FISERV INCFISV

FISERV INC Income Taxes Disclosure

10-KFiled Feb 19, 20265 min read
Income Taxes
The provision for income taxes is based on income before income taxes and income (loss) from investments in unconsolidated affiliates, as follows:
Year Ended December 31,
(In millions)202520242023
United States$3,572 $3,683 $3,342 
Foreign692 823 556 
Total$4,264 $4,506 $3,898 
The income tax provision was as follows:
Year Ended December 31,
(In millions)202520242023
Components of income tax provision (benefit):
Current:
Federal$1,288 $831 $913 
State221 242 148 
Foreign244 230 204 
1,753 1,303 1,265 
Deferred:
Federal(759)(407)(380)
State(70)(112)(12)
Foreign(113)(143)(119)
(942)(662)(511)
Income tax provision $811 $641 $754 
An income tax rate reconciliation pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025 is as follows:
(In millions)AmountPercent
U.S. federal statutory income tax rate$896 21.0 %
United States:
State and local income taxes (1)
107 2.5 %
Effect of cross-border tax laws22 0.5 %
Tax credits
Transferable federal tax credits(96)(2.3)%
Foreign tax credits(66)(1.5)%
Other(14)(0.3)%
Nontaxable or nondeductible items
Excess tax benefit from share-based awards(55)(1.3)%
Other18 0.4 %
Other adjustments10 0.2 %
Foreign tax effects:
Other foreign jurisdictions(14)(0.3)%
Changes in unrecognized tax benefits3 0.1 %
Income tax provision$811 19.0 %
(1)State and local income taxes in California, Illinois, New Jersey, New York and Pennsylvania comprise the majority (greater than 50%) of the tax effect in this category.
A reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate is as follows:
Year Ended December 31,
20242023
U.S. federal statutory income tax rate21.0 %21.0 %
State income taxes, net of federal effect2.6 %2.8 %
Foreign derived intangibles income deduction— %(0.4)%
Excess tax benefit from share-based awards(1.3)%(0.8)%
Sale of businesses and subsidiary restructuring(0.2)%(1.3)%
Unrecognized tax benefits— %(0.2)%
Nondeductible executive compensation0.3 %0.2 %
Transferable federal tax credits
(2.3)%(1.4)%
Non-cash impairment charge (see Note 8)
(2.9)%— %
Valuation allowance(1.0)%(0.6)%
Other, net(2.0)%— %
Effective income tax rate14.2 %19.3 %
Pursuant to provisions under the Inflation Reduction Act, the Company purchased transferable federal tax credits during 2025, 2024 and 2023 from various counterparties. Such federal tax credits were purchased at negotiated discounts, resulting in an income tax benefit recorded during each of the years ended December 31, 2025, 2024 and 2023. Receivables associated with transferable federal tax credits are recorded within prepaid expenses and other current assets, and amounts owed to counterparties for the purchased credits are recorded within accounts payable and other current liabilities within the consolidated balance sheets at December 31, 2025 and 2024.
A summary of income taxes paid by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025 is as follows:
(In millions)
United States - Federal$939 
United States - State and local
216 
Foreign214 
Income taxes paid, net of amounts refunded
$1,369 
Significant components of deferred tax assets and liabilities consisted of the following:
December 31,
(In millions)20252024
Accrued expenses$132 $167 
Share-based compensation80 93 
Net operating loss and credit carry-forwards986 586 
Leasing liabilities177 258 
Other362 215 
Subtotal1,737 1,319 
Valuation allowance(420)(404)
Total deferred tax assets1,317 915 
Capitalized software development costs(158)(219)
Intangible assets(1,517)(1,728)
Property and equipment(166)(278)
Capitalized commissions(101)(108)
Investments in joint ventures(250)(392)
Leasing right-of-use assets(139)(220)
Other(355)(371)
Total deferred tax liabilities(2,686)(3,316)
Total$(1,369)$(2,401)
The Company maintained a valuation allowance of $420 million and $404 million at December 31, 2025 and 2024, respectively, against its deferred tax assets. Substantially all of the valuation allowance relates to certain foreign and state net operating loss carryforwards.
Deferred tax assets and liabilities are reported in the consolidated balance sheets as follows:
December 31,
(In millions)20252024
Noncurrent assets$109 $76 
Noncurrent liabilities(1,478)(2,477)
Total$(1,369)$(2,401)
Noncurrent deferred tax assets are included in other long-term assets in the consolidated balance sheets at December 31, 2025 and 2024.
Federal, state and foreign net operating loss carryforwards and tax credit carryforwards consisted of the following:
December 31,
(In millions)20252024
Net operating loss carryforwards: (1)
   Federal$36 $28 
   State 2,732 2,829 
   Foreign 1,818 1,597 
Tax credit carryforwards (2)
396 43 
(1)At December 31, 2025, the Company had federal net operating loss carryforwards of $36 million, most of which do not expire, state net operating loss carryforwards of $2.7 billion, most of which expire in 2026 through 2045, and foreign net operating loss carryforwards of $1.8 billion, of which $1.5 billion expire in 2026 through 2045, and the remainder of which do not expire.
(2)At December 31, 2025, the Company had tax credit carryforwards, including transferable federal tax credits, of $396 million, most of which expire in 2026 through 2045.
The Company asserts that its investment in its foreign subsidiaries is intended to be indefinitely reinvested. Undistributed historical and future earnings of its foreign subsidiaries are not considered to be indefinitely reinvested. Should these earnings be distributed in the future in the form of dividends or otherwise, the Company may be subject to foreign or U.S. taxes. The Company has the ability and intent to limit distributions so as to not make a distribution in excess of its investment in those subsidiaries. The Company will continue to monitor its global cash requirements and the need to recognize a deferred tax liability accordingly.
Unrecognized tax benefits were as follows:
December 31,
(In millions)202520242023
Unrecognized tax benefits - Beginning of year$85 $84 $96 
Increases for tax positions taken during the current year2 2 2 
Increases for tax positions taken in prior years19 4 8 
Decreases for tax positions taken in prior years— — (10)
Decreases for settlements— — (3)
Lapse of the statute of limitations(9)(5)(9)
Unrecognized tax benefits - End of year$97 $85 $84 
At December 31, 2025, unrecognized tax benefits of $60 million, net of federal and state benefits, would affect the Company’s effective income tax rate if recognized.
The Company classifies interest expense and penalties related to income taxes as components of its income tax provision. The income tax provision included interest expense (benefits) and penalties on unrecognized tax benefits of $(1) million in 2025, $1 million in 2024 and $2 million in 2023. Accrued interest expense and penalties related to unrecognized tax benefits totaled $14 million and $16 million at December 31, 2025 and 2024, respectively.
The Company’s U.S. federal income tax returns for 2020 through 2025, and tax returns in certain states and foreign jurisdictions for 2017 through 2025, remain subject to examination by taxing authorities.

Historical Timeline

Fiscal YearFiled
2025Feb 19, 2026Showing above
2024Feb 20, 2025
2023Feb 22, 2024
2022Feb 23, 2023
2021Feb 24, 2022
2020Feb 26, 2021
2019Feb 27, 2020
2018Feb 21, 2019
2017Feb 22, 2018
2016Feb 23, 2017
2015Feb 19, 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.

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