APTARGROUP, INC.ATR
APTARGROUP, INC. Income Taxes Disclosure
INCOME TAXES
Income before income taxes consists of:
| Years Ended December 31, | 2025 | 2024 | 2023 | ||||||||||||||
| United States | $ | 135,913 | $ | 99,573 | $ | 49,681 | |||||||||||
| International | 355,465 | 370,192 | 325,144 | ||||||||||||||
| Total | $ | 491,378 | $ | 469,765 | $ | 374,825 | |||||||||||
The provision (benefit) for income taxes is composed of:
| Years Ended December 31, | 2025 | 2024 | 2023 | ||||||||||||||
| Current tax expense (benefit): | |||||||||||||||||
| U.S. Federal | $ | 6,726 | $ | 10,933 | $ | 11,777 | |||||||||||
| U.S. State and Local | 3,735 | 2,744 | 1,300 | ||||||||||||||
| International | 100,109 | 103,316 | 97,455 | ||||||||||||||
| Total current tax expense (benefit) | $ | 110,570 | $ | 116,993 | $ | 110,532 | |||||||||||
| Deferred tax expense (benefit): | |||||||||||||||||
| U.S. Federal | $ | 12,040 | $ | (8,936) | $ | (10,931) | |||||||||||
| U.S. State and Local | 889 | (923) | (675) | ||||||||||||||
| International | (24,618) | (11,547) | (8,277) | ||||||||||||||
| Total deferred tax expense (benefit) | $ | (11,689) | $ | (21,406) | $ | (19,883) | |||||||||||
| Total income tax expense (benefit): | |||||||||||||||||
| U.S. Federal | $ | 18,766 | $ | 1,997 | $ | 846 | |||||||||||
| U.S. State and Local | 4,624 | 1,821 | 625 | ||||||||||||||
| International | 75,491 | 91,769 | 89,178 | ||||||||||||||
| Total income tax expense (benefit) | $ | 98,881 | $ | 95,587 | $ | 90,649 | |||||||||||
As further described in Note 1 – Summary of Significant Accounting Policies, the Company has elected to prospectively adopt the guidance in ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, or ASU 2023-09. The following table is a reconciliation of the U.S. federal statutory rate of 21% to the Company’s effective tax rate for the year ended December 31, 2025 in accordance with the guidance in ASU No. 2023-09:
| Years Ended December 31, | 2025 | |||||||
| Amount | Percent | |||||||
| Provision for Income taxes at U.S. federal statutory rate | $ | 103,189 | 21.0 | % | ||||
| Domestic Federal: | ||||||||
| Tax credits | (2,115) | (0.4) | % | |||||
| Nontaxable and nondeductible items, net | ||||||||
| Excess benefits from share-based compensation | (2,804) | (0.6) | % | |||||
| Other | 382 | 0.1 | % | |||||
| Cross border tax laws (1) | (3,045) | (0.6) | % | |||||
| Changes in valuation allowance | (300) | (0.1) | % | |||||
| Other | 313 | 0.1 | % | |||||
| Domestic state and local income taxes, net of federal effect (2) | 3,179 | 0.6 | % | |||||
| Foreign: | ||||||||
| France | ||||||||
| Rate differential | 8,114 | 1.7 | % | |||||
| Other | 2,256 | 0.5 | % | |||||
| Germany - Federal | ||||||||
| Municipal taxes | 12,781 | 2.6 | % | |||||
| Other | (7,380) | (1.5) | % | |||||
| Brazil | ||||||||
| Changes in valuation allowance | (8,300) | (1.7) | % | |||||
| Other | 262 | 0.1 | % | |||||
| China | ||||||||
| Nontaxable and nondeductible items, net | ||||||||
| Equity investment remeasurement gain | (5,394) | (1.1) | % | |||||
| Other | (2,129) | (0.4) | % | |||||
| Other Foreign Jurisdictions | 2,007 | 0.2 | % | |||||
| Worldwide changes in unrecognized tax benefits | (2,135) | (0.4) | % | |||||
| $ | 98,881 | 20.1 | % | |||||
(1)The Company has elected to include U.S. foreign tax credits in the Cross Border tax section.
(2)The states that contribute to the majority (greater than 50%) of the tax effect in this category include New Jersey, Illinois and California.
The Company’s effective tax rate of 20.1% for the year ended December 31, 2025 is due primarily to benefits from the release of valuation allowances as a result of our revised assessment of the realization of tax losses in Brazil and Luxembourg, excess tax benefits on deductible share-based compensation and a benefit related to the gain resulting from remeasurement of equity investments to fair value upon Aptar becoming the majority shareholder in the invested companies.
As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective tax rate differs from the statutory tax rate as follows:
| Years Ended December 31, | 2024 | 2023 | |||||||||
| Income tax at statutory rate | $ | 98,651 | $ | 78,713 | |||||||
| State income taxes, net of federal tax effect | 1,439 | 362 | |||||||||
| Excess tax benefits from share-based compensation | (11,041) | (5,935) | |||||||||
| Deferred tax (benefits) charges, incl. tax rate changes | 2,691 | (3,512) | |||||||||
| Valuation allowance | (14,625) | 158 | |||||||||
| Legal entity reorganization | — | 3,630 | |||||||||
| Rate differential on earnings of foreign operations | 21,357 | 18,917 | |||||||||
| Other items, net | (2,885) | (1,684) | |||||||||
| Actual income tax provision | $ | 95,587 | $ | 90,649 | |||||||
| Effective income tax rate | 20.3 | % | 24.2 | % | |||||||
The provision for income taxes for 2023 includes a $3.6 million charge for taxes related to legal entity reorganizations to enhance our dividend and cash management capabilities. The provision for income tax is favorably impacted by excess tax benefits on deductible share-based compensation. The tax provision for 2024 reflects a $11.0 million benefit from this item compared with a $5.9 million tax benefit for 2023. During 2024, we were able to change our previous assessment on the realization of tax losses, and our need for a valuation allowance, in various jurisdictions due to sufficient positive evidence becoming available during the year. Our revised assessment of the realization of tax losses in Luxembourg resulted in a $11.0 million net tax benefit in 2024. Our mix of earnings has an unfavorable tax rate impact since a majority of our pretax income is earned in higher tax jurisdictions.
The amount of income taxes paid were as follows:
| Years Ended December 31, | 2025 | ||||
U.S. Federal (1) | $ | 28,166 | |||
| U.S. State and Local | 5,407 | ||||
| Foreign | |||||
| France | 55,539 | ||||
| Germany - Federal | 32,445 | ||||
| Germany - Muni | 27,943 | ||||
| Other | 29,851 | ||||
| Total Foreign | $ | 145,778 | |||
Total income taxes paid | $ | 179,351 | |||
(1)The Company has elected to include amounts paid for transferable, non-refundable U.S. energy credits of $17.5 million, as income taxes paid.
For the years ended December 31, 2024 and 2023, income taxes paid were $89.4 million and $112.0 million, respectively.
Significant deferred tax assets and liabilities as of December 31, 2025 and 2024 are composed of the following temporary differences:
| 2025 | 2024 | ||||||||||
| Deferred Tax Assets: | |||||||||||
| Net operating loss carryforwards | $ | 82,593 | $ | 72,766 | |||||||
| Operating and finance leases | 22,077 | 21,712 | |||||||||
| Share-based compensation | 11,061 | 3,747 | |||||||||
| Vacation and bonus | 15,979 | 16,223 | |||||||||
| U.S. capitalized research expenditures | 41,338 | 41,956 | |||||||||
| Accrued liabilities and other reserves | 10,324 | 9,598 | |||||||||
| Other | 35,589 | 33,931 | |||||||||
| Total gross deferred tax assets | $ | 218,961 | $ | 199,933 | |||||||
| Less valuation allowance | (56,465) | (61,134) | |||||||||
| Net deferred tax assets | $ | 162,496 | $ | 138,799 | |||||||
| Deferred Tax Liabilities: | |||||||||||
| Acquisition related intangibles | $ | 52,023 | $ | 51,155 | |||||||
| Depreciation and amortization | 26,489 | 21,325 | |||||||||
| Operating and finance leases | 22,408 | 22,672 | |||||||||
| Other | 7,169 | 8,059 | |||||||||
| Total gross deferred tax liabilities | $ | 108,089 | $ | 103,211 | |||||||
Net deferred tax assets | $ | 54,407 | $ | 35,588 | |||||||
We evaluate the deferred tax assets and record a valuation allowance when it is believed it is more likely than not that the benefit will not be realized. We have established a valuation allowance for $51.2 million of the $82.6 million of tax effected net operating loss carryforwards. These losses are generally in locations that have not produced cumulative three year operating profit. A valuation allowance of $5.0 million has also been established against the $7.0 million of U.S. state tax credit carryforwards.
There is no expiration date on $72.8 million of the tax-effected net operating loss carryforwards and $9.8 million (tax effected) will expire in the years 2026 to 2045. The U.S. state tax credit carryforwards of $7.0 million (tax effected) will expire in the years 2026 to 2039.
None of the earnings accumulated outside of the U.S. will be subject to U.S. taxation under the current U.S. federal income tax laws. We maintain our assertion that all other cash and distributable reserves at our non-U.S. affiliates will continue to be indefinitely reinvested, with the exception of $160.0 million of 2025 earnings in France, all earnings in Germany and the pre-2020 earnings in Italy, Switzerland and Colombia. We estimate the amount of additional local income tax and withholding tax that would be payable on distributions to be in the range of $20.0 million to $25.0 million if earnings accumulated outside the U.S. are repatriated to the U.S.
Income Tax Uncertainties
We provide a liability for the amount of tax benefits realized from uncertain tax positions. A reconciliation of the beginning and ending amount of income tax uncertainties is as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance at January 1 | $ | 5,792 | $ | 5,942 | $ | 6,919 | |||||||||||
| Increases based on tax positions for the current year | 400 | 300 | 985 | ||||||||||||||
| Increases (Decreases) based on tax positions of prior years | 3,759 | 107 | (997) | ||||||||||||||
| Settlements | (301) | (127) | (901) | ||||||||||||||
| Lapse of statute of limitations | (720) | (430) | (64) | ||||||||||||||
| Balance at December 31 | $ | 8,930 | $ | 5,792 | $ | 5,942 | |||||||||||
As of December 31, 2025, the total amount of unrecognized tax benefits was $8.9 million, which if recognized, would favorably impact our effective tax rate.
We recognize interest and penalties related to unrecognized tax benefits as a component of income taxes. As of December 31, 2025, 2024 and 2023, we had approximately $4.0 million, $3.6 million and $3.4 million, respectively, accrued for the payment of interest and penalties, of which approximately $0.4 million, $0.2 million and $0.2 million was recognized in income tax expense for the years ended December 31, 2025, 2024 and 2023, respectively.
Aptar or its subsidiaries file income tax returns in the U.S. Federal jurisdiction and various state and foreign jurisdictions. The major tax jurisdictions we file in, with the years still subject to income tax examinations, are listed below:
| Major Tax Jurisdiction | Tax Years Subject to Examination | ||||
| United States — Federal | 2022-2025 | ||||
| United States — State | 2021-2025 | ||||
| France | 2022-2025 | ||||
| Germany | 2023-2025 | ||||
| Italy | 2019-2025 | ||||
| China | 2015-2025 | ||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 6, 2026 | Showing above |
| 2024 | Feb 7, 2025 | |
| 2023 | Feb 9, 2024 | |
| 2022 | Feb 17, 2023 | |
| 2021 | Feb 18, 2022 | |
| 2020 | Feb 19, 2021 | |
| 2019 | Feb 24, 2020 | |
| 2018 | Feb 21, 2019 | |
| 2017 | Feb 26, 2018 | |
| 2016 | Feb 27, 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.