3D SYSTEMS CORPDDD
3D SYSTEMS CORP Income Taxes Disclosure
NOTE 16 - INCOME TAXES
The components of our income (loss) before income taxes for the years ended December 31, 2025, 2024 and 2023 are as follows:
| (in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
Income (loss) before income taxes: | ||||||||||||||||||||
| Domestic | $ | 13,858 | $ | (160,709) | $ | (239,971) | ||||||||||||||
| Foreign | 35,734 | (89,287) | (122,341) | |||||||||||||||||
| Total | $ | 49,592 | $ | (249,996) | $ | (362,312) | ||||||||||||||
The components of income tax provision for the years ended December 31, 2025, 2024 and 2023 are as follows:
| (in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Current: | ||||||||||||||||||||
| U.S. federal | $ | — | $ | 24 | $ | 135 | ||||||||||||||
| State | 99 | 301 | (50) | |||||||||||||||||
| Foreign | 14,867 | 2,820 | 1,686 | |||||||||||||||||
| Total | $ | 14,966 | $ | 3,145 | $ | 1,771 | ||||||||||||||
| Deferred: | ||||||||||||||||||||
| U.S. federal | $ | 838 | $ | — | $ | — | ||||||||||||||
| State | — | — | — | |||||||||||||||||
| Foreign | (933) | (952) | (2,412) | |||||||||||||||||
| Total | (95) | (952) | (2,412) | |||||||||||||||||
Total income tax provision (benefit) | $ | 14,871 | $ | 2,193 | $ | (641) | ||||||||||||||
Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 2, Summary of Significant Accounting Policies, cash paid for income taxes (net of refunds) during the year ended December 31, 2025, consisted of the following:
| (in thousands) | 2025 | |||||||
Federal | $ | 799 | ||||||
State: | ||||||||
Other (a) | 492 | |||||||
Total State | 492 | |||||||
Foreign: | ||||||||
Germany | 2,431 | |||||||
Korea | 1,860 | |||||||
Netherlands | 1,723 | |||||||
China | 559 | |||||||
Mexico | 522 | |||||||
Other (a) | 1,247 | |||||||
Total Foreign | 8,342 | |||||||
Cash paid for income taxes (net of refunds) | $ | 9,633 | ||||||
(a) The amount of income taxes paid during the year does not meet the 5% disaggregation threshold and is included in Other.
Cash paid for income taxes, net of refunds, during the years ended December 31, 2024 and 2023, was $5.5 million and $3.9 million respectively.
The components of our net deferred income tax assets and net deferred income tax (liabilities) at December 31, 2025 and 2024 as follows:
| (in thousands) | 2025 | 2024 | ||||||||||||
| Deferred income tax assets: | ||||||||||||||
| Intangible assets | $ | 11,860 | $ | 15,685 | ||||||||||
| Stock options and restricted stock awards | 1,666 | 3,032 | ||||||||||||
| Reserves and allowances | 4,511 | 6,879 | ||||||||||||
| Net operating loss carryforwards | 79,161 | 59,641 | ||||||||||||
| Tax credit carryforwards | 32,287 | 31,326 | ||||||||||||
| Accrued liabilities | 2,235 | 2,681 | ||||||||||||
| Deferred revenue | 1,055 | 2,176 | ||||||||||||
| Lease tax assets | 12,248 | 17,498 | ||||||||||||
| Research expenditures capitalization | 31,905 | 44,773 | ||||||||||||
| Other | 5,607 | 3,236 | ||||||||||||
| Valuation allowance | (170,425) | (168,299) | ||||||||||||
| Total deferred income tax assets | $ | 12,110 | $ | 18,628 | ||||||||||
| Deferred income tax liabilities: | ||||||||||||||
| Intangible assets | $ | 1,171 | $ | 2,081 | ||||||||||
| Property and equipment | 710 | 2,352 | ||||||||||||
| Lease tax liabilities | 10,182 | 14,159 | ||||||||||||
| Other | — | 49 | ||||||||||||
| Total deferred income tax liabilities | $ | 12,063 | $ | 18,641 | ||||||||||
Net deferred income tax asset (liability) | $ | 47 | $ | (13) | ||||||||||
At December 31, 2025, $79.2 million of our deferred income tax assets was attributable to $475.4 million of gross net operating loss carryforwards, which consisted of $111.0 million of loss carryforwards for U.S. federal income tax purposes, $175.1 million of loss carryforwards for U.S. state income tax purposes and $189.3 million of loss carryforwards for foreign income tax purposes.
The net operating loss carryforwards for U.S. federal income tax purposes do not expire. The net operating loss carryforwards for U.S. state income tax purposes began to expire in 2025. In addition, certain net loss carryforwards for foreign income tax purposes begin to expire in 2026 and certain other loss carryforwards for foreign purposes do not expire.
At December 31, 2025, tax credit carryforwards deferred assets of $32.3 million consisted of $22.4 million of research and experimentation credit carryforwards for U.S. federal income tax purposes, $5.9 million of research and experimentation tax credit carryforwards for U.S. state income tax purposes, and $4.0 million of foreign tax credits for U.S. federal income tax purposes. We have recorded a valuation allowance related to the U.S. federal and state tax credits.
During the year ended December 31, 2025, management reevaluated its assertion regarding the indefinite reinvestment of earnings generated by certain foreign subsidiaries. Historically, the Company had asserted that these undistributed foreign earnings would be indefinitely reinvested, and accordingly, no deferred tax liability had been recorded on the associated outside basis differences. As a result of changes in business plans and capital allocation strategies, including updated cash flow projections and anticipated funding needs in the parent jurisdiction, management determined that it can no longer assert indefinite reinvestment for a portion of these foreign earnings. Accordingly, as of December 31, 2025, we recorded the deferred tax liability related to undistributed earnings of foreign subsidiaries of $0.8 million.
Including interest and penalties, the total net decrease of our unrecognized benefits is $2.1 million for the year ended December 31, 2025. The decrease was primarily related to the lapse of statute for certain credits. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $2.6 million. We include interest and penalties in the consolidated financial statements as a component of income tax expense.
Unrecognized Tax Benefits(1) | ||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Balance at January 1 | $ | (16,413) | $ | (18,604) | $ | (17,150) | ||||||||||||||
| Increases related to prior year tax positions | (240) | (1,170) | (99) | |||||||||||||||||
| Decreases related to prior year tax positions | 106 | 4,337 | 107 | |||||||||||||||||
| Decreases related to prior year tax positions as a result of lapse of statute | 3,170 | — | 271 | |||||||||||||||||
| Decreases related to settlement | — | — | — | |||||||||||||||||
| Increases related to current year tax positions | (933) | (976) | (1,733) | |||||||||||||||||
| Increases related to acquired tax positions | — | — | — | |||||||||||||||||
| Decreases related to acquired tax positions | — | — | — | |||||||||||||||||
| Balance at December 31 | $ | (14,310) | $ | (16,413) | $ | (18,604) | ||||||||||||||
(1) The unrecognized tax benefit balance as of December 31, 2025, 2024, and 2023 includes $0.5 million, $1.3 million, and $0.3 million of interest and penalty, respectively.
Tax years 2021 through 2024 remain subject to examination by the U.S. Internal Revenue Service. State income tax returns are generally subject to examination for a period of three to four years after filing the respective tax returns. The tax years 2020 through 2024 remain open to examination by the various foreign taxing jurisdictions to which the Company is subject.
The following presents the changes in the balance of our deferred income tax asset valuation allowance:
| Year Ended | Item | Balance at beginning of year | Additions (reductions) charged to expense | Other(1) | Balance at end of year | |||||||||||||||||||||||||||
| 2025 | Deferred income tax asset valuation allowance | $ | 168,299 | $ | (1,915) | $ | 4,041 | $ | 170,425 | |||||||||||||||||||||||
| 2024 | Deferred income tax asset valuation allowance | $ | 125,533 | $ | 43,365 | $ | (599) | $ | 168,299 | |||||||||||||||||||||||
| 2023 | Deferred income tax asset valuation allowance | $ | 100,694 | $ | 23,606 | $ | 1,233 | $ | 125,533 | |||||||||||||||||||||||
(1) The Other portion of changes to our valuation allowance consists primarily of the impact of acquisitions and changes in foreign currency translation rates.
In 2025, we recorded a full valuation allowance for Oqton Belgium and a partial valuation allowance for 3D Systems SA. In 2024, we recorded full valuation allowances for 3DSystems GmbH and Kumovis GmbH. In addition, we released a valuation allowance for Oqton Belgium. In 2023, we recorded full valuation allowances for Wematter and Layerwise. All of which are foreign subsidiaries of the Company. We continue to review results of operations and forecast estimates to determine if it is more likely than not that the deferred tax assets will be realized.
The overall effective tax rate differs from the statutory federal tax rate for the years ended December 31, 2025 as follows:
| (in thousands) | Amount | Percent | |||||||||
| Tax provision based on the federal statutory rate | $ | 10,414 | 21.0 | % | |||||||
State and local income taxes(1) | 79 | 0.2 | % | ||||||||
| Foreign tax effects | |||||||||||
| Belgium | |||||||||||
| Foreign income tax rate differential | (779) | (1.6) | % | ||||||||
| Changes in valuation allowances | 6,738 | 13.6 | % | ||||||||
| Deferred adjustments | (2,289) | (4.6) | % | ||||||||
| Other | (588) | (1.2) | % | ||||||||
| Germany | |||||||||||
| Changes in valuation allowances | (1,874) | (3.8) | % | ||||||||
| Other | 145 | 0.3 | % | ||||||||
| Netherlands | |||||||||||
| Changes in valuation allowances | 1,623 | 3.3 | % | ||||||||
| Other | (344) | (0.7) | % | ||||||||
| Switzerland | |||||||||||
| Changes in valuation allowances | 1,708 | 3.4 | % | ||||||||
| Tax-deductible goodwill | (1,985) | (4.0) | % | ||||||||
| Other | (409) | (0.8) | % | ||||||||
| Other foreign jurisdictions | 3,924 | 7.9 | % | ||||||||
| Effect of cross-border tax laws | |||||||||||
| Global intangible low-taxed income inclusion | 5,980 | 12.1 | % | ||||||||
| Subpart F income inclusion | 725 | 1.5 | % | ||||||||
| Tax credits | |||||||||||
| Research and development tax credits | (3,593) | (7.2) | % | ||||||||
| Expired foreign tax credits | 3,253 | 6.6 | % | ||||||||
| Changes in valuation allowances | (9,951) | (20.1) | % | ||||||||
| Nontaxable or nondeductible items | |||||||||||
| Employee share-based payments | 2,483 | 5.0 | % | ||||||||
| Equity method investment | (827) | (1.7) | % | ||||||||
| Impairment of investments | 1,338 | 2.7 | % | ||||||||
| Unremitted foreign earnings | 838 | 1.7 | % | ||||||||
| Deferred adjustments | 559 | 1.1 | % | ||||||||
| Payable adjustments | (637) | (1.3) | % | ||||||||
| Other | 791 | 1.6 | % | ||||||||
| Changes in unrecognized tax benefits | (2,451) | (4.9) | % | ||||||||
Total | $ | 14,871 | 30.0 | % | |||||||
(1) In 2025, state taxes in California, New York, New Jersey, New York City, and Michigan made up the majority (greater than 50%) of the tax effect in this category.
The difference between our effective tax rate and the federal statutory rate for 2025 was 9.0 percentage points. The difference in the effective rate is primarily due to the global intangible low-taxed income inclusion ("GLTI").
The overall effective tax rate differs from the statutory federal tax rate for the years ended December 31, 2024, and 2023 are as follows:
| % of Pretax (Loss) Income | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Tax provision based on the federal statutory rate | 21.0 | % | 21.0 | % | ||||||||||
| Increase in valuation allowances | (17.3) | (6.5) | ||||||||||||
| Change in carryforward attributes | — | — | ||||||||||||
| Global intangible low-taxed income inclusion | — | (0.4) | ||||||||||||
| Non-deductible expenses | — | — | ||||||||||||
| Non-deductible earnout expense | — | 1.0 | ||||||||||||
Goodwill impairment charge | (8.7) | (14.6) | ||||||||||||
| Foreign income tax rate differential | 0.2 | 0.5 | ||||||||||||
| Deemed income related to foreign operations | (0.6) | (0.3) | ||||||||||||
| Tax rate change | (0.1) | — | ||||||||||||
| Employee share-based payments | (0.3) | (0.5) | ||||||||||||
| Other | (0.3) | (0.7) | ||||||||||||
| Deferred and payable adjustments | 1.3 | (1.3) | ||||||||||||
| Non-deductible penalties | — | — | ||||||||||||
| State taxes, net of federal benefit, before valuation allowance | 1.2 | 0.7 | ||||||||||||
| Return-to-provision adjustments | (0.5) | 0.2 | ||||||||||||
| Other tax credits | 2.0 | 1.1 | ||||||||||||
| Uncertain tax positions and audit settlements | 1.3 | — | ||||||||||||
| Effective tax rate | (0.8) | % | 0.2 | % | ||||||||||
The difference between our effective tax rate for 2024 and 2023 and the federal statutory rate was 21.8 and 20.8 percentage points, respectively. The difference in the effective rate is primarily due to the net increase in valuation allowances and non-deductible goodwill impairment charges.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 9, 2026 | Showing above |
| 2024 | Mar 27, 2025 | |
| 2023 | Aug 13, 2024 | |
| 2022 | Mar 16, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 5, 2021 | |
| 2019 | Feb 26, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Mar 14, 2018 | |
| 2016 | Feb 28, 2017 | |
| 2015 | Mar 14, 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.