GE HealthCare Technologies Inc.GEHC
GE HealthCare Technologies Inc. Income Taxes Disclosure
INCOME TAXES
The Company is subject to income taxes in the U.S. (both federal and state) and in numerous foreign jurisdictions. Changes in the tax laws or regulations in these jurisdictions, or in positions by the relevant authorities regarding their application, administration, or interpretation, may affect our tax liability, return on investments, and business operations.
The Tax Cuts and Jobs Act imposes tax on the Company for net controlled foreign corporation (“CFC”) tested income earned by certain non-U.S. subsidiaries (previously referred to as global intangible low-taxed income or “GILTI”). We have elected to account for net CFC tested income as a period cost. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into U.S. law, which includes significant changes to the federal income tax system. The Company has recorded the OBBBA tax impacts in its provision for income taxes for the year ended December 31, 2025, none of which are material to our financial statements.
Income From Continuing Operations Before Income Taxes | |||||||||||
| For the years ended December 31 | |||||||||||
| 2025 | 2024 | 2023 | |||||||||
U.S. income | $ | 1,028 | $ | 593 | $ | 816 | |||||
Non-U.S. income | 1,740 | 1,988 | 1,545 | ||||||||
Total | $ | 2,768 | $ | 2,581 | $ | 2,361 | |||||
Provision for Income Taxes | For the years ended December 31 | ||||||||||
| 2025 | 2024 | 2023 | |||||||||
| Current | |||||||||||
| U.S. Federal | $ | 4 | $ | 62 | $ | 171 | |||||
Non-U.S. | 317 | 412 | 345 | ||||||||
U.S. State | 8 | 8 | 42 | ||||||||
| Deferred | |||||||||||
| U.S. Federal | 110 | 3 | — | ||||||||
Non-U.S. | 131 | (12) | 103 | ||||||||
| U.S. State | 44 | 58 | 82 | ||||||||
| Total | $ | 614 | $ | 531 | $ | 743 | |||||
The effective income tax rate for the year ended December 31, 2025 differs from the statutory federal income tax rate as follows.
| Reconciliation of U.S. Federal Statutory Income Tax Rate to Actual Income Tax Rate | ||||||||
For the year ended December 31, 2025 | ||||||||
Amount | Percent | |||||||
Income from continuing operations before income taxes | $ | 2,768 | ||||||
Tax expected at 21% | 581 | 21.0 | % | |||||
State and local income taxes, net of federal income tax effect(1) | 41 | 1.5 | % | |||||
Foreign tax effects | ||||||||
| China | 30 | 1.1 | % | |||||
Other foreign jurisdictions | 54 | 2.0 | % | |||||
Effect of cross-border tax laws | ||||||||
Foreign-derived deduction eligible income | (49) | (1.8) | % | |||||
Net CFC tested income | 45 | 1.6 | % | |||||
| Other | 5 | 0.2 | % | |||||
Tax credits | ||||||||
R&D tax credits | (28) | (1.0) | % | |||||
Foreign tax credits | (81) | (2.9) | % | |||||
Changes in valuation allowances | 9 | 0.3 | % | |||||
Nontaxable or nondeductible items(2) | 22 | 0.8 | % | |||||
Changes in unrecognized tax benefits | (24) | (0.9) | % | |||||
Other adjustments | 8 | 0.3 | % | |||||
| Effective tax rate | $ | 614 | 22.2 | % | ||||
(1) In 2025, state and local income taxes in California, Illinois, New York, Florida, New Jersey, New York City, and Pennsylvania comprise more than 50% of state and local income taxes, net of federal income tax effect.
(2) The tax impact of any share-based compensation items are included in this category.
For the years ended December 31, 2024 and 2023, the effective income tax rate differs from the statutory federal income tax rate as follows.
Reconciliation of U.S. Federal Statutory Income Tax Rate to Actual Income Tax Rate | ||||||||
| For the years ended December 31 | ||||||||
| 2024 | 2023 | |||||||
Income from continuing operations before income taxes | $ | 2,581 | $ | 2,361 | ||||
Tax expected at 21% | 542 | 496 | ||||||
Foreign operations | 38 | 63 | ||||||
Withholding taxes | 34 | 28 | ||||||
U.S. tax on foreign operations | (43) | (35) | ||||||
Uncertain tax positions | 170 | 11 | ||||||
R&D benefits | (51) | (33) | ||||||
State and local income taxes, net of federal income tax effect | 49 | 24 | ||||||
Valuation allowance | (281) | 19 | ||||||
Spin-Off and separation costs | 72 | 184 | ||||||
Other | — | (14) | ||||||
Provision for income taxes | $ | 531 | $ | 743 | ||||
Effective income tax rate | 20.6% | 31.5% | ||||||
For the years ended December 31, 2025 and 2024, included in State and local income taxes, net of federal income tax effect is $10 million and $35 million of expense related to revaluation of deferred tax assets as a result of changes in future apportionment and state tax rates based on the 2024 and 2023 as-filed tax returns. For the year ended December 31, 2023, the Spin-Off and separation costs line includes $59 million of expense related to revaluation of state deferred tax assets associated with the Spin-Off.
UNRECOGNIZED TAX BENEFITS.
The Company is subject to periodic tax audits by tax authorities in the U.S. (both federal and state) and the numerous countries in which we operate. While the Company currently is being audited, or remains subject to audit, in a number of jurisdictions for tax years 2004-2024, including China, France, Germany, India, Japan, Norway, the U.K., and the United States, we believe that there are no jurisdictions in which the ultimate outcome of unresolved issues or claims is likely to be material to the results of operations, financial position, or cash flows. We believe that we have made adequate provisions for all unrecognized tax benefits.
The balance of unrecognized tax benefits, the amount of related interest and penalties, and the portion that, if recognized, would reduce tax expense and effective tax rate are as follows.
| 2025 | 2024 | 2023 | |||||||||
Balance at beginning of period | $ | 551 | $ | 409 | $ | 465 | |||||
Additions for tax positions of the current year | 5 | 4 | — | ||||||||
Additions for tax positions of prior years | 43 | 181 | 156 | ||||||||
Reductions for tax positions of prior years | (108) | (33) | (203) | ||||||||
Settlements with tax authorities | (7) | (4) | (6) | ||||||||
Expiration of the statute of limitations | (21) | (6) | (3) | ||||||||
Balance at end of period | $ | 463 | $ | 551 | $ | 409 | |||||
For the year ended December 31, 2025, the Additions for tax positions of prior years line includes $37 million of currency translation adjustments (“CTA”), and the Reductions for tax positions of prior years line includes $102 million related to a tax attribute that expired in 2025.
For the year ended December 31, 2024, the Additions for tax positions of prior years line includes $172 million of reserves established due to ongoing audits, of which $142 million was established against a net operating loss deferred tax asset. Also for the year ended December 31, 2024, the Reductions for tax positions of prior years includes CTA of $14 million and a reversal of $19 million related to various tax audits that were closed during the year.
For the year ended December 31, 2023, the Additions for tax positions of prior years line in the table above includes $134 million related to the Spin-Off. Also during the year ended December 31, 2023, a matter was closed with local tax authorities which resulted in the reversal of a net operating loss deferred tax asset and the related $183 million unrecognized tax benefit, which is included in the Reductions for tax positions of prior years line above.
Unrecognized Tax Benefits | For the years ended December 31 | ||||||||||
| 2025 | 2024 | 2023 | |||||||||
Unrecognized tax benefits | $ | 463 | $ | 551 | $ | 409 | |||||
Accrued interest on unrecognized tax benefits | 65 | 81 | 72 | ||||||||
Portion that, if recognized, would reduce tax expense and effective tax rate | 158 | 182 | 157 | ||||||||
Interest and penalties on unrecognized tax benefits recorded in Benefit (provision) for income taxes in the Consolidated Statements of Income were not material during the years ended December 31, 2025, 2024, and 2023.
DEFERRED INCOME TAXES.
We regularly evaluate the recoverability of our deferred tax assets and establish a valuation allowance, if necessary, to reduce the deferred tax assets to an amount that is more likely than not to be realized (a likelihood of more than 50%). Significant judgment is required in determining whether a valuation allowance is necessary and the amount of such valuation allowance. In assessing the recoverability of our deferred tax assets at December 31, 2025, we considered all available evidence, including the nature of financial statement losses, reversing taxable temporary differences, estimated future operating profits, and tax planning actions and strategies.
| As of | ||||||||
| December 31, 2025 | December 31, 2024 | |||||||
Total assets | $ | 4,491 | $ | 4,474 | ||||
Total liabilities | (193) | (56) | ||||||
Net deferred income tax asset (liability) | $ | 4,298 | $ | 4,418 | ||||
| Components of the Net Deferred Income Tax Asset (Liability) | As of | |||||||
| December 31, 2025 | December 31, 2024 | |||||||
Deferred tax assets: | ||||||||
Employee benefits | $ | 1,247 | $ | 1,340 | ||||
| Reserves and accruals | 481 | 413 | ||||||
Operating loss carryforwards | 463 | 447 | ||||||
Lease liabilities | 48 | 57 | ||||||
Tax credit carryforwards | 119 | 80 | ||||||
| U.S. interest restriction carryforwards | 135 | 156 | ||||||
| Goodwill and other intangible assets | 1,184 | 1,355 | ||||||
Property, plant, and equipment | 181 | 223 | ||||||
Capitalized R&D | 834 | 689 | ||||||
| Other deferred tax assets | 100 | 55 | ||||||
Total deferred income tax asset | 4,793 | 4,817 | ||||||
Valuation allowances | (251) | (231) | ||||||
Total deferred income tax asset after valuation allowance | 4,542 | 4,586 | ||||||
Deferred tax liabilities: | ||||||||
ROU assets | (47) | (42) | ||||||
Other deferred tax liabilities | (198) | (126) | ||||||
Total deferred income tax liability | (244) | (168) | ||||||
Net deferred income tax asset (liability) | $ | 4,298 | $ | 4,418 | ||||
Valuation allowances primarily relate to non-U.S. deferred taxes where there were historical losses and U.S. federal and state credit carryforwards. Activity in the valuation allowance consists of the following:
| Valuation Allowances | For the years ended December 31 | ||||||||||
| 2025 | 2024 | 2023 | |||||||||
| Balance at beginning of period | $ | 231 | $ | 540 | $ | 272 | |||||
| Provision for income taxes | 4 | (279) | (12) | ||||||||
| Foreign currency exchange and other | 16 | (31) | 280 | ||||||||
| Balance at end of period | $ | 251 | $ | 231 | $ | 540 | |||||
For the year ended December 31, 2024, our valuation allowance decreased by $310 million, which included a release of a valuation allowance in France of $295 million reflected in the Provision for income taxes line. Based on our analysis of all positive and negative evidence during the year ended December 31, 2024, we concluded that it is more likely than not that France deferred tax assets will be realizable based on our profitability in France as a stand-alone company post Spin-Off and our expectation for the continued generation of prospective positive income in the jurisdiction. In making these judgments, we considered various business and structural factors as a stand-alone company, which support our conclusion of the realization of the deferred tax assets. As a result of the Spin-Off, there was an increase in the valuation allowance of $269 million in 2023, which is included in the Foreign currency exchange and other line of the table above.
NET OPERATING LOSSES.
As of December 31, 2025, the Company had net operating loss carryforwards of $5,987 million primarily related to Ireland, France, Brazil, Germany, and the Netherlands, which can be carried forward indefinitely. The gross net operating loss carryforwards resulted in a deferred tax asset of $1,170 million as of December 31, 2025. This amount excludes accruals of $300 million for unrecognized tax benefits the Company has recorded related to the underlying tax positions which generated the net operating losses and expected impacts to U.S. foreign tax credits of $407 million.
UNDISTRIBUTED EARNINGS.
Post Spin-Off, the Company’s previously undistributed earnings of certain of our foreign subsidiaries are no longer indefinitely reinvested in non-U.S. businesses due to current U.S. funding needs. Therefore, in 2023, an incremental deferred tax liability of $21 million was recorded for withholding and other foreign taxes due upon future distribution of earnings. In addition, the Company is providing for withholding and other foreign taxes due upon future distribution of current period earnings. However, the Company generally considers instances of outside basis differences in foreign subsidiaries that would incur additional U.S. tax upon an unforeseen future reversal (e.g., capital gain distribution or disposition to an unrelated third party) of approximately $8 billion to be permanent in duration. Quantification of the deferred tax liability, if any, associated with indefinitely reinvested basis differences is not practicable.
CASH TAXES PAID.
The amounts of cash paid for income taxes by GE HealthCare are as follows.
| For the year ended December 31, 2025 | |||||
| U.S. Federal | $ | 38 | |||
| U.S. State | 17 | ||||
| Foreign | |||||
| Norway | 69 | ||||
| China | 66 | ||||
| India | 41 | ||||
| Japan | 23 | ||||
| United Kingdom | 23 | ||||
| Other | 151 | ||||
| Cash paid during the year for income taxes | $ | 429 | |||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 4, 2026 | Showing above |
| 2024 | Feb 13, 2025 | |
| 2023 | Feb 6, 2024 | |
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.