557) | 1.0 | 15 | — | |||||||||||||||||||||||||||||
| Ireland: | |||||||||||||||||||||||||||||||||||
| Ireland statutory tax rate difference between Ireland and U.S. | 3,887 | 2.8 | 719 | (1.3) | (462) | 1.1 | |||||||||||||||||||||||||||||
| Change in valuation allowance | 1,854 | 1.3 | 2,951 | (5.4) | (369) | 0.9 | |||||||||||||||||||||||||||||
| Other | (571) | (0.4) | (37) | 0.1 | 29 | (0.1) | |||||||||||||||||||||||||||||
| Other foreign jurisdictions: | |||||||||||||||||||||||||||||||||||
| Other | 1,413 | 1.0 | (88) | 0.2 | 172 | (0.4) | |||||||||||||||||||||||||||||
| Effect of cross-border tax laws: | |||||||||||||||||||||||||||||||||||
| Subpart F | (4,876) | (3.5) | 4,876 | (8.9) | — | — | |||||||||||||||||||||||||||||
| Global intangible low-taxed income (GILTI), net of Section 250 deduction | 873 | 0.6 | — | — | — | — | |||||||||||||||||||||||||||||
| Tax credits: | |||||||||||||||||||||||||||||||||||
| Research and development tax credits | (4,018) | (2.9) | (1,708) | 3.1 | (2,011) | 5.0 | |||||||||||||||||||||||||||||
| Changes in valuation allowances | (22,289) | (16.0) | 8,557 | (15.6) | 13,025 | (32.3) | |||||||||||||||||||||||||||||
| Nontaxable or nondeductible items: | |||||||||||||||||||||||||||||||||||
| Income not subject to tax | (11,499) | (8.2) | (8,224) | 14.9 | (5,844) | 14.5 | |||||||||||||||||||||||||||||
| Designated drug excise tax | 1,012 | 0.7 | 1,399 | (2.5) | 403 | (1.0) | |||||||||||||||||||||||||||||
| Share-based payment awards | 1,339 | 1.0 | (1,875) | 3.4 | 997 | (2.5) | |||||||||||||||||||||||||||||
| Executive compensation limitation | 7,833 | 5.6 | 896 | (1.6) | — | — | |||||||||||||||||||||||||||||
| Partnership investment basis difference from foreign source income | (2,624) | (1.9) | 2,941 | (5.3) | 2,621 | (6.5) | |||||||||||||||||||||||||||||
| TRA liability revaluation | 1,384 | 1.0 | 10,643 | (19.3) | 876 | (2.2) | |||||||||||||||||||||||||||||
| Other (permanent differences) | 762 | 0.5 | 637 | (1.2) | 793 | (2.0) | |||||||||||||||||||||||||||||
| Changes in unrecognized tax benefits | (1,252) | (0.9) | 749 | (1.4) | (66) | 0.2 | |||||||||||||||||||||||||||||
| Other adjustments: | |||||||||||||||||||||||||||||||||||
| Imputed interest on TRA Liability | — | — | — | — | 3,331 | (8.3) | |||||||||||||||||||||||||||||
| Capital loss | — | — | — | — | (1,041) | 2.6 | |||||||||||||||||||||||||||||
| Other | (119) | (0.1) | 16 | — | (357) | 0.9 | |||||||||||||||||||||||||||||
| Effective income tax rate | $ | 11,276 | 8.1 | % | $ | 18,863 | (34.3) | % | $ | 8,452 | (21.0) | % | |||||||||||||||||||||||
(1)The states and localities that contribute to the majority (greater than 50%) of the tax effect in this category include New Jersey for 2025; Tennessee, New York City and Philadelphia for 2024; and Tennessee and Texas for 2023.
The year-over-year changes in the provision for income taxes and effective tax rate primarily reflected differences in income by jurisdiction, the impact of the One Big Beautiful Bill Act (the “OBBBA”), and items related to share-based compensation in the current year.
The change in effective income tax rate for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to the timing and jurisdictional mix of income and the exit of the umbrella partnership-C-corporation structure as a result of the Reorganization (refer to Note 1. Nature of Operations), which has the effect of allocating all of the operating company’s income to the corporate parent.
India Special Economic Zone
The Company’s Indian subsidiaries are primarily export-oriented, and the tax holiday benefits provided by the Indian government for export activities within Special Economic Zones (“SEZ”) expired in March 2023. Without availing the SEZ benefit in India, the Company is eligible to claim a reduced tax rate of approximately 25.17%.
Organization for Economic Cooperation and Development Policies
The Organization for Economic Cooperation and Development (“OECD”) has issued a two-pillar approach to global taxation, focusing on global profit allocation and a global minimum tax rate. The “Pillar One” global profit allocation proposal would not apply to the Company, since it generally applies to companies with global revenues exceeding €20 billion (approximately $23 billion using the exchange rate as of December 31, 2025). The “Pillar Two” proposal focuses on a global minimum tax of at least 15%. Legislation for the Pillar Two proposal, applying to the Company, has been enacted in Ireland, and became effective with the financial year beginning on January 1, 2024. As the tax rates of the other jurisdictions in which the Company operates exceed 15%, the Company does not believe there is any potential additional exposure besides in Ireland.
The Company assessed that no top-up tax under Pillar Two of the OECD Inclusive Framework on Base Erosion and Profit Shifting is expected to be due for the year ended December 31, 2025. This assessment is based on the application of safe harbor provisions available in all relevant jurisdictions including UK, Germany, Ireland, Switzerland, U.S. and India.
Since Pillar Two taxes are an alternative minimum tax, deferred taxes will not need to be recorded or remeasured. Instead, Pillar Two taxes will be expensed as incurred.
Undistributed Earnings
Applicable foreign taxes (including withholding taxes) have not been provided on the approximately $142.5 million of undistributed earnings of foreign subsidiaries as of December 31, 2025. These earnings have been and currently are considered to be indefinitely reinvested. Quantification of additional taxes that may be payable on distribution is not practicable.
Carryforwards
At December 31, 2025, the Company had approximately $215.9 million of foreign net operating loss carryforwards. These net operating loss carryforwards will partially expire, if unused, between 2029 and 2034. At December 31, 2025, the Company had approximately $164.8 million of state net operating loss carryforwards. The majority of the state net operating losses will expire, if unused, between 2035 and 2045. At December 31, 2025, the Company had approximately $12.5 million of federal R&D credit carryforwards and $11.4 million of state R&D credit carryforwards. The federal R&D credit carryforwards will expire, if unused, between 2036 and 2045, while the state R&D credits may be carried forward indefinitely. At December 31, 2025, the Company had approximately $5.0 million of federal capital loss carryforwards that will expire, if unused, in 2028.
One Big Beautiful Bill Act
On July 4, 2025, President Trump signed the OBBBA, which includes a broad range of tax reform provisions affecting businesses, including, but not limited to, extending or making permanent certain business and international tax measures initially established under the 2017 Tax Cuts and Jobs Act and eliminating the requirement to capitalize and amortize U.S.-based research and experimental expenditures over five years, making these expenditures fully deductible in the period incurred. These provisions resulted in a reduction of the Company’s current income tax liabilities of $7.8 million during the year ended December 31, 2025.
Cash Paid for Income Taxes
The Company paid cash for income taxes as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Federal | $ | 5,600 | $ | 488 | $ | — | |||||||||||
| State and local: | |||||||||||||||||
| Philadelphia, PA | 811 | 588 | 221 | ||||||||||||||
| Tennessee | 702 | 1,452 | 1,054 | ||||||||||||||
| Texas | 505 | 525 | 435 | ||||||||||||||
| All other state and local | 3,114 | 2,769 | (10) | ||||||||||||||
| Foreign: | |||||||||||||||||
| India | 10,740 | 8,756 | 7,692 | ||||||||||||||
| All other foreign | (145) | 642 | (6,896) | ||||||||||||||
| Total | $ | 21,327 | $ | 15,220 | $ | 2,496 | |||||||||||
In 2025, India exceeded 5% of total income taxes paid. In 2024, the only jurisdictions with cash taxes paid that equaled or exceeded 5% of total income taxes paid were Tennessee and India and in 2023, Philadelphia, Texas, Tennessee, and India.
Deferred Taxes
Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
| December 31, 2025 | December 31, 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Partnership interest in Amneal | $ | 346,410 | $ | 360,055 | |||||||
| Projected imputed interest on TRA | 17,970 | 18,169 | |||||||||
| Net operating loss carryforward | 48,410 | 33,403 | |||||||||
| IRC Section 163(j) interest carryforward | 103,681 | 105,621 | |||||||||
| Capitalized costs | 1,713 | 2,048 | |||||||||
| Stock-based compensation | 6,659 | 17,337 | |||||||||
| Intangible assets | 21,386 | 19,701 | |||||||||
| Tax credits and other | 40,344 | 33,999 | |||||||||
| Total deferred tax assets | 586,573 | 590,333 | |||||||||
| Valuation allowance | (586,573) | (590,333) | |||||||||
| Net deferred tax assets | $ | — | $ | — | |||||||
Since first establishing a valuation allowance, the Company has generated a cumulative consolidated three-year pre-tax loss through December 31, 2025. When measuring this loss, the Company excluded pre-tax income attributable to non-controlling interests because it does not support the realization of the Company’s deferred taxes. As a result of the losses through December 31, 2025, the Company determined that it is more likely than not that it will not realize the benefits of its gross DTAs and therefore maintained its valuation allowance. As of December 31, 2025, this valuation allowance was $586.6 million, and it reduced the carrying value of these gross DTAs, net of the impact of the reversal of taxable temporary differences, to zero.
The following table summarizes the changes in the Company’s valuation allowance on deferred tax assets (in thousands):
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance at the beginning of the period | $ | 590,333 | $ | 566,544 | $ | 434,895 | |||||||||||
| (Decrease) increase due to net operating losses and temporary differences | (5,062) | 15,139 | 23,078 | ||||||||||||||
| (Decrease) increase due to stock-based compensation | (10,771) | 2,665 | 1,652 | ||||||||||||||
| Increase (decrease) recorded against additional paid-in capital | 2,818 | (1,794) | 96,316 | ||||||||||||||
| Increase recorded against other comprehensive income | 9,255 | 7,779 | 10,603 | ||||||||||||||
| Balance at the end of the period | $ | 586,573 | $ | 590,333 | $ | 566,544 | |||||||||||
Tax Receivable Agreement
In 2018, the Company entered into a tax receivable agreement (“TRA”) with the Members, which was amended in connection with the Reorganization pursuant to which it is generally required to pay the Members, on a one-to-one basis, 75% of the applicable tax savings, if any, in U.S. federal and state income tax that it is deemed to realize as a result of certain tax attributes of their Amneal common units sold to the Company (or exchanged in a taxable sale) and that were created as a result of (i) the sales of their Amneal common units for shares of Class A common stock of the Company prior to the Reorganization (as defined in Note 1. Nature of Operations) and (ii) tax benefits attributable to payments made under the TRA.
In conjunction with the valuation allowance recorded on the DTAs, the Company reversed the entire accrued TRA liability of $192.8 million during 2019. The Company did not record a TRA liability as of December 31, 2021, 2020, and 2019 because future TRA payments were not probable and estimable. Payments made under the TRA represent amounts that otherwise would have been due to taxing authorities in the absence of attributes obtained by the Company as a result of the sales or exchanges of Amneal common units discussed above. Such amounts will be paid after cash tax savings are realized from the TRA attributes. Payments under the TRA are only expected to be made in periods following the filing of a tax return in which the Company is able to utilize certain tax benefits to reduce its cash taxes paid to a taxing authority.
For the years ended December 31, 2025, 2024, and 2023, the Company recorded expenses associated with the TRA of $6.6 million, $50.7 million, and $3.1 million, respectively, as a result of the realization of cash tax savings from the TRA attributes for those years. As of December 31, 2025 and 2024, the Company had TRA liabilities of $57.5 million and $53.9 million, respectively (refer to Note 22. Related Party Transactions for the current and long-term portions of the TRA liability). The Company’s cumulative cash tax benefit recorded through December 31, 2025 associated with the TRA was approximately $78.9 million, of which the Company recognized cumulative expenses under the TRA of $61.0 million.
As noted above, the Company has determined it is more-likely-than-not it will be unable to utilize its DTAs subject to the TRA; therefore, as of December 31, 2025, the Company had not recognized the contingent liability under the TRA related to the tax savings it may realize in future years from Amneal common units sold or exchanged. If utilization of these DTAs becomes more-likely-than-not in the future, at such time, the unrecorded contingent TRA liability (which amounted to $129.1 million as of December 31, 2025) will be recorded through charges in the Company’s consolidated statements of operations. If the TRA attributes are not utilized in future years, it is reasonably possible no amounts would be paid under the TRA in excess of the $57.5 million accrued as of December 31, 2025.
The timing and amount of any payments under the TRA may vary, depending upon a number of factors including the timing and amount of the Company’s taxable income, and the corporate tax rate in effect at the time of realization of the Company’s taxable income. The timing and amount of payments may also be accelerated under certain conditions, such as a change of control or other early termination event, which could give rise to the Company being obligated to make TRA payments in advance of tax benefits being realized.
Accounting for Uncertainty in Income Taxes
The Company and its subsidiaries file income tax returns in the U.S. federal, and various state, local and foreign jurisdictions. In the U.S., income tax returns are generally subject to examination for a period of three years. The majority of states in which the Company files income tax returns follow the three-year U.S. federal statute of limitations, and a few states have a four-year statute of limitations in which to assess state taxes four years after the return is filed. Because the Company has unused state NOL carryovers generated more than three or four years ago, the relevant state taxing authorities may audit and adjust otherwise closed carryover tax years to the extent such NOL carryover is utilized in an open year. Neither the Company nor any
of its affiliates is currently under audit by the Internal Revenue Service. Amneal is currently under examination in certain states and the Company does not expect any material adjustments as of December 31, 2025.
The Company accounts for income tax contingencies using the benefit recognition model. The Company will recognize a benefit if a tax position is more likely than not to be sustained upon audit, based solely on the technical merits. The benefit is measured by determining the amount that is greater than 50% likely of being realized upon settlement, presuming that the tax position is examined by the appropriate taxing authority that has full knowledge of all relevant information. The Company currently does not believe that the total amount of unrecognized tax benefits will increase or decrease significantly over the next 12 months.
A rollforward of unrecognized tax benefits for the years ended December 31, 2025, 2024 and 2023 is as follows (in thousands):
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Unrecognized tax benefits at the beginning of the period | $ | 3,944 | $ | 3,735 | $ | 3,616 | |||||||||||
| Gross change for current period positions | 251 | 210 | 170 | ||||||||||||||
| Gross change for prior period positions | 74 | (1) | (51) | ||||||||||||||
Decrease due to expiration of statute of limitations | (243) | — | — | ||||||||||||||
| Unrecognized tax benefits at the end of the period | $ | 4,026 | $ | 3,944 | $ | 3,735 | |||||||||||
Included in the total unrecognized tax benefits at December 31, 2025, 2024 and 2023 was $4.0 million, $3.9 million and $3.7 million, respectively, that if recognized, would favorably affect the effective income tax rate.
In India, the income tax returns for the fiscal years ending March 31, 2022, 2023 and 2024 are currently being reviewed by tax authorities as part of the normal procedures, and the Company is not expecting any material adjustments. There are no other income tax returns in the process of examination, administrative appeal, or litigation. Income tax returns are generally subject to examination for a period of three years, five years, and four years after the tax year in India, Switzerland, and Ireland, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Mar 14, 2024 | |
| 2022 | Mar 3, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 1, 2019 | |
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.