CORPAY, INC.CPAY
CORPAY, INC. Income Taxes Disclosure
Income Taxes
Income before the provision for income taxes is attributable to the following jurisdictions for years ended December 31 (in
thousands):
2025 | 2024 | 2023 | ||||
United States | $289,052 | $278,330 | $322,856 | |||
Foreign | 1,252,627 | 1,106,783 | 1,002,149 | |||
Total | $1,541,679 | $1,385,113 | $1,325,005 |
The provision for income taxes for the years ended December 31 consists of the following (in thousands):
2025 | 2024 | 2023 | ||||
Current: | ||||||
Federal | $102,328 | $168,982 | $155,647 | |||
State | 22,245 | 7,528 | 25,614 | |||
Foreign | 373,062 | 269,588 | 208,532 | |||
Total current | 497,635 | 446,098 | 389,793 | |||
Deferred: | ||||||
Federal | (40,323) | (62,190) | (46,676) | |||
State | 4,414 | (19,080) | (8,088) | |||
Foreign | 8,005 | 16,553 | 8,086 | |||
Total deferred | (27,904) | (64,717) | (46,678) | |||
Total provision | $469,731 | $381,381 | $343,115 |
For the year ended December 31, 2025, the Company adopted ASU 2023-09 on a prospective basis. In preparing the tabular
rate reconciliation, the Company presented the effects of cross-border tax laws net of U.S. tax credits. The tax effects for all
jurisdictions of changes in judgment related to tax positions taken in prior annual reporting periods, and associated interest, are
reported in the changes in unrecognized tax benefits category.
The provision for income taxes differs from amounts computed by applying the U.S. federal statutory rate of 21% to income
before income taxes for the year ended December 31, 2025, in accordance with guidance after the adoption of ASU 2023-09,
due to the following (in thousands, except percentages*):
2025 | ||||
U.S. federal tax at statutory rate | $323,753 | 21.0% | ||
State and local income taxes, net of federal income tax effect | 21,061 | 1.4 | ||
Foreign tax effects: | ||||
Australia: | ||||
Gain (loss) on sale | 30,517 | 2.0 | ||
Other | 14,840 | 1.0 | ||
Brazil: | ||||
Statutory tax rate difference between Brazil and U.S. | 47,143 | 3.1 | ||
Withholding taxes | 17,416 | 1.1 | ||
Other | (24,700) | (1.6) | ||
Canada | 16,336 | 1.1 | ||
Other foreign jurisdictions | 5,654 | 0.4 | ||
Effect of cross-border tax laws | 17,097 | 1.1 | ||
Changes in unrecognized tax benefits | 19,776 | 1.3 | ||
Other adjustments | (19,160) | (1.2) | ||
Effective tax rate | $469,731 | 30.5% | ||
*Columns may not calculate due to rounding. | ||||
The provision for income taxes differs from amounts computed by applying the U.S. federal tax rate of 21% for both 2024 and
2023, to income before income taxes for the years ended December 31, 2024 and 2023, in accordance with guidance prior to the
adoption of ASU 2023-09, due to the following (in thousands, except percentages):
2024 | 2023 | |||||||
Computed “expected” tax expense | $290,877 | 21.0% | $278,251 | 21.0% | ||||
Changes resulting from: | ||||||||
Change in valuation allowance | (64,289) | (4.6) | 22,447 | 1.7 | ||||
Foreign tax credits | 1,309 | 0.1 | (98,641) | (7.4) | ||||
Foreign income tax differential | 31,743 | 2.3 | 14,949 | 1.1 | ||||
State taxes net of federal benefits | (9,047) | (0.7) | 13,857 | 1.0 | ||||
Increase in tax expense due to uncertain tax positions | 38,395 | 2.8 | 14,146 | 1.1 | ||||
Foreign withholding tax | 30,785 | 2.2 | 24,331 | 1.8 | ||||
Stock-based compensation | (29,582) | (2.1) | 7,980 | 0.6 | ||||
Sub-part F Income/GILTI | 87,252 | 6.3 | 94,594 | 7.1 | ||||
Brazil tourism tax benefit | — | — | (16,311) | (1.2) | ||||
Interest on net equity deduction | (20,757) | (1.5) | (15,051) | (1.1) | ||||
Impairment of goodwill | 18,900 | 1.4 | — | — | ||||
Other | 5,795 | 0.4 | 2,563 | 0.2 | ||||
Provision for income taxes | $381,381 | 27.5% | $343,115 | 25.9% | ||||
More than half of the Company's state tax expense derive from the following states (from largest composition to least):
California, Virginia, Minnesota, Pennsylvania, Tennessee, Illinois.
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at
December 31 are as follows (in thousands*):
2025 | 2024 | |||
Deferred tax assets: | ||||
Accounts receivable, principally due to the allowance for credit losses | $34,419 | $16,756 | ||
Accrued expenses not currently deductible for tax | 20,552 | 13,263 | ||
Lease deferral | 15,108 | 15,423 | ||
Interest rate swap | 39,895 | — | ||
Stock-based compensation | 29,300 | 29,425 | ||
Net operating loss carry forwards | 174,478 | 159,603 | ||
Accrued escheat | 3,656 | 3,897 | ||
163(j) interest limitation | 139,056 | 88,139 | ||
Other | 28,579 | 22,665 | ||
Deferred tax assets before valuation allowance | 485,042 | 349,171 | ||
Valuation allowance | (127,150) | (113,223) | ||
Deferred tax assets, net | 357,892 | 235,948 | ||
Deferred tax liabilities: | ||||
Intangibles—including goodwill | (849,943) | (548,802) | ||
Basis difference in investment in subsidiaries | (43,815) | (42,206) | ||
Interest rate swap | — | (8,695) | ||
Lease deferral | (13,507) | (13,536) | ||
Accrued expense liability | (661) | (722) | ||
Prepaid expenses | (690) | (1,172) | ||
Withholding taxes | (7,837) | (18,472) | ||
Property and equipment and other | (51,130) | (38,646) | ||
Deferred tax liabilities | (967,584) | (672,251) | ||
Net deferred tax liabilities | $(609,692) | $(436,303) | ||
*Columns may not calculate due to rounding. Disclosure has been conformed in all periods to align with current presentation. | ||||
The Company’s deferred tax balances are classified in its balance sheets as of December 31 as follows (in thousands):
2025 | 2024 | |||
Long term deferred tax assets and liabilities: | ||||
Long term deferred tax assets | $4,653 | $2,873 | ||
Long term deferred tax liabilities | (614,345) | (439,176) | ||
Net deferred tax liabilities | $(609,692) | $(436,303) |
The valuation allowances relate to foreign net operating loss carryforwards, state net operating loss carryforwards and state
163(j) limitations on business interest carryforward. The net change in the total valuation allowance for the year ended
December 31, 2025, was an increase of $13.9 million. The valuation allowance increase was primarily due to an increase in
foreign net operating losses where significant negative evidence on future utilization was considered.
As of December 31, 2025, the Company had a net operating loss carryforward for state income tax purposes of approximately
$57.9 million that is available to offset future state tax expense, either indefinitely or in some cases subject to expiration in 15
or 20 years. Additionally, the Company had $116.5 million net operating loss carryforwards for foreign income tax purposes
that are available to offset future foreign tax expense. Most foreign net operating loss carryforwards will not expire in future
years. The Company has provided a valuation allowance against $113.0 million of its deferred tax asset related to the net
operating losses as it does not anticipate utilizing the losses in the foreseeable future.
During 2025 and 2024, the Company had recorded accrued interest and penalties related to the unrecognized tax benefits of
$8.0 million and $6.1 million, respectively. Accumulated interest and penalties were $44.7 million and $36.8 million on the
Consolidated Balance Sheets at December 31, 2025 and 2024, respectively. In accordance with the Company's accounting
policy, interest and penalties related to unrecognized tax benefits are included as a component of income tax expense.
A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits excluding interest
and penalties for the years ended December 31, 2025, 2024 and 2023 is as follows (in thousands):
Unrecognized tax benefits at December 31, 2022 | $60,669 | |
Additions based on tax positions related to the current year | 8,821 | |
Additions based on tax positions related to the prior year | (1,913) | |
Deductions based on settlement of prior year tax positions | (104) | |
Addition for cumulative federal benefit of state tax deductions | (4,235) | |
Change due to OCI | (132) | |
Unrecognized tax benefits at December 31, 2023 | 63,106 | |
Additions based on tax provisions related to the current year | 21,689 | |
Deductions based on tax positions related to the prior year | 14,206 | |
Deductions based on settlements of prior year tax positions | (178) | |
Deductions based on expiration of prior year tax positions | (3,362) | |
Change due to OCI | (1) | |
Unrecognized tax benefits at December 31, 2024 | 95,460 | |
Additions based on tax provisions related to the current year | 40,799 | |
Additions and deductions based on tax positions related to the prior year | 9,846 | |
Deductions based on expiration of prior year tax positions | (11,187) | |
Change due to OCI | 1 | |
Unrecognized tax benefits at December 31, 2025 | $134,919 |
As of December 31, 2025, the Company had total unrecognized tax benefits of $134.9 million all of which, if recognized,
would affect its effective tax rate. It is not anticipated that there are any unrecognized tax benefits that will significantly
increase or decrease within the next twelve months.
The Company files numerous consolidated and separate income tax returns in the U.S. federal jurisdiction and various state and
foreign jurisdictions. The statute of limitations for the Company’s U.S. federal income tax returns has expired for years prior to
2016. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax
examinations by tax authorities for years before 2016.
Net cash paid (refunds received) for income taxes in accordance with ASU 2023-09 consisted of the following for the year
ended December 31, 2025 (in thousands):
2025 | ||
Federal | $180,393 | |
Aggregated state and local jurisdictions | 27,971 | |
Foreign | 302,369 | |
Net cash paid (refunds received) for income taxes | $510,733 |
Income taxes paid (net of refunds) exceeded 5 percent of total income taxes paid (net of refunds) in accordance with ASU
2023-09 in the following jurisdictions for the year ended December 31, 2025 (in thousands):
2025 | ||
Federal | $180,393 | |
Foreign: | ||
Australia | 36,947 | |
Brazil | 75,642 | |
Canada | 39,742 | |
United Kingdom | $96,054 |
We have determined that outside basis differences associated with our investments in foreign subsidiaries would not result in a
material deferred tax liability, and, consistent with our assertion that these amounts continue to be indefinitely invested, have
not recorded incremental income taxes for the additional outside basis differences.
The Organization for Economic Co-operation and Development (OECD), continues to put forth various initiatives, including
Pillar Two rules which introduce a global minimum tax at a rate of 15%. European Union member states agreed to implement
the OECD’s Pillar Two rules with effective dates of January 1, 2024 and January 1, 2025 for different aspects of the directive,
and most have already enacted legislation. A number of other countries are also implementing similar legislation. As of
December 31, 2025, based on the countries in which we do business that have enacted legislation effective January 1, 2024, the
impact of these rules to our financial statements was not material. This may change as other countries enact similar legislation
and further guidance is released. The Company continues to closely monitor regulatory developments to assess potential
impacts.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Mar 1, 2017 | |
| 2015 | Feb 29, 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.