Crane NXT, Co.CXT
Crane NXT, Co. Income Taxes Disclosure
Income Taxes
Provision for Income Taxes
Our income before taxes is as follows:
| (in millions) December 31, | 2025 | 2024 | 2023 | |||||||||||||||||
| U.S. operations | $ | 91.5 | $ | 78.2 | $ | 97.4 | ||||||||||||||
| Non-U.S. operations | 89.5 | 148.2 | 142.4 | |||||||||||||||||
| Total income before tax | $ | 181.0 | $ | 226.4 | $ | 239.8 | ||||||||||||||
Our provision (benefit) for income taxes consists of:
| (in millions) December 31, | 2025 | 2024 | 2023 | |||||||||||||||||
| Current Tax: | ||||||||||||||||||||
| U.S. federal | $ | 27.8 | $ | 29.2 | $ | 31.3 | ||||||||||||||
| U.S. state and local | 3.7 | (0.1) | 1.7 | |||||||||||||||||
| Non-U.S. | 18.9 | 28.1 | 20.6 | |||||||||||||||||
| Total current tax | 50.4 | 57.2 | 53.6 | |||||||||||||||||
| Deferred Tax: | ||||||||||||||||||||
| U.S. federal | (9.2) | (13.4) | (2.8) | |||||||||||||||||
| U.S. state and local | (0.9) | 1.3 | (0.4) | |||||||||||||||||
| Non-U.S. | (4.4) | (2.8) | 1.1 | |||||||||||||||||
| Total deferred tax | (14.5) | (14.9) | (2.1) | |||||||||||||||||
Total provision for income taxes (a) | $ | 35.9 | $ | 42.3 | $ | 51.5 | ||||||||||||||
(a) Included in the above amounts are excess tax benefits from share-based compensation of $0.7 million, $1.2 million and $0.9 million in 2025, 2024 and 2023, respectively, which were reflected as reductions in our provision for income taxes in 2025, 2024 and 2023.
A reconciliation of the statutory U.S. federal tax rate to our effective tax rate is as follows:
| (in millions, except %) December 31, | 2025 | |||||||||||||
| In USD | Percent of Pre-tax Income | |||||||||||||
| U.S. Federal Statutory Tax Rate | $ | 38.0 | 21.0 | % | ||||||||||
| State and Local Income Taxes, Net of Federal Income Tax Effect (a) | 3.3 | 1.8 | % | |||||||||||
| Foreign Tax Effects | ||||||||||||||
| Italy | ||||||||||||||
| Change in Valuation Allowances | 3.1 | 1.7 | % | |||||||||||
| Other | (0.4) | (0.2) | % | |||||||||||
| Malta | ||||||||||||||
| Statutory tax rate difference between Malta and United States | (2.8) | (1.5) | % | |||||||||||
| Notional Interest Deduction | (4.5) | (2.5) | % | |||||||||||
| Other | 0.6 | 0.3 | % | |||||||||||
| United Kingdom | (2.3) | (1.2) | % | |||||||||||
| Other foreign jurisdictions | 2.4 | 1.3 | % | |||||||||||
| Effects of Changes in Tax Laws or Rates Enacted in the Current Period | — | — | % | |||||||||||
| Effects of Cross-Border Tax Laws | ||||||||||||||
| Global intangible low-taxed income, net of FTC | 1.5 | 0.8 | % | |||||||||||
| Foreign-derived intangible income | (3.8) | (2.1) | % | |||||||||||
| Subpart F income, net of FTC | 4.2 | 2.3 | % | |||||||||||
| U.S. tax on foreign branches, net of FTC | (4.1) | (2.3) | % | |||||||||||
| Tax Credits | ||||||||||||||
| Research and development tax credits | (1.6) | (0.9) | % | |||||||||||
| Change in Valuation Allowances | 1.7 | 0.9 | % | |||||||||||
| Nontaxable or Nondeductible Items | 3.7 | 2.0 | % | |||||||||||
| Changes in Unrecognized Tax Benefits | (2.5) | (1.4) | % | |||||||||||
| Other Adjustments | (0.6) | (0.2) | % | |||||||||||
| Effective tax rate | $ | 35.9 | 19.8 | % | ||||||||||
(a) As of December 31, 2025, state taxes in Illinois, Massachusetts, Maryland, Texas and Utah made up the majority (greater than 50 percent) of the tax effect in this category.
| December 31, | 2024 | 2023 | ||||||||||||
| Statutory U.S. federal tax rate | 21.0 | % | 21.0 | % | ||||||||||
| Increase (reduction) from: | ||||||||||||||
| Income taxed at non-U.S. rates | (1.4) | % | (2.0) | % | ||||||||||
| Non-U.S. income inclusion, net of tax credits | 0.5 | % | 2.0 | % | ||||||||||
| State and local taxes, net of federal benefit | 0.2 | % | 1.0 | % | ||||||||||
| Changes in reserves for uncertain tax positions | (2.7) | % | (1.3) | % | ||||||||||
| U.S. deduction for foreign - derived intangible income | (1.0) | % | (0.8) | % | ||||||||||
| Other | 2.1 | % | 1.6 | % | ||||||||||
| Effective tax rate | 18.7 | % | 21.5 | % | ||||||||||
On July 4, 2025, the U.S. government enacted The One Big Beautiful Bill Act of 2025 which includes various changes to the U.S. corporate income tax system including, but not limited to, the immediate expensing of qualifying research and development expenses and the permanent extension of certain provisions initially enacted within the Tax Cuts and Jobs Act. Based on the Company’s evaluation of the provisions, these tax law changes did not have a material impact on the Company’s financial statements.
The Organization for Economic Co-operation and Development (“OECD”) has proposed a global minimum tax of 15% of reported profits (“Pillar 2 tax ”) that has been agreed upon by over 140 member jurisdictions including the United States. Pillar 2 addresses the risks associated with profit shifting to entities in low tax jurisdictions. The Pillar 2 tax liability for the Company in 2025 was approximately $1.3 million. On January 5, 2026, the US Treasury Department and OECD have agreed in principle to adopt a side-by-side tax system that will exempt US parented companies from Pillar 2 taxes starting in 2026.
As of December 31, 2025, we have made the following determinations regarding our non-U.S. earnings:
| (in millions) | Permanently reinvested | Not permanently reinvested | ||||||||||||
| Amount of earnings | $ | 679.6 | $ | 107.9 | ||||||||||
| Associated tax | N/A (a) | $ | 0.1 | |||||||||||
(a) Determination of U.S. income taxes and non-U.S. withholding taxes due upon repatriation of this $679.6 million of earnings is not practicable because the amount of such taxes depends upon circumstances existing in numerous taxing jurisdictions at the time the remittance occurs.
Tax Related to Comprehensive Income
During 2025, 2024 and 2023, tax provisions of $0.6 million, $0.5 million and $0.5 million, respectively, related to changes in pension and post-retirement plan assets and benefit obligations, were recorded to accumulated other comprehensive loss.
Deferred Taxes and Valuation Allowances
The components of deferred tax assets and liabilities included in our Consolidated Balance Sheets are as follows:
| (in millions) December 31, | 2025 | 2024 | ||||||||||||
| Deferred tax assets: | ||||||||||||||
| Tax loss and credit carryforwards | $ | 53.3 | $ | 46.1 | ||||||||||
| Interest Deduction carryforward | 1.5 | — | ||||||||||||
| Inventories | 5.6 | 7.6 | ||||||||||||
| Capitalized Research and Development | 16.9 | 16.1 | ||||||||||||
| Accruals and Reserves | 9.0 | 9.5 | ||||||||||||
| Pension and Post Retirement Benefits | 1.0 | 3.3 | ||||||||||||
| Other | 6.2 | 5.8 | ||||||||||||
| Total | $ | 93.5 | $ | 88.4 | ||||||||||
| Less: valuation allowance | 51.3 | 43.6 | ||||||||||||
| Total deferred tax assets, net of valuation allowance | $ | 42.2 | $ | 44.8 | ||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Basis difference in intangible assets | $ | (160.9) | $ | (131.1) | ||||||||||
| Basis difference in fixed assets | (29.7) | (29.7) | ||||||||||||
| Other | (0.1) | (0.8) | ||||||||||||
| Total deferred tax liabilities | $ | (190.7) | $ | (161.6) | ||||||||||
| Net deferred tax liability | $ | (148.5) | $ | (116.8) | ||||||||||
| Balance sheet classification: | ||||||||||||||
| Long-term deferred tax assets | $ | 2.5 | $ | 2.2 | ||||||||||
| Long-term deferred tax liability | (151.0) | (119.0) | ||||||||||||
| Net deferred tax liability | $ | (148.5) | $ | (116.8) | ||||||||||
As of December 31, 2025, we had U.S. federal, U.S. state and non-U.S. tax loss and credit carryforwards that will expire, if unused, as follows:
| (in millions) Year of expiration | U.S. Federal Tax Credits | U.S. Federal Tax Losses | U.S. State Tax Credits | U.S. State Tax Losses | Non-U.S. Tax Credits | Non- U.S. Tax Losses | Total | |||||||||||||||||||||||||||||||||||||
| 2026-2030 | $ | — | $ | — | $ | 0.4 | $ | 141.2 | $ | — | $ | — | ||||||||||||||||||||||||||||||||
| After 2030 | 10.0 | 0.5 | 0.7 | 368.8 | — | — | ||||||||||||||||||||||||||||||||||||||
| Indefinite | — | — | — | 6.5 | — | 52.1 | ||||||||||||||||||||||||||||||||||||||
| Total tax carryforwards | $ | 10.0 | $ | 0.5 | $ | 1.1 | $ | 516.5 | $ | — | $ | 52.1 | ||||||||||||||||||||||||||||||||
| Deferred tax asset on tax carryforwards | $ | 10.0 | $ | 0.1 | $ | 0.8 | $ | 28.5 | $ | 0.8 | $ | 13.1 | $ | 53.3 | ||||||||||||||||||||||||||||||
| Valuation allowance on tax carryforwards | (10.0) | (0.1) | (0.4) | (27.8) | — | (13.0) | (51.3) | |||||||||||||||||||||||||||||||||||||
| Net deferred tax asset on tax carryforwards | $ | — | $ | — | $ | 0.4 | $ | 0.7 | $ | 0.8 | $ | 0.1 | $ | 2.0 | ||||||||||||||||||||||||||||||
As of December 31, 2025, and 2024, we determined that it was more likely than not that $51.3 million and $43.6 million, respectively, of our deferred tax assets related to tax loss and credit carryforwards will not be realized.
Unrecognized Tax Benefits
A reconciliation of the beginning and ending amount of our gross unrecognized tax benefits, excluding interest and penalties, is as follows:
| (in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Balance of liability as of January 1, | $ | 8.1 | $ | 16.5 | $ | 7.6 | ||||||||||||||
| Increase (decrease) as a result of: | ||||||||||||||||||||
| Tax positions taken during a prior year | (0.5) | (1.0) | (0.2) | |||||||||||||||||
| Tax positions taken during the current year | 0.5 | 0.4 | 0.5 | |||||||||||||||||
| Settlements with taxing authorities | — | — | (0.1) | |||||||||||||||||
| Lapse of the statute of limitations | (2.6) | (7.8) | (5.2) | |||||||||||||||||
| Other | — | — | 13.9 | |||||||||||||||||
| Balance of liability as of December 31, | $ | 5.5 | $ | 8.1 | $ | 16.5 | ||||||||||||||
As of December 31, 2025, 2024 and 2023, the amount of our unrecognized tax benefits that, if recognized, would affect our effective tax rate was $6.1 million, $8.6 million and $18.4 million, respectively. The difference between these amounts and those reflected in the table above relates to (1) offsetting tax effects from other tax jurisdictions, and (2) interest expense, net of deferred taxes. As of December 31, 2025, and 2024, we had gross unrecognized benefits, including interest and penalties of $6.6 million, and $9.4 million, respectively, included in “Other liabilities” in our Consolidated Balance Sheets.
As of December 31, 2023, the Company has recorded a gross unrecognized tax benefit of $13.9 million due to the Separation from SpinCo which is included in the above table as “Other.” As of December 31, 2025, and 2024, the Company had an indemnification receivable of $1.9 million, and $3.1 million, respectively, from SpinCo per the terms of the Tax Matters Agreement described below.
The Tax Matters Agreement specifies the rights, responsibilities, and obligations after the Separation with respect to tax liabilities and benefits. The agreement specifies the portion, if any, of this tax liability for which we and SpinCo will bear responsibility, and we and SpinCo agreed to indemnify each other against any amounts for which they are not responsible.
We recognize interest and penalties related to unrecognized tax benefits as a component of our income tax expense. During the years ended December 31, 2025, 2024 and 2023, we recognized interest and penalty income of $0.2 million, $1.0 million and $0.1 million, respectively, in our Consolidated and Combined Statements of Operations. As of December 31, 2025, and 2024, we had accrued $1.1 million and $1.3 million, respectively, of interest and penalties related to unrecognized tax benefits on our Consolidated Balance Sheets.
Income Taxes Paid
| (in millions) December 31, | 2025 | |||||||
| A breakdown of income taxes paid (net of refunds) is as follows: | ||||||||
| U.S. Federal | $ | 26.2 | ||||||
| U.S. State | 4.8 | |||||||
| Non-U.S. | 19.9 | |||||||
| Total income taxes paid, net | $ | 50.9 | ||||||
| Income taxes paid (net of refunds) exceeded 5 percent of total income taxes paid (net of refunds) in the following jurisdictions: | ||||||||
| U.S. Federal | $ | 26.2 | ||||||
| Foreign | ||||||||
| Japan | $ | 13.7 | ||||||
| United Kingdom | $ | 4.2 | ||||||
Income Tax Examinations
Our income tax returns are subject to examination by the U.S. federal, U.S. state and local, and non-U.S. tax authorities. With few exceptions, the years open to examinations are as follows:
| Jurisdiction | Year | |||||||
| U.S. federal | 2022 - 2024 | |||||||
| U.S. state and local | 2019 - 2024 | |||||||
| Non-U.S. | 2018 - 2024 | |||||||
Currently, we and our subsidiaries are under examination in various jurisdictions.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Feb 23, 2021 | |
| 2019 | Feb 25, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 28, 2017 | |
| 2015 | Feb 23, 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.