CNH Industrial N.V.CNH

CNH Industrial N.V. Income Taxes Disclosure

10-KFiled Feb 26, 20267 min read
Income Taxes
CNH Industrial N.V. and its subsidiaries have substantial worldwide operations and incur tax obligations in the jurisdictions in which they operate. The Company's provision for income taxes as reported in its Consolidated Statements of Operations for the year ended December 31, 2025, of $184 million consists almost entirely of income taxes related to subsidiaries of CNH Industrial N.V..
The sources of income before taxes and equity in income of unconsolidated affiliates for the years ended December 31, 2025, 2024 and 2023 are as follows (in millions of dollars):
Years Ended December 31,
202520242023
Parent country source$(386)$(36)$(48)
Foreign sources1,006 1,493 2,751 
Consolidated income before income taxes
$620 $1,457 $2,703 
The provision for income taxes for the years ended December 31, 2025, 2024 and 2023 consisted of the following (in millions of dollars):
Years Ended December 31,
202520242023
Parent country source
$13 $29 $18 
Foreign sources
367 413 1,100 
Total current income taxes
380 442 1,118 
Parent country source
(35)(43)(107)
Foreign sources
(161)(63)(417)
Total deferred income taxes
(196)(106)(524)
Total income tax provision
$184 $336 $594 
CNH Industrial N.V. is incorporated in the Netherlands but is a tax resident of the U.K. The reconciliation of the differences
between the provision for income taxes and the statutory rate is presented based on the weighted-average of the U.K. statutory corporation tax rates in force over each of the Company's calendar year reporting periods; specifically, the tax rate are 25.0%, 25.0% and 23.5% for the years ended December 31, 2025, 2024 and 2023, respectively.
Reconciliation of CNH's income tax expense for the year ended December 31, 2025 in accordance with the guidance in ASU 2023-09 is presented in the following table (in millions of dollars):
Years Ended December 31,
2025
Consolidated income taxes
$620 
Amount Percent
U.K. Federal Statutory Tax Rate$155 25.0 %
Foreign Tax Effects
Argentina
Hyper-inflationary tax impacts15 2.4 %
Statutory tax rate difference10 1.6 %
Valuation allowance
(13)(2.1)%
Other(2)(0.3)%
Brazil
NID(1)
(11)(1.8)%
Other1 0.2 %
Italy11 1.8 %
U.S.
Tax incentives(20)(3.2)%
Functional Currency(42)(6.8)%
Other(11)(1.8)%
Total Other Jurisdictions14 2.3 %
Effect of Cross-Border Tax Laws
NID(1)
11 1.8%
Other
4 0.6%
Valuation Allowance8 1.3%
Nontaxable or Nondeductible Items
Functional Currency50 8.1 %
Other Adjustments2 0.3 %
Changes in Unrecognized Tax Benefits11 1.8 %
Other Adjustments(9)(1.5)%
Total $184 29.7 %
(1)Notional interest deduction on qualifying equity under local tax law.
Reconciliations of CNH's income tax expense in accordance with the guidance prior to the adoption of ASU 2023-09 for the years ended December 31, 2024 and 2023 are as follows (in millions of dollars):
Years Ended December 31,
20242023
Tax provision at the parent statutory rate$364 $635 
Foreign income taxed at different rates37 73 
Change in valuation allowance(7)(117)
Tax contingencies69 66 
Tax credits and incentives(88)(136)
Hyper-inflationary tax impacts
(64)27 
Withholding taxes
26 28 
Other
(1)18 
Total income tax provision
$336 $594 
 
The reduction in tax expense in 2025 as compared to 2024 was largely attributable to lower profit-before-tax. However, the 2025 effective tax rate increased due to the year-over-year tax impact of Argentina's highly inflationary economy and the non-recognized tax benefits associated with the non-cash impairment charges related to Monarch Tractors and IPR&D acquired as part of the Raven acquisition. In 2025, we also recorded a valuation allowance against deferred tax assets generated by Bennamann.
The change in tax expense in 2024 as compared to 2023 was largely attributable to lower income before-tax and the tax impact from Argentina's highly inflationary economy, as identified in the table above. The 2024 tax expense was also reduced by the recognition of $29 million of previously unrecognized deferred tax benefit assets in China, offset by the de-recognition of $35 million of deferred tax assets in Argentina, increases in withholding tax on dividends, and lower benefits from U.S. exports.
At December 31, 2025, undistributed earnings in certain subsidiaries outside the U.K. totaled approximately $14 billion, of which $1 billion could give rise to tax costs upon distribution. The company has not recorded a deferred tax liability related to its undistributed earnings because the remittance of earnings to the U.K. would either incur no tax, or because such earnings are indefinitely reinvested. The Company has determined the amount of unrecognized deferred tax liability relating to the $1 billion of undistributed earnings that would be taxable if distributed was approximately $147 million and was attributable to withholding taxes and incremental local country income taxes in certain jurisdictions. The repatriation of undistributed earnings from subsidiaries to the U.K. is generally exempt from U.K. income taxes and as such there is no deferred tax liability associated with the receipt of undistributed earnings by the U.K. tax-resident parent entity from its subsidiaries in non-U.K. jurisdictions. Finally, the Company evaluated the undistributed earnings from joint ventures in which it owned 50% or less and recorded $9 million of deferred tax liabilities as of December 31, 2025.
Deferred Income Tax Assets and Liabilities
The components of net deferred tax assets as of December 31, 2025 and 2024 are as follows (in millions of dollars):
As of December 31,
20252024
Deferred tax assets:
Warranty and campaigns$88 $99 
Allowance for credit losses208 158 
Marketing and sales incentive programs465 504 
Other risk and future charges reserve48 46 
Pension, postretirement and postemployment benefits86 82 
Leasing liabilities67 68 
Research and development costs334 293 
Other reserves258 200 
Tax credits and loss carry forwards319 293 
Other
2 — 
Less: Valuation allowances(209)(183)
Total deferred tax assets1,666 1,560 
Deferred tax liabilities:
Property, plant and equipment278 365 
Intangibles144 183 
Inventories54 33 
Other— 80 
Total deferred tax liabilities476 661 
Net deferred tax assets$1,190 $899 
Net deferred tax assets are reflected in the accompanying Consolidated Balance Sheets as of December 31, 2025 and 2024 as follows (in millions of dollars):
As of December 31,
20252024
Deferred tax assets$1,207 $927 
Deferred tax liabilities(17)(28)
Net deferred tax assets$1,190 $899 
Valuation Allowances
As of December 31, 2025, the Company has valuation allowances of $209 million against certain deferred tax assets, including tax loss carry forwards, tax credits and other deferred tax assets. These valuation allowances are primarily attributable to certain operations in Argentina, Germany, and the U.K.
CNH has gross tax loss carry forwards in several tax jurisdictions. These tax losses expire as follows: $4 million in 2026; $4 million in 2027; $2 million in 2028; $22 million in 2029; $190 million in 2030 and beyond. CNH also has tax loss carry forwards of approximately $890 million with indefinite lives. CNH has tax credit carry forwards of $44 million of which $3 million will expire in 2026, $2 million will expire in 2027, $5 million will expire in 2028, $4 million will expire in 2029, and $30 million will expire in 2030 and beyond.
Income Taxes Paid
Income taxes paid, net of refunds, by jurisdiction for the years ended December 31, 2025, 2024 and 2023 were as follows:
Years Ended December 31,
202520242023
United Kingdom$— $(5)$4 
Foreign:
Austria(12)52 36 
Brazil55 109 203 
Canada37 52 90 
India28 30 28 
Italy3 28 43 
United States67 375 266 
All other foreign49 128 132 
Total
$227 $769 $802 
Uncertain Tax Positions
The Company files income tax returns in multiple jurisdictions and is subject to examination by taxing authorities throughout the world. The Company has open tax years from 2006 to 2025. Due to the global nature of the Company's business, transfer pricing disputes may arise, and the Company may seek correlative relief through the competent authority process. The Company has considered the possibility of correlative relief when booking contingencies related to transfer pricing. The lapsing of statutes, closure of currently on-going audits, or initiation of new audits in the next 12 months is not expected to have a material adverse effect on the Company's financial positions or results of operations.
A reconciliation of the gross amounts of tax contingencies at the beginning and end of the year is as follows (in millions of dollars):
Years Ended December 31,
20252024
Balance at beginning of year$268 $234 
Additions based on tax positions related to the current year22 36 
Additions for tax positions of prior years9 16 
Reductions for tax positions of prior years(1)(6)
Reductions for tax positions as a result of lapse of statute(24)(12)
Settlements(3)— 
Balance at end of year$271 $268 
As of December 31, 2025, there are $271 million of unrecognized tax benefits before consideration of interest and penalties and $332 million of unrecognized tax benefits after consideration of interest and penalties that, if recognized, would affect the effective tax rate.
The Company recognizes interest and penalties accrued related to tax contingencies as part of the income tax provision. During the years ended December 31, 2025, 2024 and 2023, the Company recognized expense of approximately $12 million, $22 million and $7 million for income tax-related interest and penalties, respectively. The Company had approximately $61 million, $47 million and $25 million of income tax-related interest and penalties accrued at December 31, 2025, 2024 and 2023, respectively.

Historical Timeline

Fiscal YearFiled
2025Feb 26, 2026Showing above
2024Feb 28, 2025
2023Feb 29, 2024
2022Feb 28, 2023

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.

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