ARROW ELECTRONICS, INC. Income Taxes Disclosure

8. Income Taxes

The provision for income taxes for the years ended December 31 consists of the following:

​

​

The principal causes of the difference between the U.S. federal statutory tax rate of 21% and effective income tax rates for the years ended December 31 are as follows:

​

​

​

​

* State taxes in Ohio, California, District of Columbia, New York, Minnesota, and Virginia made up the majority (greater than 50 percent) of the tax effect in this category.

​

​

The company is subject to taxation of GILTI on foreign subsidiaries and a tax provision to deduct a portion of FDII of U.S. corporations. GILTI tax expense, accounted for as a current period cost, net of FDII benefit, resulted in a net tax expense of $5.2 million, $4.7 million, and $23.0 million during 2025, 2024, and 2023, respectively.

At December 31, 2025, a short-term tax payable of $7.6 million was recorded in the consolidated balance sheets for a one-time transition tax on the foreign subsidiaries’ accumulated unremitted earnings related to the 2017 U.S. Tax Cuts and Jobs Act.

At December 31, 2025, the company had a liability for unrecognized tax positions of $50.5 million. The timing of the resolution of these uncertain tax positions is dependent on the tax authorities’ income tax examination processes. Material changes are not expected; however, it is possible that the amount of unrecognized tax benefits with respect to uncertain tax positions could increase or decrease during 2026. Currently, the company is unable to make a reasonable estimate of when cash settlement would occur and how it would impact the effective tax rate.

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31 is as follows:

​

​

Interest costs related to unrecognized tax benefits are classified as a component of “Interest and other financing expense, net” in the company’s consolidated statements of operations. In 2025, 2024, and 2023, the company recognized $7.3 million, $5.9 million, and $4.0 million, respectively, of interest expense related to unrecognized tax benefits. At December 31, 2025 and 2024, the company had accrued a liability of $24.2 million and $23.5 million, respectively, for interest related to unrecognized tax benefits.

In many cases the company’s uncertain tax positions are related to tax years that remain subject to examination by tax authorities. The following describes the open tax years, by major tax jurisdiction, as of December 31, 2025:

​

Deferred income taxes are provided for the effects of temporary differences between the tax basis of an asset or liability and its reported amount in the consolidated balance sheets. These temporary differences result in taxable or deductible amounts in future years.

Deferred tax assets and liabilities consist of the following at December 31:

​

At December 31, 2025, the company had international tax loss carryforwards of approximately $147.9 million, of which $3.8 million have expiration dates ranging from 2026 to 2045, and the remaining $144.1 million have no expiration date. Deferred tax assets related to these international tax loss carryforwards were $25.8 million with a corresponding valuation allowance of $0.8 million.

At December 31, 2025, the company had deferred tax assets of approximately $10.2 million with a corresponding valuation allowance of $7.4 million, related to U.S. state net operating loss carryforwards. Valuation allowances are needed when deferred tax assets may not be realized due to the uncertainty of the timing and the ability of the company to generate sufficient future taxable income in certain tax jurisdictions.

At December 31, 2025, the company had approximately $5.4 billion in undistributed foreign earnings which it deems to be indefinitely reinvested. The company recognizes that if it reverses its indefinite reinvestment assertion on foreign earnings, it may be subject to additional foreign taxes and U.S. state income taxes. It is not practicable to determine the income tax liability that would be payable if these earnings were distributed and not reinvested indefinitely.

Income taxes paid, net of income taxes refunded, for the year ended December 31 were:

​

Income taxes paid, net of income taxes refunded, amounted to $195.2 million, $230.5 million, and $538.4 million in 2025, 2024, and 2023, respectively.