BELDEN INC.BDC
BELDEN INC. Income Taxes Disclosure
Income Taxes
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Income before taxes: | |||||||||||||||||
| United States operations | $ | 84,531 | $ | 74,850 | $ | 86,805 | |||||||||||
| Foreign operations | 182,335 | 153,092 | 198,951 | ||||||||||||||
| Income before taxes | $ | 266,866 | $ | 227,942 | $ | 285,756 | |||||||||||
| Income tax expense (benefit): | |||||||||||||||||
| Currently payable | |||||||||||||||||
| United States federal | $ | 14,680 | $ | 29,589 | $ | 34,091 | |||||||||||
| United States state and local | 2,308 | 1,573 | 3,900 | ||||||||||||||
| Foreign | 7,327 | 14,320 | 18,166 | ||||||||||||||
| 24,315 | 45,482 | 56,157 | |||||||||||||||
| Deferred | |||||||||||||||||
| United States federal | (1,447) | (6,342) | (7,497) | ||||||||||||||
| United States state and local | 2,721 | (1,041) | (623) | ||||||||||||||
| Foreign | 3,755 | (8,571) | (4,837) | ||||||||||||||
| 5,029 | (15,954) | (12,957) | |||||||||||||||
| Income tax expense | $ | 29,344 | $ | 29,528 | $ | 43,200 | |||||||||||
A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before taxes after the prospective adoption of ASU 2023-09 is as follows:
| Year Ended December 31, 2025 | |||||||||||
| Amount | Percentage | ||||||||||
| Effective income tax rate reconciliation: | |||||||||||
| United States Federal Statutory Tax Rate | $ | 56,041 | 21.0 | % | |||||||
| State and Local Income Taxes, Net of Federal Income Tax Effect (a) | |||||||||||
| State and local income taxes | 4,523 | 1.7 | % | ||||||||
| Capital gain on equity transfer (b) | 6,383 | 2.4 | % | ||||||||
| Changes in valuation allowances - capital loss utilization on equity transfer (b) | (6,383) | (2.4) | % | ||||||||
| Foreign Tax Effects | |||||||||||
| Belgium | (2,815) | (1.1) | % | ||||||||
| Germany | |||||||||||
| Enacted changes in tax laws or rates | 2,828 | 1.1 | % | ||||||||
| Other | (219) | (0.1) | % | ||||||||
| Malta | |||||||||||
| Statutory tax rate difference between Malta and United States | 5,025 | 1.9 | % | ||||||||
| Notional interest deduction | (8,332) | (3.1) | % | ||||||||
| Foreign exchange gain | (3,426) | (1.3) | % | ||||||||
| Other | (607) | (0.2) | % | ||||||||
| Mexico | |||||||||||
| Branch profit tax exemption | (6,678) | (2.5) | % | ||||||||
| Other | 1,743 | 0.7 | % | ||||||||
| Switzerland | 3,333 | 1.2 | % | ||||||||
| Other foreign jurisdictions | (1,556) | (0.6) | % | ||||||||
| Effect of Cross-Border Tax Laws | |||||||||||
| Global intangible low-taxed income | 16,142 | 6.0 | % | ||||||||
| Other | (1,143) | (0.4) | % | ||||||||
| Tax Credits | |||||||||||
| Foreign tax credits | (10,308) | (3.9) | % | ||||||||
| Other | (1,840) | (0.7) | % | ||||||||
| Changes in Valuation Allowances | |||||||||||
| Capital loss utilization on equity transfer (b) | (52,254) | (19.6) | % | ||||||||
| Other | (323) | (0.1) | % | ||||||||
| Nontaxable or Nondeductible Items | |||||||||||
| Branch profit tax exemption | (16,466) | (6.2) | % | ||||||||
| Limitation on executive compensation | 6,165 | 2.3 | % | ||||||||
| Share-based payment awards | (3,539) | (1.3) | % | ||||||||
| Other | 2,746 | 1.1 | % | ||||||||
| Changes in Unrecognized Tax Benefits | (11,950) | (4.5) | % | ||||||||
| Other Adjustments | |||||||||||
| Capital gain on equity transfer (b) | 52,254 | 19.6 | % | ||||||||
| Effective Tax Rate | $ | 29,344 | 11.0 | % | |||||||
(a) State taxes in Illinois, New Mexico, New Jersey, and California made up the majority (greater than 50 percent) of the tax effect in this category.
(b) Capital loss carryforward with an associated valuation allowance recorded against it was utilized to offset a capital gain derived from the sale of shares of a domestic subsidiary as part of an internal restructuring.
A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before taxes for years prior to the adoption of ASU 2023-09 is as follows:
| Years Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Effective income tax rate reconciliation: | |||||||||||
| United States federal statutory rate | 21.0% | 21.0% | |||||||||
| State and local income taxes | (0.2)% | 0.8% | |||||||||
| Impact of change in tax contingencies | 3.8% | 0.3% | |||||||||
| Foreign income tax rate differences | (11.6)% | (10.5)% | |||||||||
| Impact of change in deferred tax asset valuation allowance | (0.5)% | 0.5% | |||||||||
| Domestic permanent differences and tax credits | (0.5)% | 2.9% | |||||||||
| Impact of share-based compensation | 1.0% | 0.1% | |||||||||
| 13.0% | 15.1% | ||||||||||
In 2024, the most significant difference between the U.S. federal statutory tax rate and our effective tax rate was the impact of foreign tax rate differences. Foreign tax rate differences resulted in an income tax benefit of $26.4 million and $30.1 million in 2024 and 2023, respectively. Changes in tax contingencies, primarily associated with our foreign tax credit, was another significant difference between the U.S. federal statutory tax rate and our effective tax rate in 2024.
If we were to repatriate foreign cash to the U.S., we may be required to accrue and pay U.S. taxes in accordance with applicable U.S. tax rules and regulations as a result of the repatriation. However, it is our intent to permanently reinvest the earnings of our non-U.S. subsidiaries in those operations and for continued non-U.S. growth opportunities. The determination of the unrecognized deferred tax liability that would be incurred upon repatriation of these undistributed non-U.S. earnings is not practicable.
The components of deferred income taxes were as follows:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (In thousands) | |||||||||||
| Components of deferred income tax balances: | |||||||||||
| Deferred income tax liabilities: | |||||||||||
| Plant, equipment, and intangibles | $ | (158,176) | $ | (136,386) | |||||||
| Right of use asset | (30,246) | (31,603) | |||||||||
| (188,422) | (167,989) | ||||||||||
| Deferred income tax assets: | |||||||||||
| Net operating loss, capital loss, and tax credit carryforwards | 66,807 | 115,591 | |||||||||
| Reserves and accruals | 43,269 | 54,085 | |||||||||
| Lease liability | 31,020 | 32,351 | |||||||||
| Postretirement, pensions, and stock compensation | 16,353 | 13,045 | |||||||||
| Valuation allowances | (52,574) | (108,064) | |||||||||
| 104,875 | 107,008 | ||||||||||
| Net deferred income tax liability | $ | (83,547) | $ | (60,981) | |||||||
The decreases in valuation allowances and deferred tax assets related to net operating loss, capital loss, and tax credit carryforwards primarily relate to the utilization of a capital loss to offset a capital gain derived from the sale of shares of a domestic subsidiary as part of an internal restructuring. The net increase in deferred tax liabilities primarily relates to the accelerated amortization of previously capitalized research and experimental expenditures as a result of newly enacted tax legislation in the U.S. as well as increase to deferred tax liabilities associated with an unrealized foreign exchange gain on debt that is designated as a net investment hedge.
As of December 31, 2025, we had $123.0 million of gross net operating loss carryforwards, $10.6 million of tax credit carryforwards, and $146.9 million of gross capital loss carryforwards. Unless otherwise utilized, net operating loss carryforwards will expire upon the filing of the tax returns for the following respective years: $13.9 million between 2026 and 2028 and $54.0 million between 2029 and 2044. Net operating loss with an indefinite carryforward period total $55.1 million. Of the $123.0 million in net operating loss carryforwards, we have determined, based on the weight of all available evidence, both positive and negative, that we will utilize $36.6 million of these net operating loss carryforwards within their respective expiration periods. A valuation allowance has been recorded on the remaining portion of the net operating loss carryforwards.
Unless otherwise utilized, tax credit carryforwards of $10.6 million will expire as follows: $6.0 million between 2026 and 2028 and $3.1 million between 2029 and 2044. Tax credit carryforwards with an indefinite carryforward period total $1.5 million. We have determined, based on the weight of all available evidence, both positive and negative, that we will utilize $7.7 million of these tax credit carryforwards within their respective expiration periods. A valuation allowance has been recorded on the remaining portion of the tax credit carryforwards.
Unless otherwise utilized, of the $146.9 million in gross capital loss carryforwards, $102.7 million will expire between 2027 and 2029 and the remaining $44.2 million have an indefinite carryforward period. A full valuation allowance has been recorded as we do not expect to be able to utilize the capital losses.
The following tables summarize our net operating loss carryforwards and tax credit carryforwards as of December 31, 2025 by jurisdiction:
| Net Operating Loss Carryforwards | |||||
| (In thousands) | |||||
| United States - Federal and various states | $ | 35,832 | |||
| Other | 25,405 | ||||
| Switzerland | 22,378 | ||||
| Germany | 22,040 | ||||
| United Kingdom | 17,317 | ||||
| Total | $ | 122,972 | |||
| Tax Credit Carryforwards | |||||
| (In thousands) | |||||
| United States | $ | 9,120 | |||
| Belgium | 1,506 | ||||
| Total | $ | 10,626 | |||
In 2025, we recognized a net $12.0 million decrease to reserves for uncertain tax positions primarily related to certain tax credits as a result of an income tax audit settlement. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
| 2025 | 2024 | ||||||||||
| (In thousands) | |||||||||||
| Balance at beginning of year | $ | 15,681 | $ | 7,143 | |||||||
| Additions for tax positions of prior years | 222 | 9,354 | |||||||||
| Additions based on tax positions related to the current year | 551 | 524 | |||||||||
| Reduction for tax positions of prior years | (12,736) | (1,340) | |||||||||
| Balance at end of year | $ | 3,718 | $ | 15,681 | |||||||
The balance of $3.7 million at December 31, 2025 reflects tax positions that, if recognized, would impact our effective tax rate. Our practice is to recognize interest and penalties related to uncertain tax positions in interest expense and operating expenses, respectively. As of December 31, 2025 and 2024, we accrued $0.2 million and $0.1 million for the payment of interest and penalties.
See Note 24, Supplemental Cash Flow Information, for further information regarding income tax payments.
Our federal tax return for the tax years 2022 and later remain subject to examination by the Internal Revenue Service. Our state and foreign income tax returns for the tax years 2015 and later remain subject to examination by various state and foreign tax authorities.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 17, 2026 | Showing above |
| 2024 | Feb 13, 2025 | |
| 2023 | Feb 13, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 15, 2022 | |
| 2020 | Feb 16, 2021 | |
| 2019 | Feb 11, 2020 | |
| 2018 | Feb 20, 2019 | |
| 2017 | Feb 13, 2018 | |
| 2016 | Feb 17, 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.