FTAI Aviation Ltd.FTAI
FTAI Aviation Ltd. Income Taxes Disclosure
11. INCOME TAXES
The Company is incorporated in the Cayman Islands where income taxes are not imposed. Taxable income or loss generated by the Company’s corporate subsidiaries is subject to income tax in jurisdictions where they conduct business.
For the year ended December 31, 2025, for purposes of this income tax disclosure, the Company has determined that based on the increased significance of its operations, by location, that Ireland is its domestic country of tax domicile. As a result, for 2025, the Ireland statutory income tax rate of 12.5% has been used for purposes of presenting the tax rate reconciliation.
During 2025, the Company adopted ASU 2023-09 “Improvements to Income Tax Disclosures” on a prospective basis. The 2025 tables below are presented on a prospective basis, both in adoption of ASU 2023-09 and for the presentation of Ireland as the country of domicile beginning in 2025 for purposes of the income taxes note to the consolidated financial statements. Thus, the year ended December 31, 2025 is presented separately from its comparative periods ending December 31, 2024 and 2023, which remain presented consistently with prior reporting.
The domestic and foreign components of the Company’s pre-tax income (loss) are as follows:
| Year Ended December 31, | |||||
| 2025 | |||||
| Pre-tax book income (loss) | |||||
Domestic (Ireland) | $ | 410,329 | |||
| Foreign | 196,355 | ||||
| Total | $ | 606,684 | |||
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Pre-tax book income (loss) | |||||||||||
Domestic (Cayman Islands) | $ | (259) | $ | (282) | |||||||
| Foreign | 14,428 | 184,299 | |||||||||
| Total | $ | 14,169 | $ | 184,017 | |||||||
The current and deferred components of the provision for (benefit from) income taxes are as follows:
| Year Ended December 31, | |||||
| 2025 | |||||
| Current: | |||||
Ireland | $ | 13,534 | |||
| Cayman Islands | — | ||||
| Bermuda | 4,800 | ||||
| United States: | |||||
| Federal | 1,353 | ||||
| State and local | 4,949 | ||||
Other Non-Ireland including Pillar II Tax | 7,028 | ||||
| Total current provision | 31,664 | ||||
| Deferred: | |||||
Ireland | 34,920 | ||||
| Cayman Islands | — | ||||
| Bermuda | 10,643 | ||||
| United States: | |||||
| Federal | 25,436 | ||||
| State and local | 2,379 | ||||
Other Non-Ireland | 578 | ||||
Total deferred provision (benefit) | 73,956 | ||||
| Total | $ | 105,620 | |||
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Current: | |||||||||||
| Cayman Islands | $ | — | $ | — | |||||||
| Bermuda | — | — | |||||||||
| United States: | |||||||||||
| Federal | 847 | 935 | |||||||||
| State and local | 1,158 | 1,176 | |||||||||
| Other Non-U.S. | 1,604 | 1,715 | |||||||||
| Total current provision | 3,609 | 3,826 | |||||||||
| Deferred: | |||||||||||
| Cayman Islands | — | — | |||||||||
| Bermuda | 2,320 | (72,185) | |||||||||
| United States: | |||||||||||
| Federal | 6,020 | 3,943 | |||||||||
| State and local | (616) | (2) | |||||||||
| Other Non-U.S. | (5,846) | 4,618 | |||||||||
Total deferred provision (benefit) | 1,878 | (63,626) | |||||||||
| Total | $ | 5,487 | $ | (59,800) | |||||||
Historically, the Company’s Bermuda operations have not been subject to Bermuda income tax. However, on December 27, 2023, the Government of Bermuda enacted a 15% corporate income tax regime (the “Bermuda CIT”) that applies to Bermuda businesses that are part of multinational enterprise groups with annual revenue of €750 million or more and is effective for tax years beginning on or after January 1, 2025. As a result of the Bermuda CIT, the exemption of certain of the Company’s Bermuda subsidiaries from Bermuda corporate income taxes ceased in 2025. The Company recorded the impact of this enactment in their provision for the year ended December 31, 2023.
The difference between the Company’s reported income tax rate and the Irish statutory rate is as follows:
| Year Ended December 31, 2025 | |||||||||||
| Amount | Percent | ||||||||||
Ireland statutory rate | $ | 75,836 | 12.50 | % | |||||||
Foreign tax effects | 24,946 | 4.11 | % | ||||||||
United States | |||||||||||
Statutory tax rate difference between the US and Ireland | 9,092 | 1.50 | % | ||||||||
Nondeductible expenses | 6,601 | 1.09 | % | ||||||||
US State and local taxes (1) | 5,053 | 0.83 | % | ||||||||
Bermuda | |||||||||||
Statutory tax rate difference between Bermuda and Ireland | 3,109 | 0.51 | % | ||||||||
Other foreign jurisdictions | 1,091 | 0.18 | % | ||||||||
Ireland alternative minimum tax (2) | 5,798 | 0.96 | % | ||||||||
Changes in valuation allowance | (4,460) | (0.74) | % | ||||||||
Other | 3,500 | 0.58 | % | ||||||||
Income tax rate | $ | 105,620 | 17.41 | % | |||||||
(1) State taxes in Arizona, California, and Florida made up the majority (greater than 50%) of the tax effect in this category.
(2) Represents top-up tax in Ireland driven by Pillar Two given Ireland statutory tax rate of 12.5%.
Note: As of January 1, 2025, the Company adopted ASU 2023-09 related to income tax disclosures in connection with 2025 only (as presented above). The effective tax rate reconciliation for pre-2025 years are presented consistently with historical presentation below.
The difference between the Company’s reported income tax rate and the Cayman Islands statutory rate of 0% is as follows:
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Income subject to tax in the United States | 53.0 | % | 3.3 | % | |||||||
| Foreign taxes | 80.1 | % | (30.9) | % | |||||||
| Change in valuation allowance | (94.4) | % | (4.9) | % | |||||||
| Income tax rate | 38.7 | % | (32.5) | % | |||||||
For the year ended December 31, 2025, the Company paid income taxes, net of refunds, by jurisdiction as follows:
| Year Ended December 31, | |||||
| 2025 | |||||
Ireland | $ | 1,238 | |||
US Federal | 8,777 | ||||
Florida (US State) | 2,735 | ||||
| Other | 2,911 | ||||
Total | $ | 15,661 | |||
Note: The table above also is a result of the adoption of ASU 2023-09 for the year ended December 31, 2025. Historically, any cash taxes paid disclosure was disclosed in the Statement of Cash Flows. Cash paid for taxes was $5,655 and $1,393 in the years ended December 31, 2024 and 2023, respectively.
Significant components of the Company’s deferred tax assets and liabilities are as follows:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss carryforwards | $ | 6,985 | $ | 34,097 | |||||||
| Interest expense | — | 2,187 | |||||||||
| Inventory | 2,089 | 2,704 | |||||||||
| Customer relationship intangibles | 25,650 | 28,500 | |||||||||
| Other | 9,399 | 4,250 | |||||||||
| Total deferred tax assets | 44,123 | 71,738 | |||||||||
| Less valuation allowance | — | (5,228) | |||||||||
| Net deferred tax assets | 44,123 | 66,510 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Fixed assets and goodwill | (51,480) | (32,545) | |||||||||
Equity method investments | (12,223) | (163) | |||||||||
| Other | (1,896) | (2,214) | |||||||||
Total deferred tax liabilities | (65,599) | (34,922) | |||||||||
Net deferred tax (liabilities) assets | $ | (21,476) | $ | 31,588 | |||||||
Deferred tax assets and liabilities are reported net in Other non-current assets or Other non-current liabilities. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible.
For the year ended December 31, 2025, the Company evaluated its deferred tax assets and determined, based on the weight of available evidence, that it is more likely than not that such deferred tax assets will be realized. As a result, the valuation allowance was fully released as of December 31, 2025. Valuation allowances of $5.2 million and $18.6 million were recognized as of December 31, 2024 and 2023, respectively, related to certain deductible temporary differences and net operating loss carryforwards.
A summary of the changes in the valuation allowance is as follows:
| December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Valuation allowance at beginning of period | $ | 5,228 | $ | 18,599 | $ | 27,565 | |||||||||||
| Change due to current year losses | — | 885 | 855 | ||||||||||||||
| Change due to current year releases | (5,228) | (14,256) | (9,821) | ||||||||||||||
| Valuation allowance at end of period | $ | — | $ | 5,228 | $ | 18,599 | |||||||||||
As of December 31, 2025, the Company had net operating loss carryforwards for Irish income tax purposes of $51.0 million, which can be carried forward indefinitely against future business income, and $2.0 million of net operating loss carryforward for Canadian income tax purpose, which will begin to expire in the year 2044. The utilization of the net operating loss carryforwards to reduce future income taxes will depend on the relevant corporate subsidiary’s ability to generate sufficient taxable income prior to the expiration of the carryforward period, if any. In addition, the maximum annual use of net operating loss carryforwards may be limited after certain changes in share ownership.
As of and for the period ended December 31, 2025, the Company had not established a liability for uncertain tax positions as no such positions existed. In general, the Company’s tax returns and the tax returns of its corporate subsidiaries are subject to U.S. federal, state, local and foreign income tax examinations by tax authorities. Generally, the Company is not subject to examination by taxing authorities for tax years prior to 2021. The Company does not believe that it is reasonably possible that the total amount of unrecognized tax benefits will significantly change within 12 months of the reporting date.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Feb 26, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Mar 10, 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.