DANA Inc Income Taxes Disclosure

Note 17.  Income Taxes

 

Income tax expense —

 

		2025				2024				2023
Current tax expense (benefit)
U.S. federal		$	5			$	2			$	26
U.S. state and local			2				1
Non-U.S.			106				104				80
Total current			113				107				106
Deferred tax expense (benefit)
U.S. federal			(38	)			(63	)			(100	)
U.S. state and local			(3	)			(6	)			(3	)
Non-U.S.			(19	)			(7	)			4
Total deferred			(60	)			(76	)			(99	)
Total income tax expense		$	53			$	31			$	7

 

We record interest and penalties related to uncertain tax positions as a component of income tax expense or benefit. Net interest expense for the periods presented herein is not significant.

 

Income before income taxes —

 

		2025				2024				2023
U.S. operations		$	(171	)		$	(350	)		$	(280	)
Non-U.S. operations			139				29				34
Loss from continuing operations before income taxes		$	(32	)		$	(321	)		$	(246	)

 

Income tax audits — We conduct business globally and, as a result, file income tax returns in multiple jurisdictions that are subject to examination by taxing authorities throughout the world. With few exceptions, we are no longer subject to U.S. federal, state and local or foreign income tax examinations for years before 2008.

 

We are currently under audit by U.S. and foreign authorities for certain taxation years. When the issues related to these periods are settled, the total amounts of unrecognized tax benefits for all open tax years may be modified. Audit outcomes and the timing of the audit settlements are subject to uncertainty and we cannot make an estimate of the impact on our financial position at this time.

 

GILTI Policy Elections — The SEC staff has indicated that a company should make and disclose certain policy elections related to accounting for global intangible low-taxed income (GILTI). As to whether we will recognize deferred taxes for basis differences expected to reverse as GILTI or account for the effect of GILTI as a period cost when incurred, we intend to account for the tax effect of GILTI as a period cost. As to the realizability of the tax benefit provided by net operating losses, we are electing to utilize the tax law ordering approach. Recent macroeconomic factors have resulted in losses in the United States. A valuation allowance has been provided for deferred tax assets where GILTI is not a source of income; however, the GILTI tax law ordering approach provides positive evidence for certain other deferred tax assets without a valuation allowance.

 

Foreign income repatriation — We continue to analyze and adjust the estimated impact of the non-U.S. income and withholding tax liabilities based on the amount and source of these earnings, as well as the expected means through which those earnings may be taxed. We recognized net expense of $1 in 2025, $7 in 2024 and $6 in 2023, related to future income taxes and non-U.S. withholding taxes on repatriations from operations that are not permanently reinvested. We also paid withholding taxes of $12, $9 and $5 during 2025, 2024 and 2023 related to the actual transfer of funds to the U.S. The unrecognized tax liability associated with the operations in which we are permanently reinvested is $15 at December 31, 2025.

 

Effective tax rate reconciliation —

 

		2025								2024								2023
		$						%		$						%		$						%
U.S. federal income tax rate			(7	)			21				(67	)			21				(52	)			21
Adjustments resulting from (a):
U.S. state and local income taxes, net of federal income tax effect (b)			(1	)			3				(4	)			1				5				(2	)
Non-U.S. tax effects
France
Changes in valuation allowances											6				(2	)
Hungary
Statutory tax rate difference			7				(21	)
Other			1				(3	)			6				(2	)			2				(1	)
Italy
Non-taxable income/loss																			(5	)			2
Luxembourg
Changes in valuation allowances			(15	)			47				9				(3	)
Adjustments to deferred tax balances			16				(50	)
Statutory tax rate difference																			7				(3	)
Other			2				(6	)			4				(1	)
South Africa
Changes in valuation allowances			(8	)			25
Other			(1	)			3
Switzerland
Statutory tax rate difference																			13				(5	)
Other																			(3	)			1
United Kingdom
Capital loss											9				(3	)
Other											2				(1	)			3				(1	)
Brazil
Statutory tax rate difference											5				(2	)
Tax on remittance of foreign earnings			(6	)			19												(8	)			3
Other			6				(19	)
China
Tax on remittance of foreign earnings											7				(2	)
Other			3				(9	)			3				(1	)			4				(2	)
India
Non-taxable income/loss																			12				(5	)
Tax on remittance of foreign earnings			10				(31	)			11				(3	)
Other			6				(19	)			6				(2	)			6				(2	)
Thailand
Tax on remittance of foreign earnings			9				(28	)
Other			(1	)			3				(4	)			2				1				—
Canada
Changes in valuation allowances			17				(53	)			10				(3	)			16				(7	)
Other			(8	)			25				8				(2	)			(4	)			2
Mexico
Statutory tax rate difference			5				(16	)
Other			(5	)			16				4				(1	)			6				(2	)
Other foreign jurisdictions			9				(28	)											7				(3	)
Effects of changes in tax laws or rates enacted in the current period			(48	)			150
Effects of cross-border tax laws
Foreign tax credits and associated impacts			(19	)			59				(25	)			8				(8	)			3
Global intangible low-taxed income			25				(78	)			15				(5	)			22				(9	)
U.S. branch income			21				(66	)			6				(2	)			2				(1	)
Tax credits
Research and development tax credits			(12	)			37				(10	)			3				(5	)			2
Changes in valuation allowances			24				(75	)			16				(5	)			20				(8	)
Nontaxable or nondeductible items
Executive compensation			10				(31	)			2				(1	)			2				(1	)
Other			1				(3	)			3				(1	)			1				—
Changes in unrecognized tax benefits			16				(50	)			9				(3	)			17				(7	)
Other adjustments
Sale of certain operating assets			5				(16	)											(1	)			1
Intercompany sale of intangible assets to the U.S.																			(57	)			23
Basis difference in foreign subsidiary			(7	)			22
Other			(2	)			6												4				(2	)
Income tax expense			53				(166	)			31				(10	)			7				(3	)

(a) The disclosure threshold was applied separately to each year; thus unlisted amounts were not subject to the threshold in that year.

(b) States taxes comprise the majority of this category: 2025 - Illinois, Kentucky and Texas; 2024 - Kentucky and Texas; and 2023 - Kentucky, Michigan and Texas.

 

During 2025, we recorded a tax benefit of $48 to release valuation allowance on certain U.S. federal attributes, $7 of tax benefit due to basis difference in a foreign subsidiary as a result of a change in tax status, $9 of tax expense for income tax reserves associated with prior tax years in a foreign jurisdiction and $6 of tax expense resulting from the sale of Dana's ownership interest in an equity method investment.

 

During 2024, we recorded tax expense of $21 for valuation allowances related to foreign jurisdictions and tax expense of $11 due to revisions in our assertions on unremitted earnings in foreign jurisdictions.

 

During 2023, we recorded tax expense of $14 for income tax reserves associated with prior tax years in foreign jurisdictions. In addition, we recorded net benefit of $55 on the intercompany sale of intangible assets to the U.S.

 

Cash paid for income taxes, net of refunds — Cash paid for income taxes, net of refunds, for the years ended December 31, 2025, 2024, and 2023 were as follows:

 

		2025				2024				2023
U.S. federal		$	—			$	(1	)		$	2
U.S. state and local			2				1				1
Total U.S.			2				—				3
Non-U.S.
Germany			(5	)			8				18
Ireland			5				*				*
Italy			(5	)			*				*
Argentina			6				*				*
Brazil			9				7				*
China			15				18				21
India			28				27				25
Thailand			13				10				*
Mexico			19				18				17
Other			9				12				8
Total Non-U.S.			94				100				89
Total		$	96			$	100			$	92

 

* Jurisdiction below the threshold for the period presented.

 

Deferred tax assets and liabilities — Temporary differences and carryforwards give rise to the following deferred tax assets and liabilities.

 

		2025				2024
Net operating loss carryforwards		$	279			$	248
Postretirement benefits, including pensions			40				34
Research and development costs			248				256
Expense accruals			96				89
Other tax credits recoverable			222				209
Capital loss carryforwards			46				43
Inventory reserves			37				32
Postemployment and other benefits			5				4
Intangibles			47				64
Leasing activities			115				78
Other			69				109
Total			1,204				1,166
Valuation allowances			(631	)			(639	)
Deferred tax assets			573				527
Unremitted earnings			(5	)			(35	)
Depreciation			(54	)			(29	)
Deferred tax liabilities			(59	)			(64	)
Net deferred tax assets		$	514			$	463

   

We have generated deferred tax assets in foreign jurisdictions where realization of the future economic benefits were, in previous reporting periods, considered so remote that the benefits were not recognized. As of December 31, 2024 the unrecognized deferred tax asset was $88. In 2024, we concluded that the future economic benefits of the tax assets are no longer remote and therefore, deferred tax assets of $96 were recognized as of December 31, 2024. We also concluded that it is not more likely than not that the tax benefits associated with the deferred tax assets will be realized; therefore, offsetting valuation allowances were recognized.

 

Carryforwards — Our deferred tax assets include benefits expected from the utilization of net operating loss (NOL), capital loss and credit carryforwards in the future. The following table identifies the net operating loss deferred tax asset components and the related allowances that existed at  December 31, 2025. Due to time limitations on the ability to realize the benefit of the carryforwards, additional portions of these deferred tax assets may become unrealizable in the future.

 

		Deferred											Earliest
		Tax				Valuation				Carryforward			Year of
		Asset				Allowance				Period			Expiration
Net operating losses
U.S. state		$	43			$	(43	)		Various			2026
Brazil			10				(4	)		Unlimited
France			7				(7	)		Unlimited
Australia			13							Unlimited
Italy			2							Unlimited
Sweden			12				(12	)		Unlimited
South Africa			8							Unlimited
U.K.			22				(22	)		Unlimited
Luxembourg			78				(78	)		Various			2035
Canada			79				(75	)		20			2026
Argentina			1							5			2030
Hungary			1							5			2030
China			3				(2	)		5			2029
Total		$	279			$	(243	)

 

In addition to the NOL carryforwards listed in the table above, we have deferred tax assets related to capital loss carryforwards of $46 which are fully offset with valuation allowances at  December 31, 2025. We also have deferred tax assets of $236 related to other credit carryforwards which are largely offset with valuation allowances of $233 at  December 31, 2025. The capital losses can generally be carried forward indefinitely while the other credits are generally available for 10 to 20 years.

 

Unrecognized tax benefits — Unrecognized tax benefits are the difference between a tax position taken, or expected to be taken, in a tax return and the benefit recognized for accounting purposes. Interest income or expense, as well as penalties relating to income tax audit adjustments and settlements, are recognized as components of income tax expense or benefit. Interest of $23 and $20 was accrued on the uncertain tax positions at  December 31, 2025 and 2024.

 

Reconciliation of gross unrecognized tax benefits —

 

		2025				2024				2023
Balance, beginning of period		$	112			$	112			$	102
Decrease related to expiration of statute of limitations			(5	)			(7	)			(8	)
Decrease related to prior years tax positions							(6	)			(5	)
Increase related to prior years tax positions			10				4				5
Increase related to current year tax positions			14				13				18
Decrease related to settlements							(4	)
Balance, end of period		$	131			$	112			$	112

 

Gross unrecognized tax benefits of $101 would impact the effective tax rate if recognized. If other open matters are settled with the IRS or other taxing jurisdictions, the total amounts of unrecognized tax benefits for open tax years may be modified.