DIEBOLD NIXDORF, IncDBD
DIEBOLD NIXDORF, Inc Income Taxes Disclosure
INCOME TAXES. Deferred taxes are provided on the asset and liability method, whereby deferred tax assets are recognized for deductible temporary differences, operating loss carry-forwards and tax credits. Deferred tax liabilities are recognized for taxable temporary differences and undistributed earnings in certain jurisdictions. Deferred tax assets are reduced by a valuation allowance when, based upon the available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Determination of a valuation allowance involves estimates regarding the timing and amount of the reversal of taxable temporary differences, expected future taxable income and the impact of tax planning strategies. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
The Company operates in numerous taxing jurisdictions and is subject to examination by various federal, state and foreign jurisdictions for various tax periods. Additionally, the Company has retained tax liabilities and the rights to tax refunds in connection with various acquisitions and divestitures of businesses. The Company’s income tax positions are based on research and interpretations of the income tax laws and rulings in each of the jurisdictions in which the Company does business. Due to the subjectivity of interpretations of laws and rulings in each jurisdiction, the differences and interplay in tax laws between those jurisdictions, as well as the inherent uncertainty in estimating the final resolution of complex tax audit matters, the Company’s estimates of income tax liabilities may differ from actual payments or assessments.
The Company assesses its position with regard to tax exposures and records liabilities for these uncertain tax positions and any related interest and penalties, when the tax benefit is not more likely than not realizable. The Company has recorded an accrual that reflects the recognition and measurement process for the financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return. Additional future income tax expense or benefit may be recognized once the positions are effectively settled.
The following table presents components of income (loss) from operations before taxes:
| Successor | Predecessor | |||||||||||||||||||||||||
| Year ended December 31, | Period from 08/12/2023 through 12/31/2023 | Period from 01/01/2023 through 08/11/2023 | ||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||
| Domestic | $ | (206.3) | $ | (195.8) | $ | (67.1) | $ | 797.1 | ||||||||||||||||||
| Foreign | 331.4 | 243.1 | 62.6 | 655.7 | ||||||||||||||||||||||
| Total | $ | 125.1 | $ | 47.3 | $ | (4.5) | $ | 1,452.8 | ||||||||||||||||||
The following table presents the components of income tax expense (benefit):
| Successor | Predecessor | |||||||||||||||||||||||||
| Year ended December 31, | Period from 08/12/2023 through 12/31/2023 | Period from 01/01/2023 through 08/11/2023 | ||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||
| Current | ||||||||||||||||||||||||||
| U.S. federal | $ | (0.6) | $ | 6.8 | $ | (1.5) | $ | (3.7) | ||||||||||||||||||
| Foreign | 72.8 | 59.1 | 33.0 | 14.4 | ||||||||||||||||||||||
| State and local | — | 6.5 | (0.4) | — | ||||||||||||||||||||||
| Total current | 72.2 | 72.4 | 31.1 | 10.7 | ||||||||||||||||||||||
| Deferred | ||||||||||||||||||||||||||
| U.S. federal | (18.9) | (15.7) | (27.1) | 29.5 | ||||||||||||||||||||||
| Foreign | (26.5) | 11.6 | (11.7) | 42.0 | ||||||||||||||||||||||
| State and local | (2.7) | (4.0) | (7.0) | 8.2 | ||||||||||||||||||||||
| Total deferred | (48.1) | (8.1) | (45.8) | 79.7 | ||||||||||||||||||||||
| Income tax expense (benefit) | $ | 24.1 | $ | 64.3 | $ | (14.7) | $ | 90.4 | ||||||||||||||||||
Income tax expense (benefit) attributable to income (loss) from operations before taxes differed from the amounts computed by applying the U.S. federal income tax rate of 21% to pre-tax income (loss) from operations. The following table presents these differences:
| Year ended December 31, 2025 | |||||||||||
| Total | % | ||||||||||
| Earnings from continuing operations, before income tax expense | $ | 125.1 | |||||||||
| U.S. federal statutory tax rate | 26.3 | 21.0 | % | ||||||||
| United States | |||||||||||
State and local income taxes(1) | (2.7) | (2.1) | % | ||||||||
| Federal | |||||||||||
| Effect of cross-border tax laws | |||||||||||
| U.S. taxed foreign income - Subpart F | 7.5 | 6.0 | % | ||||||||
| U.S. taxed foreign income - GILTI | 48.3 | 38.6 | % | ||||||||
| Foreign tax credits | (37.7) | (30.2) | % | ||||||||
| Foreign exchange gain (loss) | (2.1) | 1.7 | % | ||||||||
| Tax credits | |||||||||||
| Other tax credits | (1.1) | (0.9) | % | ||||||||
| Changes in valuation allowances | (11.8) | (9.4) | % | ||||||||
| Nontaxable or nondeductible items | |||||||||||
| Non-deductible compensation | 2.4 | 1.9 | % | ||||||||
| Non-deductible interest expense | 5.1 | 4.0 | % | ||||||||
| Other | (1.2) | (0.9) | % | ||||||||
| Other adjustments | 1.1 | 0.9 | % | ||||||||
| Year ended December 31, 2025 | |||||||||||
| Total | % | ||||||||||
| Brazil | |||||||||||
| Effect of rates different than statutory | 3.6 | 2.9 | % | ||||||||
| Tax on undistributed earnings of subsidiaries | 11.4 | 9.1 | % | ||||||||
| Other | (0.7) | (0.6) | % | ||||||||
| Canada | |||||||||||
| Changes in valuation allowances | (3.9) | (3.1) | % | ||||||||
| State and local income taxes | (2.1) | (1.7) | % | ||||||||
| Other | 1.8 | 1.5 | % | ||||||||
| Germany | |||||||||||
| Effect of rates different than statutory | (7.6) | (6.0) | % | ||||||||
| Enactment of new tax laws | (18.7) | (14.9) | % | ||||||||
| State and local income taxes | 22.9 | 18.3 | % | ||||||||
| Other | 0.9 | 0.7 | % | ||||||||
| Mexico | |||||||||||
| Changes in valuation allowances | (17.5) | (14.0) | % | ||||||||
| Other | 1.8 | 1.4 | % | ||||||||
| Netherlands | |||||||||||
| Non-deductible interest expense | 2.4 | 1.9 | % | ||||||||
| Other | 1.0 | 0.8 | % | ||||||||
| Switzerland | |||||||||||
| Effect of rates different than statutory | (4.6) | (3.7) | % | ||||||||
| State and local income taxes | 4.1 | 3.3 | % | ||||||||
| Other | (0.4) | (0.3) | % | ||||||||
| Thailand | 2.1 | 1.7 | % | ||||||||
| Turkey | |||||||||||
| Changes in valuation allowances | 2.5 | 2.0 | % | ||||||||
| Other | (1.4) | (1.1) | % | ||||||||
| Other foreign jurisdictions | 6.0 | 4.8 | % | ||||||||
| Changes in unrecognized tax benefits | (13.6) | (10.8) | % | ||||||||
| Income tax expense | $ | 24.1 | 19.3 | % | |||||||
(1) During the year ended December 31, 2025, state and local income taxes in California, New York, New Jersey, Florida, Illinois, and Pennsylvania comprise greater than 50% of the tax effect in this category.
| Successor | Predecessor | |||||||||||||||||||
| Year ended December 31, | Period from 08/12/2023 through 12/31/2023 | Period from 01/01/2023 through 08/11/2023 | ||||||||||||||||||
| 2024 | ||||||||||||||||||||
| Statutory tax expense (benefit) | $ | 9.9 | $ | (0.9) | $ | 305.1 | ||||||||||||||
| State and local taxes (net of federal tax benefit) | 2.2 | (5.1) | 8.4 | |||||||||||||||||
| Brazil non-taxable incentive | — | (3.3) | (0.6) | |||||||||||||||||
| Valuation allowances | 6.6 | 1.1 | (194.0) | |||||||||||||||||
| Foreign tax rate differential | 17.4 | 1.5 | 47.3 | |||||||||||||||||
| Tax on unremitted foreign earnings | (3.5) | 1.5 | 6.8 | |||||||||||||||||
| Change to uncertain tax positions | (3.2) | — | (1.8) | |||||||||||||||||
| U.S. taxed foreign income | 6.3 | (9.2) | 23.6 | |||||||||||||||||
| Non-deductible (non-taxable) items | 17.2 | 16.2 | 65.8 | |||||||||||||||||
| Reorganization/Fresh Start reporting | — | (21.5) | (170.9) | |||||||||||||||||
| Prior year deferred true up | (1.5) | 1.0 | (6.1) | |||||||||||||||||
| Return to provision | 3.6 | (1.2) | 8.4 | |||||||||||||||||
| Withholding tax and other taxes | 9.2 | 5.1 | 0.6 | |||||||||||||||||
| Other | 0.1 | 0.1 | (2.2) | |||||||||||||||||
| Income tax expense (benefit) | $ | 64.3 | $ | (14.7) | $ | 90.4 | ||||||||||||||
The effective tax rate for the year ended December 31, 2025 was 19.3%. The effective rate differed from the U.S. federal statutory rate due to variations in the jurisdictional mix of earnings, U.S. tax on foreign income, withholding taxes, and adjustments to valuation allowances and unrecognized tax benefits.
The effective tax rate for the year ended December 31, 2024 was 135.9%. The effective rate differed from the U.S. federal statutory rate due to variations in the geographical mix of earnings, non-deductible expenses, U.S. tax on foreign income, and withholding taxes.
The effective tax rate for the period from August 12, 2023 through December 31, 2023 was 326.7%. Significant differences from the U.S. federal statutory rate included non-deductible expenses, U.S. tax on foreign income, withholding taxes, and impact of the reorganization, all of which have a significant impact on the effective tax rate due to the minimal pre-tax income.
The effective tax rate for the period from January 1 to August 11, 2023 was 6.2%. The effective tax rate differed compared to the U.S. federal statutory rate due to the tax impacts of reorganization and fresh-start adjustments, including adjustments to the Company's valuation allowance and permanent differences.
The Company recognizes the benefit of tax positions taken or expected to be taken in its tax returns in the consolidated financial statements when it is more likely than not that the position will be sustained upon examination by authorities. Recognized tax positions are measured at the largest amount of benefit that is more likely than not of being realized upon settlement. Details of the unrecognized tax benefits are as follows:
| Successor | Predecessor | |||||||||||||||||||||||||
| Year ended December 31, | Period from 08/12/2023 through 12/31/2023 | Period from 01/01/2023 through 08/11/2023 | ||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||
| Balance at beginning of the period | $ | 55.4 | $ | 52.6 | $ | 52.7 | $ | 52.1 | ||||||||||||||||||
| Increases (decreases) related to prior year tax positions, net | (12.6) | 5.2 | — | 0.1 | ||||||||||||||||||||||
| Other | 2.0 | (0.5) | — | 0.5 | ||||||||||||||||||||||
| Reductions due to lapse of applicable statute of limitations | (0.4) | (1.9) | (0.1) | — | ||||||||||||||||||||||
| Balance the end of the period | $ | 44.4 | $ | 55.4 | $ | 52.6 | $ | 52.7 | ||||||||||||||||||
Of the Company's $44.4 unrecognized tax benefits as of December 31, 2025, if recognized, $4.4 would affect the Company's effective tax rate. The remaining $40.0 relates to a prior year tax return position, which if recognized, would be offset by changes in valuation allowances and have no effect on the Company's effective tax rate.
The Company classifies interest expense and penalties related to the underpayment of income taxes in the consolidated financial statements as income tax expense. As of December 31, 2025 and 2024, accrued interest and penalties related to unrecognized tax benefits totaled $0.4 and $0.9, respectively.
Tax years prior to 2019, as well as 2021, are closed by statute for U.S. federal tax purposes. The Company is subject to tax examination in various U.S. state jurisdictions for tax years 2016 to the present. In addition, the Company is subject to a German tax audit for tax years 2021-2022, and other various foreign jurisdictions for tax years 2013 to the present.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities at December 31 are as follows:
| 2025 | 2024 | ||||||||||
| Deferred tax assets | |||||||||||
| Accrued expenses | $ | 141.9 | $ | 139.3 | |||||||
| Warranty accrual | 9.4 | 6.5 | |||||||||
| Deferred compensation | 3.7 | 2.0 | |||||||||
| Allowances for doubtful accounts | 3.4 | 3.7 | |||||||||
| Inventories | 21.6 | 17.0 | |||||||||
| Deferred revenue | 24.8 | 26.7 | |||||||||
| Pensions, post-retirement and other benefits | 46.8 | 45.5 | |||||||||
| Capitalized R&D | 29.0 | 29.8 | |||||||||
| Tax credits | 19.5 | 6.0 | |||||||||
| Net operating loss carryforwards | 83.0 | 99.8 | |||||||||
| Capital loss carryforwards | 1.3 | 1.3 | |||||||||
| State deferred taxes | 6.8 | 7.0 | |||||||||
| Lease liability | 35.6 | 30.6 | |||||||||
| Other | — | 3.4 | |||||||||
| 426.8 | 418.6 | ||||||||||
| Valuation allowances | (177.3) | (213.4) | |||||||||
| Net deferred tax assets | $ | 249.5 | $ | 205.2 | |||||||
| Deferred tax liabilities | |||||||||||
| Property, plant and equipment, net | $ | 21.4 | $ | 15.4 | |||||||
| Goodwill and intangible assets | 218.7 | 226.6 | |||||||||
| Undistributed earnings | 48.6 | 38.0 | |||||||||
| Right-of-use assets | 37.0 | 32.0 | |||||||||
| Other | 18.8 | 0.5 | |||||||||
| Net deferred tax liabilities | 344.5 | 312.5 | |||||||||
| Net deferred tax liabilities | $ | (95.0) | $ | (107.3) | |||||||
Deferred income taxes reported in the consolidated statement of financial position as of December 31 are as follows:
| 2025 | 2024 | ||||||||||
Deferred income taxes - assets1 | $ | 105.7 | $ | 69.5 | |||||||
| Deferred income taxes - liabilities | (200.7) | (176.8) | |||||||||
| Net deferred tax liabilities | $ | (95.0) | $ | (107.3) | |||||||
(1) Includes 0.7 of deferred income taxes for the year ended December 31, 2025, which is included in Other current assets in our Statement of Financial Position.
As of December 31, 2025, the Company had domestic and international net operating loss (NOL) carryforwards of $491.7, resulting in an NOL deferred tax asset of $93.6. Of these NOL carryforwards, $222.9 expire at various times between 2026 and 2046 and $268.8 does not expire.
The Company recorded a valuation allowance to reflect the estimated amount of certain U.S., foreign and state deferred tax assets that, more likely than not, will not be realized. The net change in total valuation allowance for the years ended the December 31, 2025 and 2024 were decreases of $36.1 and $20.2, respectively. The 2025 valuation allowance decrease was driven primarily by utilization of foreign net operating losses and certain valuation allowance releases. Of the total 2025 net decrease of $36.1, the Company recorded $40.9 decrease to tax benefit, approximately $4.8 increase was recorded to stockholder’s equity.
For the years ended December 31, 2025 and 2024, provisions were made for foreign withholding taxes and estimated foreign income taxes which may be incurred upon the remittance of certain undistributed earnings in foreign subsidiaries and foreign unconsolidated affiliates. Provisions have not been made for income taxes on undistributed earnings at December 31, 2025 in foreign subsidiaries and corporate joint ventures that were deemed permanently reinvested. Determination of the amount of unrecognized deferred income tax liabilities on these earnings is not practicable because such liability, if any, depends on certain circumstances existing if and when remittance occurs. A deferred tax liability will be recognized if and when the Company no longer plans to permanently reinvest these undistributed earnings.
The amount of cash taxes paid by the Company were as follows:
| 2025 | |||||
| U.S. federal | $ | 2.3 | |||
| U.S. state and local | 1.7 | ||||
| Foreign | |||||
| Brazil | 10.0 | ||||
| Malaysia | 3.4 | ||||
| Netherlands | 4.2 | ||||
| South Africa | 4.3 | ||||
| Switzerland | 3.1 | ||||
| Thailand | 4.3 | ||||
| Other foreign | 23.9 | ||||
| Total income taxes paid | $ | 57.2 | |||
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.