8. INCOME TAXES

See Note 2 - Summary of Significant Accounting Policies - Recent Accounting Pronouncements - Pronouncements Adopted in 2025. We elected to apply ASU 2023-09 prospectively, therefore, certain comparative information for the years ended December 31, 2024 and 2023 has not been reported where new disclosures not previously required are presented.

The components of income before income taxes are as follows (in thousands):


	For the Years Ended December 31,
	2025			2024			2023
United States	$	(3,247	)	$	(11,045	)	$	3,907
Other countries		49,143			57,232			37,303
Income before income taxes	$	45,896		$	46,187		$	41,210

The components of income tax expense are as follows (in thousands):


	For the Years Ended December 31,
	2025			2024			2023
Current:
United States	$	1,671		$	1,231		$	1,204
Other countries		12,217			12,205			13,446
State and provincial		222			(22	)		597
Total current		14,110			13,414			15,247
Deferred:
United States		2,173			(2,487	)		1,555
Other countries		(866	)		2,842			(12,343	)
State and provincial		88			265			(274	)
Total deferred		1,395			620			(11,062	)
Income tax expense	$	15,505		$	14,034		$	4,185

The table below summarizes cash payments, net of refunds, for income taxes by legal jurisdiction (in thousands):


	For the Year Ended December 31,
	2025
United States	$	—
Other countries:
Canada		3,030
Colombia		(1,200	)
Curacao		(2,619	)
France		1,214
Malta		2,395
Netherlands		8,067
Russia		1,349
Other countries		6,255
State and provincial		244
Total	$	18,735

The differences in income tax expense computed using the U.S. statutory income tax rate of 21% and our income tax expense as reported in the accompanying consolidated statements of operations are as follows (in thousands):


	For the Year Ended December 31,
	2025
Tax at the statutory income tax rate	$	9,638		21.0	%
State and provincial taxes (1)		263		0.6	%
Foreign taxes:
Canada
Change in valuation allowance		1,109		2.4	%
Withholding taxes		578		1.3	%
Other		775		1.7	%
Colombia
Foreign exchange		(615	)	(1.3	%)
Other		(99	)	(0.2	%)
Indonesia
Change in valuation allowance		(479	)	(1.0	%)
Other		(412	)	(0.9	%)
Malaysia
Change in valuation allowance		896		2.0	%
Other		(35	)	(0.1	%)
Mexico
Unrecoverable receivable		1,212		2.6	%
Other		165		0.3	%
Netherlands
Withholding taxes		805		1.7	%
International earnings taxed at rates other than the statutory income tax rate		886		1.9	%
Other		399		0.9	%
Curacao
Withholding taxes		(1,142	)	(2.5	%)
International earnings taxed at rates other than the statutory income tax rate		585		1.3	%
Foreign exchange		(569	)	(1.2	%)
Other		40		0.1	%
Russian Federation
Foreign exchange		(906	)	(2.0	%)
Other		(368	)	(0.8	%)
United Kingdom
Research and development credit		(628	)	(1.4	%)
Adjustments of prior year taxes - interest income		550		1.2	%
Unremitted earnings of subsidiaries		(1,346	)	(2.9	%)
Foreign exchange		(950	)	(2.1	%)
Other		1,620		3.5	%
Other countries		998		2.2	%
Withholding taxes - other countries		1,074		2.3	%
Changes in unrecognized tax benefits		(1,202	)	(2.6	%)
United States taxes:
Non-deductible expenses		1,873		4.1	%
Foreign earnings currently taxed in the U.S. :
GILTI tax		6,959		15.1	%
Subpart F income inclusion		(1,670	)	(3.6	%)
Change in valuation allowance		4,682		10.2	%
Tax credits:
Foreign tax credit		(7,853	)	(17.1	%)
Research and development credit		(376	)	(0.8	%)
Other		(952	)	(2.1	%)
Income tax expense	$	15,505		33.8	%


(1) State taxes in Texas made up the majority (greater than 50%) of the tax effect in this category.

The 2025 tax expense was primarily impacted by our geographic mix of earnings, non-deductible expenses, unrecoverable tax receivables and valuation allowance on deferred tax assets. The Company is subject to Subpart F income tax, which is a tax primarily on passive income from controlled foreign corporations. In addition, the Company recognizes global intangible low-taxed income (“GILTI”). For the year ended December 31, 2025, the Company estimates approximately $23.8 million of GILTI income and $0.5 million of Subpart F income with a U.S. tax effect of $5.0 million and $0.1 million, respectively. Foreign tax credits associated with this and other foreign income of $7.8 million were offset by $4.7 million in valuation allowance for a net benefit of $3.1 million. Additionally, for the year ended December 31, 2025, the Company recorded adjustments of prior year taxes which had a tax effect of $1.9 million and $(1.8) million associated with GILTI and Subpart F income, respectively.


	For the Years Ended December 31,
	2024			2023
Tax at the statutory income tax rate	$	9,553		$	8,139
State and provincial taxes		136			243
International earnings taxed at rates other than the statutory income tax rate		2,237			5,749
Non-deductible expenses		1,092			2,168
Net operating loss		(190	)		4,661
Foreign earnings currently taxed in the U.S.		3,934			3,077
Change in valuation allowance		337			(1,107	)
Tax credits		(5,823	)		(7,410	)
Unremitted earnings of subsidiaries		891			(14,464	)
Adjustments of prior year taxes		(935	)		701
Changes in unrecognized tax benefits		208			519
Foreign exchange		(964	)		(171	)
Accrued withholding taxes		3,262			1,639
Other		296			441
Income tax expense	$	14,034		$	4,185

For the year ended December 31, 2024, the Company estimated approximately $10.0 million of GILTI income and $8.7 million of Subpart F income with a U.S. tax effect of $2.1 million and $1.8 million, respectively. For the year ended December 31, 2023, the Company estimated no GILTI income and Subpart F income of $14.7 million with a U.S. tax effect of $3.1 million.

On July 4, 2025, the “One Big Beautiful Bill Act” (the “Act”) was enacted into law. The Act includes significant provisions, including tax cut extensions and modifications to the U.S. and international tax frameworks. We are evaluating the impact of these legislative changes as additional guidance becomes available. Currently, we do not believe legislation will have a material impact on our tax expense.

Deferred tax assets and liabilities result from various temporary differences between the financial statement carrying value and their tax basis. Deferred tax assets and liabilities are summarized as follows (in thousands):


	December 31,
	2025			2024
Deferred tax assets:
Net operating loss carry-forwards	$	8,796		$	6,279
Tax credit carry-forwards		14,889			5,811
Accruals for compensation		5,543			9,236
Accruals for inventory capitalization		1,675			1,673
Unrealized benefit from corporate restructuring		32,677			36,762
Intangibles		1,646			1,886
Unrealized benefit plan loss		796			962
Unrealized foreign exchange and capital loss carry-forwards		5,453			2,819
Unearned revenue		2,103			2,632
Interest carry-forward		15,895			16,084
Other		2,589			1,074
Total deferred tax assets		92,062			85,218
Valuation allowance		(15,833	)		(8,812	)
Net deferred tax assets		76,229			76,406
Deferred tax liabilities:
Property, plant and equipment, net		(5,947	)		(2,840	)
Accrued withholding taxes		(10,872	)		(11,279	)
Unrealized foreign exchange		—			(1,542	)
Other		(24	)		(198	)
Total deferred tax liabilities		(16,843	)		(15,859	)
Net deferred income taxes	$	59,386		$	60,547

The table below summarizes the net deferred tax assets and net deferred tax liabilities by legal jurisdiction (in thousands):


	December 31,
	2025			2024
Long-term deferred tax assets, net	$	67,381		$	69,613
Long-term deferred tax liabilities, net		(7,995	)		(9,066	)
Net deferred income taxes	$	59,386		$	60,547

Deferred tax assets associated with tax credit carryforwards are in the U.S. and interest carry-forwards are in both the U.S. and U.K. The tax credits and interest carry-forwards may only be utilized against certain U.S. and U.K. related income in their respective jurisdictions. The U.S. tax credit carryforwards have a 10-year carry-forward period from the year generated while interest carry-forwards have no expiration date.

At December 31, 2025, we had tax net operating loss carry-forwards in various tax jurisdictions of $38.3 million. As of December 31, 2025, if unused, net operating loss carry-forwards of $3.0 million will expire between 2026 and 2027, $3.2 million will expire between 2028 and 2030, $5.0 million will expire between 2031 and 2034 and $1.6 million will expire beyond 2034. The remaining balance of $25.5 million is not subject to expiration. During 2025, no material net operating loss carry-forwards expired unused, that were not subject to valuation allowance.

Although we cannot be certain that our deferred tax assets will be realized, we anticipate that we will have sufficient taxable income in future years to allow us to fully utilize those that are not subject to a valuation allowance.

We file income tax returns in the U.S. federal jurisdiction, various states and foreign jurisdictions. We are currently undergoing multiple examinations in various jurisdictions, primarily in Canada, Indonesia, Kuwait and Nigeria, and the years 2011 through 2024 remain open for examination in various tax jurisdictions in which we operate. The ultimate settlement and timing of these additional tax assessments is uncertain, but the Company will continue to vigorously defend its return filing position and does not view the assessments as probable at this time.

During 2025, adjustments were made to estimates for uncertain tax positions in certain tax jurisdictions based upon changes in facts and circumstances, resulting in a reduction to the unrecognized tax benefits. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):


	For the Years Ended December 31,
	2025			2024			2023
Unrecognized tax benefits at January 1,	$	3,272		$	3,483		$	3,509
Tax positions, current period		1,421			138			144
Tax positions, prior period		(67	)		(165	)		68
Lapse of applicable statute of limitations		(405	)		(184	)		(238	)
Unrecognized tax benefits at December 31,	$	4,221		$	3,272		$	3,483

Our policy is to record accrued interest and penalties on uncertain tax positions, net of any tax effect, as part of total tax expense for the period. The corresponding liability is carried along with the tax exposure as a non-current payable in other long-term liabilities. For the years ended December 31, 2025, 2024 and 2023, we recognized $(2.3) million, $0.2 million and $0.6 million, respectively, in interest and penalties. As of December 31, 2025 and 2024, we had $2.8 million and $5.1 million, respectively, accrued for the payment of interest and penalties. As of December 31, 2025, 2024 and 2023, there are $0.5 million, $0.4 million and $0.4 million, respectively, of unrecognized tax benefits that if recognized would affect our effective tax rate.

Historical Timeline

Fiscal Year	Filed
2025	Mar 23, 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.

Core Laboratories Inc. /DE/ Income Taxes Disclosure

Historical Timeline

About Income Taxes Disclosures

Other Available Disclosures