Commercial Vehicle Group, Inc.CVGI
Commercial Vehicle Group, Inc. Income Taxes Disclosure
Income Taxes
Pre-tax income (loss) consisted of the following for the years ended December 31:
| 2025 | 2024 | 2023 | |||||||||||||||
| Domestic | $ | (34,858) | $ | (20,095) | $ | (1,017) | |||||||||||
| Foreign | 19,121 | 11,854 | 29,447 | ||||||||||||||
| Total | $ | (15,737) | $ | (8,241) | $ | 28,430 | |||||||||||
The following table reconciles the income tax provision with the amount calculated using the 21.0% U.S. federal statutory rate applied to pretax income, reflecting the adoption of ASU 2023-09:
Year Ended December 31, 2025 | |||||||||||
Amount | Percent | ||||||||||
| U.S. Federal Statutory Tax Rate | $ | (3,305) | 21.0 | % | |||||||
State and Local Income Tax, Net of Federal | 21 | (0.1) | % | ||||||||
| Foreign Tax Effects | |||||||||||
| China | |||||||||||
Statutory Tax Rate Difference | 153 | (1.0) | % | ||||||||
| Research and Development Credit | (86) | 0.6 | % | ||||||||
| Withholding Tax | 550 | (3.5) | % | ||||||||
| Other | 268 | (1.7) | % | ||||||||
| India | |||||||||||
| Withholding Tax | 147 | (0.9) | % | ||||||||
| Other | 77 | (0.5) | % | ||||||||
| Mexico | |||||||||||
Statutory Tax Rate Difference | 1,271 | (8.1) | % | ||||||||
Other Adjustments, Nontaxable or Nondeductible Items | (1,224) | 7.8 | % | ||||||||
| United Kingdom | |||||||||||
Other Adjustments | (324) | 2.1 | % | ||||||||
| Other Foreign Jurisdictions | 274 | (1.7) | % | ||||||||
| Tax Credits | |||||||||||
| Research and Development Credit | (731) | 4.7 | % | ||||||||
| Changes in Valuation Allowances | 7,310 | (46.5) | % | ||||||||
| Nontaxable or Nondeductible Items | |||||||||||
| Executive Compensation Limit | 374 | (2.4) | % | ||||||||
| Other Nontaxable or Nondeductible Items | 152 | (1.0) | % | ||||||||
| Other | 14 | (0.1) | % | ||||||||
| Changes in Unrecognized Tax Benefits | 45 | (0.3) | % | ||||||||
| Other Adjustments | (246) | 1.6 | % | ||||||||
| Provision (benefit) for income taxes | $ | 4,740 | (30.1) | % | |||||||
A reconciliation of income taxes computed at the statutory rates to the reported income tax provision for the years ended December 31 follows:
| 2024 | 2023 | ||||||||||
| Federal provision (benefit) at statutory rate | $ | (1,730) | $ | 5,970 | |||||||
| U.S./Foreign tax rate differential | 604 | 828 | |||||||||
| Foreign non-deductible expenses | 376 | (14) | |||||||||
| Foreign tax provision | 311 | 821 | |||||||||
| State taxes, net of federal benefit | (337) | (1) | |||||||||
| State tax rate change, net of federal benefit | 72 | (201) | |||||||||
| Change in uncertain tax positions | (343) | 209 | |||||||||
| Change in valuation allowance | 28,769 | (21,750) | |||||||||
| Tax credits | (1,738) | (2,284) | |||||||||
| Share-based compensation | 457 | (30) | |||||||||
| Executive compensation (IRC 162m) | 38 | 226 | |||||||||
| Repatriation of foreign earnings | 1,237 | 435 | |||||||||
| GILTI, net of related foreign tax credit | — | 142 | |||||||||
| Other | (223) | 446 | |||||||||
| Provision (benefit) for income taxes | $ | 27,493 | $ | (15,203) | |||||||
The provision (benefit) for income taxes for the years ended December 31 follows:
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | Deferred | Total | Current | Deferred | Total | Current | Deferred | Total | |||||||||||||||||||||||||||||||||||||||||||||
| Federal | $ | 424 | $ | — | $ | 424 | $ | (289) | $ | 19,963 | $ | 19,674 | $ | (2,157) | $ | (18,166) | $ | (20,323) | |||||||||||||||||||||||||||||||||||
| State and local | 27 | — | 27 | 56 | 3,592 | 3,648 | 433 | (3,355) | (2,922) | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign | 3,784 | 505 | 4,289 | 3,685 | 486 | 4,171 | 7,220 | 822 | 8,042 | ||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 4,235 | $ | 505 | $ | 4,740 | $ | 3,452 | $ | 24,041 | $ | 27,493 | $ | 5,496 | $ | (20,699) | $ | (15,203) | |||||||||||||||||||||||||||||||||||
A summary of deferred income tax assets and liabilities as of December 31 follows:
| 2025 | 2024 | ||||||||||
| Noncurrent deferred tax assets: | |||||||||||
| Amortization and fixed assets | $ | 5,271 | $ | 6,106 | |||||||
| Inventories | 2,224 | 2,893 | |||||||||
| Pension obligations | 3,010 | 2,467 | |||||||||
| Warranty obligations | 193 | 226 | |||||||||
| Accrued benefits | 739 | 792 | |||||||||
| Operating leases | 8,878 | 9,486 | |||||||||
| Tax credit carryforwards | 9,347 | 8,612 | |||||||||
| Net operating loss carryforwards | 23,032 | 18,233 | |||||||||
| Other temporary differences | 12,233 | 8,883 | |||||||||
| Total noncurrent deferred tax assets | $ | 64,927 | $ | 57,698 | |||||||
| Valuation allowance | (41,777) | (35,934) | |||||||||
| Net noncurrent deferred tax assets | $ | 23,150 | $ | 21,764 | |||||||
| Noncurrent deferred tax liabilities: | |||||||||||
| Amortization and fixed assets | $ | (1,104) | $ | (1,132) | |||||||
| Inventories | — | (59) | |||||||||
| Operating leases | (9,615) | (9,242) | |||||||||
| Other temporary differences | (1,228) | (571) | |||||||||
| Total noncurrent tax liabilities | (11,947) | (11,004) | |||||||||
| Net noncurrent deferred tax liabilities | $ | (11,947) | $ | (11,004) | |||||||
| Total net deferred tax asset | $ | 11,203 | $ | 10,760 | |||||||
| Deferred taxes are reflected in the Consolidated Balance Sheet as follows: | |||||||||||
| Net non-current deferred tax assets | $ | 11,349 | $ | 11,084 | |||||||
| Non-current deferred tax liabilities (included in Other long-term liabilities) | $ | (146) | $ | (324) | |||||||
| Total net deferred tax asset | $ | 11,203 | $ | 10,760 | |||||||
We assess whether valuation allowances should be established against deferred tax assets based on consideration of all available evidence using a “more likely than not” standard. In making such judgments, the most weight is given to the cumulative three-year income (loss) position as it can be objectively verified. During 2023, the Company reversed the valuation allowance on its U.S. deferred tax assets of $22.0 million as the three-year cumulative income position was sufficient to overcome the weight of the negative evidence during the year ended December 31, 2023. During 2024, we recorded a valuation allowance of $26.6 million primarily related to establishing a full valuation allowance on our U.S. deferred tax assets due to the cumulative three-year loss position.
During 2025, we remained in a full valuation allowance position on our U.S. deferred tax assets due to the cumulative three-year loss position. We recorded an additional valuation allowance of $5.8 million primarily related to certain U.S. federal and state tax attribute carryforwards and interest expense carryforwards generated as a result of the limitation on business interest expense deductibility under Section 163(j) of the Internal Revenue Code. We expect to be able to realize the benefits of all of our deferred tax assets that are not currently offset by a valuation allowance, as discussed above. In the event that our actual results differ from our estimates or we adjust these estimates in future periods, the effects of these adjustments could materially impact our financial position and results of operations.
Activity for the years ended December 31 is as follows (in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance - Beginning of the year | $ | 35,934 | $ | 9,340 | $ | 31,090 | |||||||||||
| Provisions | 5,843 | 26,594 | 297 | ||||||||||||||
| Utilizations and reversals | — | — | (22,047) | ||||||||||||||
| Balance - End of the year | $ | 41,777 | $ | 35,934 | $ | 9,340 | |||||||||||
As of December 31, 2025, the Company had net operating loss carryforwards of $145.8 million, of which $33.7 million related to foreign jurisdictions, $59.8 million related to U.S. Federal, and $52.3 million related to U.S. state jurisdictions, $5.2 million of U.S. foreign tax credit carryforwards, and $3.8 million of research and development tax credit carryforwards. The carryforward periods for these net operating losses range from five years to indefinite, foreign tax credits begin to expire in 2027, and research and development tax credits begin to expire in 2037. Utilization of these carryforwards is subject to the tax laws of the applicable tax jurisdiction and may be limited by the ability of certain subsidiaries to generate taxable income in the associated tax jurisdiction. As noted above, we recorded a full valuation allowance on all deferred tax assets that are not more likely than not able to be utilized before they expire.
As of December 31, 2025, cash of $33.0 million was held by foreign subsidiaries. During the year ended December 31, 2025, $12.1 million was repatriated from the Company's foreign subsidiaries. The Company had a $0.1 million deferred tax liability as of December 31, 2025 for the expected future income tax implications of repatriating cash from the foreign subsidiaries for which indefinite reinvestment is not expected.
Net income tax payments after the prospective adoption of ASU 2023-09, as described in Note 1, consisted of the following:
| 2025 | ||||||||
United States - federal | $ | (2,275) | ||||||
United States - state and local | (774) | |||||||
International: | ||||||||
Czech Republic | 1,165 | |||||||
| China | 1,159 | |||||||
Mexico | 503 | |||||||
India | 351 | |||||||
Thailand | 247 | |||||||
Other foreign | (112) | |||||||
Total income taxes paid, net of refunds | $ | 264 | ||||||
For the twelve months ended December, 31 2024 and 2023, cash paid for taxes, net of refunds received, were $8.4 million and $10.9 million, respectively.
We file federal income tax returns in the U.S. and income tax returns in various states and foreign jurisdictions. In the U.S., we are generally no longer subject to tax assessment for tax years prior to 2018. In our major non-U.S. jurisdictions including China, Czech Republic, Mexico and the United Kingdom, tax years are typically subject to examination for three to five years.
As of December 31, 2025, and 2024, we provided a liability of $1.0 million and $0.9 million, respectively, for unrecognized tax benefits associated with our U.S. federal and state, and foreign jurisdictions. The unrecognized tax benefits were recorded in Other long-term liabilities on the Consolidated Balance Sheets.
We accrue interest and penalties related to unrecognized tax benefits through income tax expense. We had $0.9 million and $0.8 million accrued for the payment of interest and penalties as of December 31, 2025 and December 31, 2024, respectively. Accrued interest and penalties are included in the $1.0 million of unrecognized tax benefits.
A reconciliation of the beginning and ending amount of unrecognized tax benefits (including interest and penalties) at December 31 follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance - Beginning of the year | $ | 941 | $ | 1,338 | $ | 1,089 | |||||||||||
| Gross increase - tax positions in prior periods | 154 | 154 | 60 | ||||||||||||||
| Gross decreases - tax positions in prior periods | (68) | — | — | ||||||||||||||
| Gross increases - current period tax positions | — | — | 149 | ||||||||||||||
| Lapse of statute of limitations | — | (571) | — | ||||||||||||||
| Currency translation adjustment | (40) | 20 | 40 | ||||||||||||||
| Balance - End of the year | $ | 987 | $ | 941 | $ | 1,338 | |||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 10, 2026 | Showing above |
| 2024 | Mar 17, 2025 | |
| 2023 | Mar 14, 2024 | |
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.