CHURCH & DWIGHT CO INC /DE/ Income Taxes Disclosure
The components of income before taxes are as follows:
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Domestic |
|
$ |
876.6 |
|
|
$ |
666.5 |
|
|
$ |
872.4 |
|
Foreign |
|
|
80.3 |
|
|
|
89.8 |
|
|
|
95.0 |
|
Total |
|
$ |
956.9 |
|
|
$ |
756.3 |
|
|
$ |
967.4 |
|
The following table summarizes the provision for U.S. federal, state and foreign income taxes:
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Current: |
|
|
|
|
|
|
|
|
|
|||
U.S. federal |
|
$ |
129.5 |
|
|
$ |
180.9 |
|
|
$ |
159.1 |
|
State |
|
|
31.7 |
|
|
|
45.2 |
|
|
|
40.9 |
|
Foreign |
|
|
22.9 |
|
|
|
26.9 |
|
|
|
25.6 |
|
|
|
|
184.1 |
|
|
|
253.0 |
|
|
|
225.6 |
|
Deferred: |
|
|
|
|
|
|
|
|
|
|||
U.S. federal |
|
|
44.3 |
|
|
|
(64.5 |
) |
|
|
(11.3 |
) |
State |
|
|
(9.7 |
) |
|
|
(15.7 |
) |
|
|
(2.8 |
) |
Foreign |
|
|
1.4 |
|
|
|
(1.8 |
) |
|
|
0.3 |
|
|
|
|
36.0 |
|
|
|
(82.0 |
) |
|
|
(13.8 |
) |
Total provision |
|
$ |
220.1 |
|
|
$ |
171.0 |
|
|
$ |
211.8 |
|
Deferred tax assets (liabilities) consist of the following at December 31, 2025 and 2024:
|
|
2025 |
|
|
2024 |
|
||
Deferred tax assets: |
|
|
|
|
|
|
||
Accounts receivable |
|
$ |
7.2 |
|
|
$ |
7.4 |
|
Deferred compensation |
|
|
55.8 |
|
|
|
51.7 |
|
Pension, postretirement, and postemployment benefits |
|
|
4.8 |
|
|
|
2.9 |
|
Inventory reserve |
|
|
7.7 |
|
|
|
8.6 |
|
Sec 174 R&D capitalization |
|
|
13.4 |
|
|
|
59.4 |
|
ASC 842 lease liabilities |
|
|
32.9 |
|
|
0.0 |
|
|
Tax credit carryforwards/other tax attributes |
|
|
9.1 |
|
|
|
5.1 |
|
International operating loss carryforwards |
|
|
8.9 |
|
|
|
8.4 |
|
Other |
|
|
18.1 |
|
|
|
8.8 |
|
Total gross deferred tax assets |
|
|
157.9 |
|
|
|
152.3 |
|
Valuation allowances |
|
|
(17.1 |
) |
|
|
(14.3 |
) |
Total deferred tax assets |
|
|
140.8 |
|
|
|
138.0 |
|
Deferred tax liabilities: |
|
|
|
|
|
|
||
Goodwill |
|
|
(311.0 |
) |
|
|
(298.7 |
) |
Trade names and other intangibles |
|
|
(579.2 |
) |
|
|
(415.0 |
) |
Property, plant, and equipment |
|
|
(96.2 |
) |
|
|
(85.2 |
) |
ASC 842 Right of Use assets |
|
|
(30.4 |
) |
|
0.0 |
|
|
Interest rate swaps |
|
|
(3.2 |
) |
|
|
(3.7 |
) |
Total deferred tax liabilities |
|
|
(1,020.0 |
) |
|
|
(802.6 |
) |
Net deferred tax liability |
|
$ |
(879.2 |
) |
|
$ |
(664.6 |
) |
Long term net deferred tax asset |
|
|
7.7 |
|
|
|
4.6 |
|
Long term net deferred tax liability |
|
|
(886.9 |
) |
|
|
(669.2 |
) |
Net deferred tax liability |
|
$ |
(879.2 |
) |
|
$ |
(664.6 |
) |
The difference between tax expense and the tax that would result from the application of the federal statutory rate is as follows:
|
2025 |
|
||||
|
Amount |
|
Percent |
|
||
Federal |
$ |
119.0 |
|
|
63.2 |
% |
State |
|
40.6 |
|
|
21.6 |
% |
Foreign |
|
28.5 |
|
|
15.2 |
% |
Total Income Tax Paid |
$ |
188.1 |
|
|
100.0 |
% |
|
2025 |
|
||||
|
Amount |
|
Percent |
|
||
U.S. Federal Statutory Tax Rate |
$ |
200.9 |
|
|
21.0 |
% |
State and Local Income Taxes, Net of Federal Income Tax Effect (a) |
|
17.4 |
|
|
1.8 |
|
Foreign Tax Effects |
|
8.2 |
|
|
0.9 |
|
Effect of Cross-Border Tax Laws |
|
(3.1 |
) |
|
-0.3 |
|
Tax Credits |
|
(6.2 |
) |
|
-0.6 |
|
Changes in Valuation Allowances |
|
3.2 |
|
|
0.3 |
|
Nontaxable or Nondeductible Items |
|
5.2 |
|
|
0.5 |
|
Changes in Unrecognized Tax Benefits |
|
1.0 |
|
|
0.1 |
|
Other Adjustments |
|
(6.5 |
) |
|
-0.7 |
|
ASC 842 Right of Use Assets |
|
26.5 |
|
|
2.8 |
|
ASC 842 Lease Liabilities |
|
(28.6 |
) |
|
-3.0 |
|
Other |
|
(4.4 |
) |
|
-0.5 |
|
Effective Tax Rate |
$ |
220.1 |
|
|
23.0 |
% |
(a) State taxes in Florida, Illinois, New Jersey, New York, and Texas made up of the majority (greater than 50%) of the tax effect in this category.
|
|
|
2024 |
|
|
2023 |
|
||
Statutory rate |
|
|
|
21 |
% |
|
|
21 |
% |
Tax that would result from use of the federal statutory rate |
|
|
$ |
158.8 |
|
|
$ |
203.1 |
|
State and local income tax, net of federal effect |
|
|
|
23.3 |
|
|
|
30.1 |
|
Varying tax rates of foreign affiliates |
|
|
|
6.9 |
|
|
|
6.8 |
|
Valuation Allowances |
|
|
|
2.1 |
|
|
0.0 |
|
|
Stock Options Exercised |
|
|
|
(23.0 |
) |
|
|
(21.8 |
) |
Reserve for Uncertain Tax Position |
|
|
|
0.3 |
|
|
|
(0.3 |
) |
Other |
|
|
|
2.6 |
|
|
|
(6.1 |
) |
Recorded tax expense |
|
|
$ |
171.0 |
|
|
$ |
211.8 |
|
Effective tax rate |
|
|
|
22.6 |
% |
|
|
21.9 |
% |
At December 31, 2025 and 2024, respectively, certain foreign subsidiaries of the Company had net operating loss carryforwards of approximately $8.1 and $8.3, which are not subject to expiration. The Company believes that it is more likely than not that the benefit from these net operating loss carryforwards will not be realized. In recognition of this risk, the Company has provided a valuation allowance of $8.1 and $8.3 at December 31, 2025 and 2024, respectively, on the deferred tax asset relating to these net operating loss carryforwards.
The Company also believes that it is more likely than not that the benefit from certain additional deferred tax assets of a foreign subsidiary will not be realized. In recognition of this risk, the Company maintains a valuation allowance of $0.6 and $0.7 at December 31, 2025 and 2024, respectively, on these deferred tax assets.
The Company has foreign tax credit carryforwards of approximately $9.3 and $5.2 as of December 31, 2025 and 2024, respectively. The Company believes that it is more likely than not that the benefit from a majority of the foreign tax credit carryforwards as of December 31, 2025 will not be realized. In recognition of this risk, the Company has provided a valuation allowance of $8.4 and $5.2 at December 31, 2025 and 2024, respectively, on the deferred tax asset relating to these foreign tax credit carryforwards. The Company does not have any undistributed earnings of foreign subsidiaries that are considered to be indefinitely reinvested outside of the U.S.
The Company has recorded liabilities in connection with uncertain tax positions, which, although supportable by the Company, may be challenged by tax authorities.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Unrecognized tax benefits at January 1 |
|
$ |
5.4 |
|
|
$ |
5.1 |
|
|
$ |
5.8 |
|
Gross increases - tax positions in current period |
|
|
6.1 |
|
|
|
0.9 |
|
|
0.0 |
|
|
Lapse of statute of limitations |
|
|
(0.7 |
) |
|
|
(0.6 |
) |
|
|
(0.7 |
) |
Unrecognized tax benefits at December 31 |
|
$ |
10.8 |
|
|
$ |
5.4 |
|
|
$ |
5.1 |
|
Included in the balance of unrecognized tax benefits at December 31, 2025, 2024 and 2023 are $9.1, $4.5 and $4.2, respectively, of tax benefits that, if recognized, would affect the effective tax rate. Also included in the balance of unrecognized tax benefits at December 31, 2025, 2024 and 2023 are $1.7, $0.9 and $0.9, respectively, of tax benefits that, if recognized, would result in adjustments to deferred taxes.
The Company is subject to U.S. federal income tax as well as income tax in multiple state and international jurisdictions. The Company’s U.S. federal income tax returns are closed for tax years through 2021. The Company is currently under audit by several state taxing authorities for the years 2017 through 2023. It is reasonably possible that a decrease of approximately $0.5 in the unrecognized tax benefits may occur within the next twelve months related to the settlement of these audits or the lapse of applicable statutes of limitations.
The Company’s policy for recording interest associated with income tax examinations is to record interest as a component of Income before Income Taxes. During the twelve months ended December 31, 2025, 2024, and 2023, the Company recognized interest expense associated with uncertain tax positions of approximately $0.5, $0.4 and $0.3, respectively. As of December 31, 2025, 2024, and 2023, the Company had accrued interest expense related to unrecognized tax benefits of $2.0, $1.3 and $0.9, respectively.
On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (the “Act”), which contains provisions effective January 1, 2023, including a 15% corporate minimum tax and a 1% excise tax on stock buybacks. The law did not have any material impacts on the Company's consolidated financial position, results of operations or cash flows during the year ended December 31, 2025.
On July 4,2025, President Trump signed into law the legislation formally titled "An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14" and commonly referred to as the One Big Beautiful Bill Act ("OBBBA"). The legislation includes several provisions that may impact the timing and magnitude of certain tax deductions. Key provisions include the permanent extension of several key elements of the 2017 Tax Cuts and Jobs Act, including 100% bonus depreciation and an immediate tax deduction for domestic research costs. The tax provisions in OBBBA did not have a material impact on our financial position and results of operations, and had approximately a minimal benefit to operating cash flows.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 12, 2026 | Showing above |
| 2024 | Feb 13, 2025 | |
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.