CDW CorpCDW
CDW Corp Income Taxes Disclosure
Income Taxes
Income before income taxes was taxed under the following jurisdictions:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Domestic | $ | 1,261.8 | $ | 1,312.5 | $ | 1,298.1 | ||||||||||||||
| Foreign | 165.6 | 122.9 | 152.1 | |||||||||||||||||
| Total | $ | 1,427.4 | $ | 1,435.4 | $ | 1,450.2 | ||||||||||||||
Components of Income tax expense (benefit) consist of the following:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Current: | ||||||||||||||||||||
| Federal | $ | 242.7 | $ | 267.4 | $ | 267.3 | ||||||||||||||
| State | 70.5 | 72.8 | 69.7 | |||||||||||||||||
| Foreign | 46.3 | 31.5 | 41.6 | |||||||||||||||||
| Total current | 359.5 | 371.7 | 378.6 | |||||||||||||||||
| Deferred: | ||||||||||||||||||||
| Federal | 9.3 | (13.1) | (22.9) | |||||||||||||||||
| State | (6.7) | (0.9) | (6.4) | |||||||||||||||||
| Foreign | (1.3) | (0.1) | (3.4) | |||||||||||||||||
| Total deferred | 1.3 | (14.1) | (32.7) | |||||||||||||||||
| Income tax expense | $ | 360.8 | $ | 357.6 | $ | 345.9 | ||||||||||||||
The following table is a reconciliation between the statutory tax rate expressed as a percentage of income before income taxes and the effective income tax rate for the year ended December 31, 2025, based on the adoption of ASU 2023-09:
| Year Ended December 31, | ||||||||||||||
| 2025 | ||||||||||||||
| Statutory federal income tax rate | $ | 299.7 | 21.0 | % | ||||||||||
State and local tax, net of federal income tax effect(1) | 50.5 | 3.5 | ||||||||||||
| Foreign tax effects | 10.0 | 0.7 | ||||||||||||
| Nontaxable or nondeductible items: | ||||||||||||||
| Excess tax benefits on equity awards | (3.1) | (0.2) | ||||||||||||
| Other nontaxable or nondeductible items | 10.3 | 0.7 | ||||||||||||
| Total nontaxable or nondeductible items | 7.2 | 0.5 | ||||||||||||
| Other | (6.6) | (0.5) | ||||||||||||
| Effective income tax rate | $ | 360.8 | 25.3 | % | ||||||||||
(1)The states that contribute the majority (greater than 50%) of the tax effect in this category include Illinois, California, New York, and New Jersey for the year-ended December 31, 2025.
The following table is a reconciliation between the statutory tax rate expressed as a percentage of income before income taxes and the effective income tax rate for the years ended December 31, 2024 and 2023 prior to the adoption of ASU 2023-09.
| Year Ended December 31, | ||||||||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||||||||
| Statutory federal income tax rate | $ | 301.4 | 21.0 | % | $ | 304.5 | 21.0 | % | ||||||||||||||||||
| State taxes, net of federal effect | 60.0 | 4.2 | 55.8 | 3.8 | ||||||||||||||||||||||
| Excess tax benefit of equity awards | (15.5) | (1.1) | (29.6) | (2.0) | ||||||||||||||||||||||
| Tax on foreign earnings | 5.8 | 0.4 | 8.5 | 0.6 | ||||||||||||||||||||||
| Other | 5.9 | 0.4 | 6.7 | 0.5 | ||||||||||||||||||||||
| Effective income tax rate | $ | 357.6 | 24.9 | % | $ | 345.9 | 23.9 | % | ||||||||||||||||||
The following table presents income taxes paid, net of refunds, for the year ended December 31, 2025, based on the adoption of ASU 2023-09:
| Year Ended December 31, | ||||||||
| 2025 | ||||||||
| Federal | $ | 212.4 | ||||||
| State | 65.8 | |||||||
| Foreign | ||||||||
| UK | 29.6 | |||||||
| All other foreign | 18.2 | |||||||
| Total | $ | 326.0 | ||||||
In 2025, the UK was the only jurisdiction with cash taxes paid that equaled or exceeded 5% of total income taxes paid.
The tax effect of temporary differences that give rise to net deferred income tax liabilities is presented below.
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Deferred tax assets: | ||||||||||||||
| Contract liabilities | $ | 45.8 | $ | 33.5 | ||||||||||
| Equity compensation plans | 28.2 | 29.4 | ||||||||||||
| Net operating loss and credit carryforwards, net | 32.0 | 40.2 | ||||||||||||
| Payroll and benefits | 5.8 | 10.3 | ||||||||||||
| Operating lease liabilities | 43.2 | 38.7 | ||||||||||||
| Accounts receivable | 27.3 | 20.7 | ||||||||||||
| Other | 20.4 | 22.5 | ||||||||||||
| Total deferred tax assets | 202.7 | 195.3 | ||||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Acquisition-related intangibles | 251.6 | 279.8 | ||||||||||||
| Property and equipment | 42.8 | 14.7 | ||||||||||||
| Operating lease right-of-use assets | 28.4 | 22.5 | ||||||||||||
| Other | 28.6 | 23.0 | ||||||||||||
| Total deferred tax liabilities | 351.4 | 340.0 | ||||||||||||
| Deferred tax asset valuation allowance | 22.5 | 21.9 | ||||||||||||
| Net deferred tax liabilities | $ | 171.2 | $ | 166.6 | ||||||||||
The Company has income tax net operating losses of $108 million that do not expire and international tax credit carryforwards of $17 million, which expire in 2027.
The Company is indefinitely reinvested in its UK business, and therefore did not provide for any US deferred taxes on the earnings of the UK business. The Company is not permanently reinvested in its Canadian business and therefore has recognized deferred tax liabilities of $9 million as of December 31, 2025, related to Canada withholding taxes on earnings of its Canadian business.
In the ordinary course of business, the Company is subject to review by domestic and foreign taxing authorities, including the Internal Revenue Service (“IRS”). In general, the Company is no longer subject to audit by the IRS or state, local, or foreign taxing authorities for tax years through 2014. Various taxing authorities are in the process of auditing income tax returns of the Company and its subsidiaries. The Company does not anticipate that any adjustments from the audits would have a material impact on its Consolidated Financial Statements.
Changes in the Company’s unrecognized tax benefits as of December 31, 2025, 2024, and 2023 were as follows:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Balance as of January 1 | $ | 19.7 | $ | 19.3 | $ | 18.7 | ||||||||||||||
| Additions/reductions for current year and prior year | (1.2) | 0.4 | 0.6 | |||||||||||||||||
| Balance as of December 31 | $ | 18.5 | $ | 19.7 | $ | 19.3 | ||||||||||||||
As of December 31, 2025, the Company had $19 million of unrecognized tax benefits that, if recognized, would have decreased income taxes and the corresponding effective income tax rate and increased net income. The impact of recognizing these tax benefits, net of the federal income tax benefit related to unrecognized state income tax benefits, would be approximately $15 million.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 20, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 26, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Feb 27, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Mar 1, 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.