BRUNSWICK CORPBC
BRUNSWICK CORP Income Taxes Disclosure
Income Taxes
The sources of (Loss) earnings before income taxes were as follows:
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| United States | $ | (271.9) | $ | 89.9 | $ | 364.4 | |||||||||||
| Foreign | 136.2 | 113.4 | 264.5 | ||||||||||||||
| (Loss) earnings before income taxes | $ | (135.7) | $ | 203.3 | $ | 628.9 | |||||||||||
Income tax expense from continuing operations:
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Current tax expense: | |||||||||||||||||
| U.S. Federal | $ | 21.7 | $ | 20.2 | $ | 88.7 | |||||||||||
| State and local | 4.2 | 7.8 | 17.3 | ||||||||||||||
| Foreign | 56.1 | 41.6 | 73.9 | ||||||||||||||
| Total current | 82.0 | 69.6 | 179.9 | ||||||||||||||
| Deferred tax (benefit) expense: | |||||||||||||||||
| U.S. Federal | (60.6) | (13.1) | 17.2 | ||||||||||||||
| State and local | (14.9) | 11.7 | 10.2 | ||||||||||||||
| Foreign | (6.3) | (14.2) | (11.0) | ||||||||||||||
| Total deferred | (81.8) | (15.6) | 16.4 | ||||||||||||||
| Income tax provision | $ | 0.2 | $ | 54.0 | $ | 196.3 | |||||||||||
Temporary differences and carryforwards giving rise to deferred tax assets and liabilities as of December 31, 2025, and 2024 are summarized in the table below:
| (in millions) | 2025 | 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Loss carryforwards | $ | 59.9 | $ | 60.5 | |||||||
| Tax credit carryforwards | 57.4 | 53.0 | |||||||||
| Deferred revenue | 39.8 | 40.2 | |||||||||
| Product warranties | 36.3 | 34.4 | |||||||||
| Sales incentives and discounts | 31.0 | 30.3 | |||||||||
| Operating lease liabilities | 30.4 | 30.1 | |||||||||
| Compensation and benefits | 21.7 | 3.3 | |||||||||
| Interest expense | 19.3 | 33.5 | |||||||||
| Other | 99.8 | 92.2 | |||||||||
| Gross deferred tax assets | 395.6 | 377.5 | |||||||||
| Valuation allowance | (74.8) | (75.1) | |||||||||
| Deferred tax assets | 320.8 | 302.4 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Operating lease assets | (28.6) | (28.3) | |||||||||
| State and local income taxes | (24.1) | (22.6) | |||||||||
| Depreciation and amortization | (3.0) | (54.3) | |||||||||
| Other | (3.1) | (10.1) | |||||||||
| Deferred tax liabilities | (58.8) | (115.3) | |||||||||
| Total net deferred tax assets | $ | 262.0 | $ | 187.1 | |||||||
As of December 31, 2025, the Company had a total valuation allowance against its deferred tax assets of $74.8 million. The remaining realizable value of deferred tax assets as of December 31, 2025 was determined by evaluating the potential to recover the value of these assets through the utilization of tax loss and credit carrybacks, the reversal of existing taxable temporary differences and carryforwards, certain tax planning strategies and future taxable income exclusive of reversing temporary differences and carryforwards. As of December 31, 2025, the Company retained valuation allowance reserves of $54.0 million against deferred tax assets in the U.S. primarily related to state tax credits that are subject to restrictive rules for future utilization, various state operating loss carryforwards, and non-amortizable intangibles and valuation allowances of $20.8 million for deferred tax assets related to foreign jurisdictions, primarily Luxembourg.
As of December 31, 2025, the tax benefit of loss carryforwards totaling $60.0 million was available to reduce future tax liabilities. This deferred tax asset was comprised of $0.8 million for the tax benefit of federal net operating loss (NOL) carryforwards, $20.5 million for the tax benefit of state NOL carryforwards and $38.7 million for the tax benefit of foreign NOL carryforwards. NOL carryforwards of $38.0 million expire at various intervals between the years 2026 and 2045, while $22.0 million have an unlimited life.
As of December 31, 2025, tax credit carryforwards totaling $57.4 million were available to reduce future tax liabilities. This deferred tax asset was comprised of $3.9 million related to federal tax credits, $51.5 million of various state tax credits related to research and development, capital investment and job incentives and $2.0 million related to foreign tax credits. Tax credit carryforwards of $55.4 million expire at various intervals between the years 2026 and 2040, while $2.0 million have an unlimited life.
No deferred income taxes have been provided as of December 31, 2025 or 2024 on the applicable undistributed earnings of the non-U.S. subsidiaries where the indefinite reinvestment assertion has been applied. If at some future date these earnings cease to be indefinitely reinvested and are repatriated, the Company may be subject to additional U.S. income taxes and foreign withholding and other taxes on such amounts. Remittances from foreign
subsidiaries are generally not subject to U.S. income taxation. These remittances are either excluded from U.S. taxable income as earnings that have already been subjected to taxation or in the alternative are subject to a 100 percent foreign dividends received deduction. The Company continues to provide deferred taxes, primarily related to foreign withholding taxes, on the undistributed net earnings of foreign subsidiaries and unconsolidated affiliates that are not deemed to be indefinitely reinvested in operations outside the United States, although such amounts were immaterial as of December 31, 2025, and 2024. We have not provided for deferred taxes on the outside basis differences in our investments in our foreign subsidiaries. A determination of the unrecognized deferred taxes related to these outside basis differences is not practicable.
The balance of gross unrecognized tax benefits and related activity were not material in any period presented.
The following is a reconciliation of the total amounts of unrecognized tax benefits excluding interest and penalties for 2025, 2024, and 2023 annual reporting periods:
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Balance as of January 1 | $ | 5.2 | $ | 8.4 | $ | 7.5 | |||||||||||
| Gross increases - tax positions prior periods | 2.9 | 0.3 | 0.9 | ||||||||||||||
| Gross decreases - tax positions prior periods | (0.4) | (0.1) | — | ||||||||||||||
| Decreases - settlements with taxing authorities | — | (0.1) | — | ||||||||||||||
| Reductions - lapse of statute of limitations | (0.4) | (3.3) | — | ||||||||||||||
| Balance as of December 31 | $ | 7.3 | $ | 5.2 | $ | 8.4 | |||||||||||
The Company is regularly audited by federal, state and foreign tax authorities. The Internal Revenue Service (IRS) has completed its field examination and has issued its Revenue Agents Report through the 2014 tax year and all open issues have been resolved. The Company is currently open to tax examinations by the IRS for the 2022 through 2024 tax years. The Company is open to state and local tax audits in major tax jurisdictions dating back to the 2017 taxable year. The Company is no longer subject to income tax examinations by any major foreign tax jurisdiction for years prior to 2015.
The Company has evaluated the effects of the Global Anti-Base Erosion Model Rules set forth by the Organization for Economic Co-operation and Development (OECD), referred to as “Pillar Two”, which establishes a global minimum corporate tax rate of 15 percent. The Company has determined that Pillar Two legislation has been enacted in one or more of the jurisdictions in which we operate and the Company is within the scope of the legislation. The Company assessed such enacted legislation, and, as applicable, the transitional safe harbor provisions of Pillar Two, and concluded that the tax effects are not material to the Company's consolidated financial statements.
On July 4, 2025, H.R.1, commonly referred to as the One Big Beautiful Bill Act (the Act), was signed into law. The Act includes tax reform provisions affecting business. Key tax-related provisions include an elective deduction for domestic research and development expenses and a reinstatement of elective 100% first year bonus depreciation. Certain changes adopted in the act will not take effect until 2026, such as the modifications to the international tax framework. We continue to monitor the impact of the Act and to evaluate the different elections that are available with respect to the timing of deductions. The Act did not have a material impact on the Company's financial statements for the year ended December 31, 2025.
The table below provides the updated requirements of ASU 2023-09 for 2025 on a prospective basis. See Note 1– Significant Accounting Polices for additional details on the adoptions of ASU 2023-09.
The effective income tax rate for the year ended December 31, 2025 differs from the statutory federal income tax rate as follows:
| For the Year Ended December 31, 2025 | ||||||||||||||
| (in millions, except percentages) | $ | % | ||||||||||||
| U.S. federal statutory rate | $ | (28.5) | 21.0 | % | ||||||||||
| Tax credits | ||||||||||||||
| Research credits | (7.5) | 5.5 | % | |||||||||||
| Other | (0.1) | 0.1 | % | |||||||||||
| Nontaxable or nondeductible items | ||||||||||||||
| Goodwill amortization/asset impairment | 26.0 | (19.2) | % | |||||||||||
| Executive compensation | 3.0 | (2.2) | % | |||||||||||
| Stock incentive compensation | 1.8 | (1.3) | % | |||||||||||
| Other | 1.7 | (1.2) | % | |||||||||||
| Effect of cross-border tax laws | ||||||||||||||
| Foreign derived intangible income (FDII) deduction, net of provision to return | (5.6) | 4.1 | % | |||||||||||
| Foreign dividends/deemed income inclusions, net of credits | (4.6) | 3.4 | % | |||||||||||
| Provision to return - BEAT tax liability | 2.4 | (1.8) | % | |||||||||||
| Other | (1.3) | 1.0 | % | |||||||||||
| Valuation allowance | 1.2 | (0.9) | % | |||||||||||
| Other adjustments | 0.8 | (0.6) | % | |||||||||||
| Enactment of new tax laws | 0.0 | 0.0 | % | |||||||||||
Domestic state and local income taxes, net of federal income tax effect (A) | (9.5) | 7.0 | % | |||||||||||
| Foreign tax effects | ||||||||||||||
| Canada | 1.5 | (1.1) | % | |||||||||||
| Germany | 1.6 | (1.2) | % | |||||||||||
| Luxembourg - withholding taxes and other | 2.8 | (2.1) | % | |||||||||||
Mexico - non-taxable or non-deductible items (B) | 1.6 | (1.2) | % | |||||||||||
| Norway - provision to return and other | 2.8 | (2.0) | % | |||||||||||
| Singapore - withholding taxes and other | 3.1 | (2.3) | % | |||||||||||
| Other jurisdictions | 5.6 | (4.1) | % | |||||||||||
| Worldwide changes in unrecognized tax benefits | ||||||||||||||
| Belgium | 1.6 | (1.2) | % | |||||||||||
| Other | (0.2) | 0.1 | % | |||||||||||
| Income tax provision | $ | 0.2 | (0.2) | % | ||||||||||
(A) For the year ended December 31, 2025, Minnesota and Wisconsin make up the majority of the effect of the state and local income taxes. The tax effect in this category was related to state valuation allowance of $(4.6) million (3.4%), state tax credits of $(2.6) million (1.9%), and other state and local income taxes of $(2.3) million (1.7%).
(B) For the year ended December 31, 2025, the tax effect in this category was related to compensation adjustments $(4.0) million (2.9%), non-U.S. income tax $2.2 million ((1.6)%), other non-deductibles $1.7 million ((1.3)%), tax rate differential $2.3 million ((1.7)%), and other non-taxable items $(0.6) million (0.4%).
As previously disclosed for the year ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective tax rate is attributable to the following:
| (in millions) | 2024 | 2023 | ||||||||||||
| U.S. federal statutory rate | $ | 42.7 | $ | 132.1 | ||||||||||
| State and local income taxes, net of federal income tax effect | 4.2 | 13.3 | ||||||||||||
| Deferred tax asset valuation allowance | 5.0 | 17.8 | ||||||||||||
| Change in estimates related to prior years and prior years amended tax return filings | 3.4 | 1.8 | ||||||||||||
| Federal and state tax credits | (10.2) | (15.2) | ||||||||||||
| Taxes related to foreign income, net of credits | 2.6 | (4.5) | ||||||||||||
| Deferred tax reassessment | 7.3 | 2.5 | ||||||||||||
| Tax reserve reassessment | (3.4) | 0.8 | ||||||||||||
| Asset impairment | 6.8 | — | ||||||||||||
| FDII deduction | (8.7) | (16.6) | ||||||||||||
| Intercompany sales of intellectual property rights | — | 53.1 | ||||||||||||
| Nondeductible loss on intercompany sale | — | 6.9 | ||||||||||||
| Other | 4.3 | 4.3 | ||||||||||||
| Income tax provision | $ | 54.0 | $ | 196.3 | ||||||||||
Effective tax rate | 26.6 | % | 31.2 | % | ||||||||||
For the year ended December 31, 2025, the Company recorded $2.7 million of income tax benefit related to a decrease in its valuation allowance on deferred tax assets and $26.0 million of income tax benefit related to the impairment of the Navico Group reporting unit's goodwill. The valuation allowance decrease is primarily due to certain federal tax credits, state credits and NOLs that may not be realized in future years.
For the year ended December 31, 2024, the Company recorded $5.0 million of income tax expense related to an increase in its valuation allowance on deferred tax assets and $6.8 million of income tax expense related to the impairment of the Navico Group reporting unit's goodwill. The valuation allowance increase is primarily due to certain federal tax credits, state credits and NOLs that may not be realized in future years.
The following supplemental schedule of cash paid for income taxes, net of refunds:
| (in millions) | 2025 | |||||||
| Cash paid during the period for income taxes: | ||||||||
| U.S. Federal | $ | 3.7 | ||||||
| U.S. state and local | 0.1 | |||||||
| Foreign | ||||||||
| Norway | 10.2 | |||||||
| China | 9.5 | |||||||
| Belgium | 5.7 | |||||||
| Mexico | 5.4 | |||||||
| Canada | 2.8 | |||||||
| Other | 10.8 | |||||||
| Total cash paid during the period for income taxes | $ | 48.2 | ||||||
Cash paid for income taxes, prior to the adoption of ASU 2023-09, was $93.5 million and $175.4 million for the years ended December 31, 2024 and 2023, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 13, 2026 | Showing above |
| 2024 | Feb 14, 2025 | |
| 2023 | Feb 16, 2024 | |
| 2022 | Feb 16, 2023 | |
| 2021 | Feb 16, 2022 | |
| 2020 | Feb 16, 2021 | |
| 2019 | Feb 18, 2020 | |
| 2018 | Feb 19, 2019 | |
| 2017 | Feb 20, 2018 | |
| 2016 | Feb 17, 2017 | |
| 2015 | Feb 17, 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.