CLEAN HARBORS INCCLH
CLEAN HARBORS INC Income Taxes Disclosure
INCOME TAXES
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The domestic and foreign components of income before provision for income taxes were as follows (in thousands):
| For the years ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Domestic | $ | 441,591 | $ | 444,118 | $ | 401,912 | |||||||||||
| Foreign | 86,376 | 89,325 | 101,367 | ||||||||||||||
| Total | $ | 527,967 | $ | 533,443 | $ | 503,279 | |||||||||||
The provision for income taxes consisted of the following (in thousands):
| For the years ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 66,183 | $ | 68,321 | $ | 64,164 | |||||||||||
| State | 24,264 | 27,649 | 25,496 | ||||||||||||||
| Foreign | 20,783 | 16,737 | 23,078 | ||||||||||||||
| 111,230 | 112,707 | 112,738 | |||||||||||||||
| Deferred | |||||||||||||||||
| Federal | 22,556 | 20,669 | 18,251 | ||||||||||||||
| State | 3,771 | (4,415) | (9,049) | ||||||||||||||
| Foreign | (564) | 2,183 | 3,483 | ||||||||||||||
| 25,763 | 18,437 | 12,685 | |||||||||||||||
| Provision for income taxes | $ | 136,993 | $ | 131,144 | $ | 125,423 | |||||||||||
The Company's effective income tax rate varied from the amount computed using the statutory federal income tax rate of 21% as follows (in thousands, except percentages):
| For the years ended December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||
| Adjusted pre-tax book income | $ | 527,967 | $ | 533,443 | $ | 503,279 | |||||||||||||||||||||||||||||
| U.S. federal statutory tax rate | 110,873 | 21.0 | % | 112,023 | 21.0 | % | 105,689 | 21.0 | % | ||||||||||||||||||||||||||
State and local income taxes, net of federal income tax effect(1) | 22,147 | 4.2 | 18,480 | 3.5 | 12,948 | 2.6 | |||||||||||||||||||||||||||||
| Foreign tax effects | |||||||||||||||||||||||||||||||||||
| Canada | |||||||||||||||||||||||||||||||||||
| Statutory tax rate difference between Canada and the United States | (4,600) | (0.9) | (4,876) | (0.9) | (5,630) | (1.1) | |||||||||||||||||||||||||||||
| Provincial income taxes | 6,673 | 1.3 | 7,391 | 1.4 | 9,786 | 1.9 | |||||||||||||||||||||||||||||
| Divestiture of business | (5,693) | (1.1) | — | — | — | — | |||||||||||||||||||||||||||||
| Other adjustments | 4,701 | 0.9 | (3,086) | (0.6) | 1,177 | 0.2 | |||||||||||||||||||||||||||||
| Other foreign jurisdictions | 661 | 0.1 | 446 | 0.1 | (160) | — | |||||||||||||||||||||||||||||
| Total foreign tax effects | 1,742 | 0.3 | (125) | — | 5,173 | 1.0 | |||||||||||||||||||||||||||||
| Effect of changes in tax laws or rates enacted in the current period | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Effect of cross-border tax laws | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Tax credits | (1,000) | (0.2) | 3,099 | 0.6 | 2,144 | 0.4 | |||||||||||||||||||||||||||||
| Changes in valuation allowances | (16) | — | (4,075) | (0.8) | (3,245) | (0.6) | |||||||||||||||||||||||||||||
| Nontaxable and nondeductible items | 156 | — | (7) | — | (940) | (0.2) | |||||||||||||||||||||||||||||
| Changes in unrecognized tax benefits | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Other adjustments | 3,091 | 0.6 | 1,749 | 0.3 | 3,654 | 0.7 | |||||||||||||||||||||||||||||
| Effective tax rate | $ | 136,993 | 25.9 | % | $ | 131,144 | 24.6 | % | $ | 125,423 | 24.9 | % | |||||||||||||||||||||||
(1)In 2025 state taxes in California, Texas, Arkansas, Illinois, Louisiana, Massachusetts, New York and New Jersey comprise the majority of the state taxes, net of federal effect category. In 2024 and 2023 state taxes in California, Texas, Massachusetts, Illinois, Louisiana and New York comprise the majority of the state taxes, net of federal effect category.
On July 4, 2025, the One Big Beautiful Bill Act was signed into law. The business tax provisions in the legislation did not have a material impact on the Company’s effective tax rate. Certain provisions, such as bonus depreciation, had a beneficial impact to cash taxes.
Income taxes paid by jurisdiction, net of refunds received, consisted of the following (in thousands):
| For the years ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Federal | $ | 64,802 | $ | 83,000 | $ | 54,670 | ||||||||||||||
| State | 30,407 | 30,958 | 27,664 | |||||||||||||||||
| Total Domestic | 95,209 | 113,958 | 82,334 | |||||||||||||||||
| Foreign | ||||||||||||||||||||
| Canada | 19,395 | 13,471 | 47,186 | |||||||||||||||||
| Other Foreign Jurisdictions | 3,300 | 3,177 | 2,794 | |||||||||||||||||
| Total Foreign | 22,695 | 16,648 | 49,980 | |||||||||||||||||
| Total | $ | 117,904 | $ | 130,606 | $ | 132,314 | ||||||||||||||
No individual jurisdictions within the “State” or “Other Foreign Jurisdictions” captions above were equal to or greater than 5 percent of total income taxes paid, net of refunds received.
The components of the total net deferred tax assets and liabilities as of December 31, 2025 and 2024 were as follows (in thousands):
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Provision for doubtful accounts | $ | 9,626 | $ | 14,808 | |||||||
| Closure, post-closure and remedial liabilities | 29,770 | 32,189 | |||||||||
| Operating lease liabilities | 63,020 | 60,929 | |||||||||
| Accrued expenses | 15,631 | 14,749 | |||||||||
| Accrued compensation and benefits | 17,483 | 16,876 | |||||||||
Net operating loss carryforwards(1) | 57,298 | 48,331 | |||||||||
Excess business interest(2) | 13,116 | 22,078 | |||||||||
Tax credit carryforwards | 2,507 | 2,619 | |||||||||
| Stock-based compensation | 5,822 | 4,877 | |||||||||
| Other | 2,556 | 2,565 | |||||||||
| Total deferred tax assets | 216,829 | 220,021 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Property, plant and equipment | (316,192) | (311,546) | |||||||||
| Operating lease right-of-use assets | (61,948) | (59,999) | |||||||||
| Interest rate swap asset | (3,674) | (8,748) | |||||||||
| Permits and other intangible assets | (165,672) | (158,905) | |||||||||
| Prepaid expenses | (12,640) | (10,881) | |||||||||
| Total deferred tax liabilities | (560,126) | (550,079) | |||||||||
| Total net deferred tax liability before valuation allowance | (343,297) | (330,058) | |||||||||
| Less valuation allowance | (34,418) | (27,232) | |||||||||
| Net deferred tax liabilities | $ | (377,715) | $ | (357,290) | |||||||
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(1)As of December 31, 2025, the net operating loss carryforwards included (i) gross state net operating loss carryforwards of $290.4 million which will begin to expire in 2026, (ii) gross federal net operating loss carryforwards of $75.7 million which will begin to expire in 2026 and (iii) gross foreign net operating loss carryforwards of $69.3 million which will begin to expire in 2026.
(2)The Company previously recognized U.S. federal income taxes related to the operations in Canada and has not accrued for any remaining undistributed foreign earnings. These amounts continue to be indefinitely reinvested. The amount of tax associated with those unrepatriated earnings is not expected to be material.
A valuation allowance is required to be established when, based on an evaluation of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The components of the total valuation allowance as of December 31, 2025 and 2024 were as follows (in thousands):
| 2025 | 2024 | ||||||||||
| Allowance related to: | |||||||||||
| Foreign tax credits | $ | 346 | $ | 346 | |||||||
| Federal net operating losses | 3,768 | 3,783 | |||||||||
| State net operating loss carryforwards | 4,728 | 4,734 | |||||||||
| Foreign net operating loss carryforwards | 16,072 | 14,543 | |||||||||
| Deferred tax assets of a Canadian subsidiary | 251 | 3,521 | |||||||||
| Realized and unrealized capital losses | 9,253 | 305 | |||||||||
| Total valuation allowance | $ | 34,418 | $ | 27,232 | |||||||
The Company files U.S. federal income tax returns as well as income tax returns in various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local or non-U.S. income tax examinations before 2017. The Company has ongoing U.S., state and local jurisdictional audits, as well as Canadian federal and provincial audits, all of which the Company believes will not result in material liabilities. The Company has not identified any material uncertain tax positions in the periods presented.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 18, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Feb 26, 2020 | |
| 2018 | Feb 27, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Feb 22, 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.