GENUINE PARTS COGPC
GENUINE PARTS CO Income Taxes Disclosure
Income Taxes
Significant components of our deferred tax assets and liabilities are as follows:
| (in thousands) | 2025 | 2024 | ||||||||||||
| Deferred tax assets related to: | ||||||||||||||
| Expenses not yet deducted for tax purposes | $ | 416,375 | $ | 344,858 | ||||||||||
| Operating lease liabilities | 467,765 | 622,732 | ||||||||||||
| Pension liability not yet deducted for tax purposes | — | 201,971 | ||||||||||||
| Employee and retiree benefits | 58,591 | — | ||||||||||||
| Net operating loss | 95,273 | 59,154 | ||||||||||||
| 1,038,004 | 1,228,715 | |||||||||||||
| Deferred tax liabilities related to: | ||||||||||||||
| Employee and retiree benefits | — | 257,640 | ||||||||||||
| Inventory | 68,930 | 67,437 | ||||||||||||
| Operating lease assets | 489,096 | 635,041 | ||||||||||||
| Other intangible assets | 513,773 | 495,227 | ||||||||||||
| Property, plant and equipment | 129,986 | 135,073 | ||||||||||||
| Other | 177,344 | 52,330 | ||||||||||||
| 1,379,129 | 1,642,748 | |||||||||||||
| Net deferred tax liability before valuation allowance | (341,125) | (414,033) | ||||||||||||
| Valuation allowance | (28,092) | (25,758) | ||||||||||||
| Total net deferred tax liability | $ | (369,217) | $ | (439,791) | ||||||||||
We currently have approximately $504 million in gross net operating losses, of which approximately $279 million will carry forward indefinitely. The remaining net operating losses of approximately $225 million will begin to expire in 2026.
The components of income before income taxes are as follows:
| (in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| United States | $ | (248,918) | $ | 761,230 | $ | 1,164,914 | ||||||||||||||
| Foreign | 301,086 | 414,738 | 577,434 | |||||||||||||||||
| Income before income taxes | $ | 52,168 | $ | 1,175,968 | $ | 1,742,348 | ||||||||||||||
The components of income tax expense are as follows:
| (in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Current: | ||||||||||||||||||||
| Federal | $ | 81,244 | $ | 129,542 | $ | 201,929 | ||||||||||||||
| State | 36,534 | 41,344 | 51,244 | |||||||||||||||||
| Foreign | 125,396 | 123,048 | 130,538 | |||||||||||||||||
| Deferred: | ||||||||||||||||||||
| Federal | (165,112) | (3,774) | 26,166 | |||||||||||||||||
| State | (58,834) | (1,477) | 10,241 | |||||||||||||||||
| Foreign | (33,005) | (16,791) | 5,706 | |||||||||||||||||
| $ | (13,777) | $ | 271,892 | $ | 425,824 | |||||||||||||||
The reasons for the difference between total tax expense and the amount computed by applying the statutory Federal income tax rate to income before income taxes are as follows:
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| (in thousands) | Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||||
| Pre-Tax Book Income | $ | 52,168 | $ | 1,175,968 | $ | 1,742,348 | ||||||||||||||||||||||||||||||||
| U.S. Federal Statutory Tax Rate | $ | 10,955 | 21.00 | % | $ | 246,953 | 21.00 | % | $ | 365,893 | 21.00 | % | ||||||||||||||||||||||||||
| State and Local Income Taxes, Net of Federal Income Tax Effect (1)(2)(3) | (17,618) | (33.77) | % | 31,495 | 2.68 | % | 48,573 | 2.79 | % | |||||||||||||||||||||||||||||
| Foreign Tax Effects: | ||||||||||||||||||||||||||||||||||||||
| Australia | 7,001 | 13.42 | % | 9,023 | 0.77 | % | 12,585 | 0.72 | % | |||||||||||||||||||||||||||||
| Canada | 6,417 | 12.30 | % | 8,933 | 0.76 | % | 13,304 | 0.76 | % | |||||||||||||||||||||||||||||
| United Kingdom | — | — | % | 3,767 | 0.32 | % | 1,592 | 0.09 | % | |||||||||||||||||||||||||||||
| Other Foreign Jurisdictions | (14,492) | (27.78) | % | (15,162) | (1.30) | % | (6,372) | (0.36) | % | |||||||||||||||||||||||||||||
| Tax Credits | (15,568) | (29.84) | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||
| Other Adjustments | 9,528 | 18.26 | % | (13,117) | (1.11) | % | (9,751) | (0.56) | % | |||||||||||||||||||||||||||||
| Effective Tax Rate | $ | (13,777) | (26.41) | % | $ | 271,892 | 23.12 | % | $ | 425,824 | 24.44 | % | ||||||||||||||||||||||||||
(1)State Taxes in the following states make up more than 50% of the tax effect in this category for 2025: Alabama, California, Florida, Illinois, Louisiana, Minnesota, New York, and Texas.
(2)State Taxes in the following states make up more than 50% of the tax effect in this category for 2024: Alabama, California, Florida, Illinois, Louisiana, Minnesota, New York, Pennsylvania and Wisconsin
(3)State Taxes in the following states make up more than 50% of the tax effect in this category for 2023: California, Florida, Illinois, Indiana, Michigan, Minnesota, New Jersey, New York, Pennsylvania and Wisconsin.
The components of income taxes paid globally are as follows:
| (in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Federal Taxes Paid | $ | 43,364 | $ | 88,744 | $ | 190,305 | ||||||||||||||
| State Taxes Paid | 40,832 | 36,789 | 63,724 | |||||||||||||||||
| Foreign Taxes Paid | 136,867 | 139,092 | 112,241 | |||||||||||||||||
| Australia | 49,874 | 33,749 | 31,473 | |||||||||||||||||
| Canada | 33,858 | 44,340 | 35,181 | |||||||||||||||||
| United Kingdom | 22,618 | 15,489 | 17,347 | |||||||||||||||||
| Other Foreign Jurisdictions | 30,517 | 45,514 | 28,240 | |||||||||||||||||
| Total Income Taxes Paid (Net of Refunds Received) | $ | 221,063 | $ | 264,625 | $ | 366,270 | ||||||||||||||
We account for Global Intangible Low Taxed income in the year the tax is incurred as a period cost.
We, or one of our subsidiaries, file income tax returns in the U.S., various states, and foreign jurisdictions. With few exceptions, we are no longer subject to federal, state and local tax examinations by tax authorities for years before 2021 or subject to foreign income tax examinations for years ended prior to 2013. We are currently under Federal income tax audit for 2022 and 2023 as well as audits in some of our state and foreign jurisdictions. Some audits may conclude in the next 12 months and the unrecognized tax benefits recognized in relation to the audits may differ from actual settlement amounts. It is not possible to estimate the effect, if any, of the amount of such change during the next 12 months to previously recognized uncertain tax positions in connection with the audits; however, we do not anticipate that total unrecognized tax benefits will significantly change in the next 12 months.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
| (in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Balance at beginning of year | $ | 36,190 | $ | 20,527 | $ | 19,621 | ||||||||||||||
| Additions based on tax positions related to the current year | 19,369 | 15,493 | 2,584 | |||||||||||||||||
| Additions for tax positions of prior years | 9,957 | 3,462 | 1,752 | |||||||||||||||||
| Reductions for tax positions for prior years | (327) | (542) | (70) | |||||||||||||||||
| Reduction for lapse in statute of limitations | (1,244) | (2,203) | (2,713) | |||||||||||||||||
| Settlements | (8,423) | (547) | (647) | |||||||||||||||||
| Balance at end of year | $ | 55,522 | $ | 36,190 | $ | 20,527 | ||||||||||||||
The amount of gross unrecognized tax benefits, including interest and penalties, as of December 31, 2025 and 2024 was approximately $57 million and $37 million, respectively, of which approximately $45 million and $35 million, respectively, if recognized, would affect the effective tax rate.
During the tax years ended December 31, 2025, 2024 and 2023, we paid, received refunds, or accrued insignificant interest and penalties. We recognize potential interest and penalties related to unrecognized tax benefits as a component of income tax expense.
As of December 31, 2025, we estimate that we have an outside basis difference in certain foreign subsidiaries of approximately $1.5 billion, which includes the cumulative undistributed earnings from our foreign subsidiaries. We continue to be indefinitely reinvested in this outside basis difference. Determining the amount of net unrecognized deferred tax liability related to any additional outside basis difference in these entities is not practicable. This is due to the complexities associated with the calculation to determine residual taxes on the undistributed earnings, including the availability of foreign tax credits, applicability of any additional local withholding tax and other indirect tax consequences that may arise due to the distribution of these earnings.
In 2025, we entered into a limited partnership agreement to become a limited partner in an approved qualified renewable energy project. We have elected for the application of the proportional amortization method (“PAM”) in this qualified investment, under which, the equity investment is amortized as a component of tax expense in proportion to the allocation of tax benefits from income tax credits and net operating losses. During 2025, $51 million of tax benefits, offset by $47 million of equity investment amortization, are included in . As of December 31, 2025, the carrying value of the equity investment is $7 million recorded in a $43 million initial commitment remains payable in other current liabilities on the Company's consolidated balance sheets with anticipated settlement in 2026. There was no equity investment impairment during the year ended December 31, 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 20, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 17, 2022 | |
| 2020 | Feb 19, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 25, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 27, 2017 | |
| 2015 | Feb 26, 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.