Avantor, Inc.AVTR
Avantor, Inc. Income Taxes Disclosure
Income taxes
━━━━━━━━
The following table presents detail about captions appearing on the statements of operations:
(in millions) | Year ended December 31, | ||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
(Loss) income before income taxes: | |||||||||||||||||
| United States | $ | (580.6) | $ | 521.2 | $ | 527.6 | |||||||||||
| Foreign | 139.3 | 332.7 | (117.1) | ||||||||||||||
| Total | $ | (441.3) | $ | 853.9 | $ | 410.5 | |||||||||||
| Current income tax (expense) benefit: | |||||||||||||||||
| Federal | $ | (24.9) | $ | (97.6) | $ | (110.7) | |||||||||||
| State | (9.5) | (30.4) | (35.5) | ||||||||||||||
| Foreign | (46.8) | (61.3) | (115.6) | ||||||||||||||
| Subtotal | (81.2) | (189.3) | (261.8) | ||||||||||||||
| Deferred income tax (expense) benefit: | |||||||||||||||||
| Federal | (23.4) | 18.5 | 18.9 | ||||||||||||||
| State | 20.3 | (0.4) | 0.9 | ||||||||||||||
| Foreign | (4.6) | 28.8 | 152.6 | ||||||||||||||
| Subtotal | (7.7) | 46.9 | 172.4 | ||||||||||||||
Income tax expense | $ | (88.9) | $ | (142.4) | $ | (89.4) | |||||||||||
The following table reconciles the income tax provision calculated at the United States federal corporate rate to the amounts presented in the statements of operations:
| (in millions) | Year ended December 31, | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||
(Loss) income before income taxes | (441.3) | 853.9 | 410.5 | ||||||||||||||||||||||||||||||||
| United States federal corporate rate | (92.7) | 21.0 | % | 179.3 | 21.0 | % | 86.2 | 21.0 | % | ||||||||||||||||||||||||||
State and Local Income Taxes, Net of Federal Income Tax Effect1 | (8.6) | 1.9 | % | 24.3 | 2.9 | % | 27.3 | 6.7 | % | ||||||||||||||||||||||||||
| Foreign Tax Effects | |||||||||||||||||||||||||||||||||||
| Germany | |||||||||||||||||||||||||||||||||||
| German Trade Tax | 2.9 | (0.7) | % | 1.9 | 0.2 | % | 5.5 | 1.3 | % | ||||||||||||||||||||||||||
| Statutory tax rate difference between Germany and United States | (7.5) | 1.7 | % | (9.1) | (1.1) | % | (21.1) | (5.1) | % | ||||||||||||||||||||||||||
| Valuation Allowance | 16.0 | (3.6) | % | 22.5 | 2.6 | % | 24.6 | 6.0 | % | ||||||||||||||||||||||||||
| Other Germany | (1.0) | 0.2 | % | (1.7) | (0.1) | % | (1.6) | (0.4) | % | ||||||||||||||||||||||||||
| Netherlands | |||||||||||||||||||||||||||||||||||
| Valuation Allowance | (9.5) | 2.1 | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
| Other Netherlands | 2.3 | (0.5) | % | 2.0 | 0.2 | % | (6.9) | (1.7) | % | ||||||||||||||||||||||||||
| Singapore | |||||||||||||||||||||||||||||||||||
| Tax Exempt Income | — | — | % | (14.5) | (1.7) | % | (14.7) | (3.6) | % | ||||||||||||||||||||||||||
| Other Singapore | 0.2 | — | % | (3.4) | (0.4) | % | (3.3) | (0.8) | % | ||||||||||||||||||||||||||
| Switzerland | |||||||||||||||||||||||||||||||||||
| Change in Applicable Cantonal Tax Rate | 15.6 | (3.5) | % | — | — | % | 0.3 | 0.1 | % | ||||||||||||||||||||||||||
| Other Switzerland | (3.2) | 0.7 | % | 3.1 | 0.4 | % | (0.6) | (0.1) | % | ||||||||||||||||||||||||||
| United Kingdom | |||||||||||||||||||||||||||||||||||
| Clinical Services Sale | — | — | % | (38.5) | (4.5) | % | — | — | % | ||||||||||||||||||||||||||
| Tax Exempt Income | (19.2) | 4.4 | % | (0.6) | (0.1) | % | — | — | % | ||||||||||||||||||||||||||
| Other United Kingdom | 4.4 | (1.0) | % | 4.3 | 0.5 | % | (2.3) | (0.6) | % | ||||||||||||||||||||||||||
| Other Foreign Jurisdictions | 7.5 | (1.7) | % | (1.2) | (0.1) | % | 4.5 | 1.1 | % | ||||||||||||||||||||||||||
| Effect of Cross-Border Tax Laws | |||||||||||||||||||||||||||||||||||
| FDII | (14.4) | 3.3 | % | (13.9) | (1.6) | % | (17.1) | (4.2) | % | ||||||||||||||||||||||||||
| GILTI | (0.1) | — | % | 8.0 | 0.9 | % | (0.1) | — | % | ||||||||||||||||||||||||||
| Other Effect of Cross-Border Tax Laws | 1.7 | (0.4) | % | 1.2 | 0.1 | % | — | — | % | ||||||||||||||||||||||||||
| Tax Credits | |||||||||||||||||||||||||||||||||||
| Research and development tax credits | (1.4) | 0.3 | % | (2.1) | (0.2) | % | (1.9) | (0.5) | % | ||||||||||||||||||||||||||
| Nontaxable or Nondeductible Items | |||||||||||||||||||||||||||||||||||
| Executive Compensation Limitation | 4.7 | (1.1) | % | 2.2 | 0.3 | % | 6.1 | 1.5 | % | ||||||||||||||||||||||||||
| Impairment of Goodwill | 164.9 | (37.4) | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
| Other Permanent differences | 6.1 | (1.3) | % | 6.2 | 0.7 | % | 1.7 | 0.4 | % | ||||||||||||||||||||||||||
| Changes in Unrecognized Tax Benefits | 17.0 | (3.8) | % | (22.7) | (2.8) | % | (0.3) | (0.1) | % | ||||||||||||||||||||||||||
| Other Adjustments | 3.2 | (0.7) | % | (4.9) | (0.5) | % | 3.1 | 0.8 | % | ||||||||||||||||||||||||||
Income tax benefit | $ | 88.9 | (20.1)% | $ | 142.4 | 16.7% | $ | 89.4 | 21.8% | ||||||||||||||||||||||||||
1.State taxes in California, Massachusetts, Pennsylvania, and Maryland make up the majority (greater than 50 percent) of the tax effect in this category.
Deferred taxes
The following table presents the components of deferred tax assets and liabilities:
(in millions) | December 31, | ||||||||||
| 2025 | 2024 | ||||||||||
Deferred tax assets: | |||||||||||
| Reserves and accrued expenses | $ | 49.0 | $ | 54.7 | |||||||
| Pension, postretirement and environmental liabilities | 0.5 | 8.2 | |||||||||
| Net operating loss and deferred deductions | 367.2 | 458.7 | |||||||||
| Other | 38.3 | 3.1 | |||||||||
| Deferred tax assets, gross | 455.0 | 524.7 | |||||||||
| Less: valuation allowances | (190.1) | (214.1) | |||||||||
| Deferred tax assets, net | 264.9 | 310.6 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Intangibles | (611.8) | (656.1) | |||||||||
| Property, plant and equipment | (64.8) | (57.8) | |||||||||
| Investment in partnerships | (71.0) | (58.5) | |||||||||
| Deferred tax liabilities | (747.6) | (772.4) | |||||||||
Net deferred tax liability | $ | (482.7) | $ | (461.8) | |||||||
| Classification on balance sheets: | |||||||||||
| Other assets | $ | 74.4 | $ | 95.5 | |||||||
| Deferred income tax liabilities | (557.1) | (557.3) | |||||||||
The (decrease) increase to the valuation allowance was $(24.0) million in 2025, $8.0 million in 2024 and $26.4 million in 2023.
At December 31, 2025, $132.1 million of the valuation allowances presented above relate to foreign net operating loss carryforwards that are not expected to be realized. We evaluate the realization of deferred tax assets by considering such factors as the reversal of existing taxable temporary differences, expected profitability by tax jurisdiction and available carryforward periods. The extent and timing of any such reversals will influence the extent of tax benefits recognized in a particular year. Should applicable losses, credits and deductions ultimately be realized, the resulting reduction in the valuation allowance would generally be recognized as an income tax benefit.
Uncertain tax positions
We file federal income tax returns in the United States and other tax returns in various states and international jurisdictions. In the normal course of business, we are subject to examination by taxing authorities throughout the world. In these cases, we evaluate our tax position using the recognition threshold and the measurement analysis in accordance with the accounting guidance. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit recognized in our financial statements. Tax years are subject to examination in the United States since 2021 at the federal level, since 2017 for certain states and in certain international jurisdictions since 2014.
The following table reflects changes to the reserve for uncertain tax positions, excluding accrued interest and penalties:
(in millions) | Year ended December 31, | ||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Beginning balance | $ | 83.3 | $ | 106.9 | $ | 51.8 | |||||||||||
| Additions: | |||||||||||||||||
| Tax positions related to the current year | 1.1 | 1.1 | — | ||||||||||||||
| Tax positions related to prior years | 34.0 | 1.6 | 65.2 | ||||||||||||||
| Reductions: | |||||||||||||||||
| Settlements with taxing authorities | (18.1) | — | (6.3) | ||||||||||||||
| Lapse of statutes of limitations | (1.4) | (25.6) | (4.5) | ||||||||||||||
| Currency translation | 8.0 | (0.7) | 0.7 | ||||||||||||||
| Ending balance | $ | 106.9 | $ | 83.3 | $ | 106.9 | |||||||||||
At December 31, 2025, December 31, 2024 and December 31, 2023, the total amount of unrecognized tax benefits that, if recognized, would reduce income tax expense and the effective tax rate by $79.1 million, $31.3 million and $50.8 million, respectively.
Accrued interest and penalties related to the reserve for uncertain tax positions were $11.1 million at December 31, 2025, $7.2 million at December 31, 2024 and $8.2 million at December 31, 2023.
The development of reserves for uncertain tax positions requires judgments about tax issues, potential outcomes and the timing of settlement discussions with tax authorities. If we were to prevail on all uncertain tax positions, we would recognize an income tax benefit.
Deferred tax treatment of retained goodwill
The Company completed the sale of its Clinical Services business on October 17, 2024. Under ASC 350-20-40-3, the Company determined the amount of goodwill that was deconsolidated in the sale by allocating goodwill between the Clinical Services business and the Company. The goodwill that was retained from the Clinical Services business by the Company has been treated as non-deductible goodwill, which creates a permanent basis difference for tax purposes for which no deferred tax liability has been provided.
Deferred tax treatment of goodwill impairment
In the third quarter of 2025, the Company recorded a goodwill impairment charge of $785.0 million related to our Distribution reporting unit, formerly referred to as our Buy Sell reporting unit. The impairment charge was recorded against “Component 2 goodwill”, which relates to book goodwill exceeding the amount that is tax‑deductible resulting in the goodwill being non-deductible as a permanent difference.
Other matters
Undistributed earnings of foreign subsidiaries that are deemed to be permanently reinvested amount to $2,776.2 million at December 31, 2025. In addition to the one-time transition tax imposed on all accumulated foreign undistributed earnings through December 31, 2017, undistributed earnings of foreign subsidiaries as of December 31, 2025 may still be subject to certain taxes upon repatriation, primarily
where foreign withholding taxes apply. We assert indefinite reinvestment related to investments in foreign subsidiaries. It is not practicable to calculate the unrecognized deferred tax liability on undistributed foreign earnings due to the complexity of the hypothetical calculation.
At December 31, 2025, we had federal net operating loss carryforwards of $3.1 million that have indefinite expirations and state net operating loss carryforwards of $70.8 million that expire at various times through 2041. In addition, we had foreign net operating loss carryforwards of $560.5 million, which predominantly have indefinite expirations.
On July 4, 2025, the U.S. enacted H.R. 1, commonly referred to as the One Big Beautiful Bill Act (“Act”). As a result of the Act, our current cash tax obligations were reduced by approximately $43.0 million due to changes to several provisions, including the reinstatement of immediate expensing for domestic research and development expenditures, the extension of 100% bonus depreciation for qualified properties and the relaxation of limitations on the deductibility of business interest expense. The impact on income tax expense resulting from the Act was immaterial.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 11, 2026 | Showing above |
| 2024 | Feb 7, 2025 | |
| 2023 | Feb 14, 2024 | |
| 2022 | Feb 14, 2023 | |
| 2021 | Feb 11, 2022 | |
| 2020 | Feb 16, 2021 | |
| 2019 | Feb 14, 2020 | |
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.