GLOBAL PAYMENTS INCGPN
GLOBAL PAYMENTS INC Income Taxes Disclosure
INCOME TAX
The income tax expense for the years ended December 31, 2025, 2024 and 2023 consisted of the following:
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Current income tax expense (benefit): | |||||||||||||||||
| Federal | $ | 282,092 | $ | 289,893 | $ | 290,887 | |||||||||||
| State | 73,817 | 60,358 | 78,459 | ||||||||||||||
| Foreign | 179,523 | 191,762 | 196,384 | ||||||||||||||
| 535,432 | 542,013 | 565,730 | |||||||||||||||
| Deferred income tax expense (benefit): | |||||||||||||||||
| Federal | (174,619) | (192,569) | (253,489) | ||||||||||||||
| State | (10,388) | (36,605) | (38,131) | ||||||||||||||
| Foreign | (98,868) | (71,326) | (87,593) | ||||||||||||||
| (283,875) | (300,500) | (379,213) | |||||||||||||||
| $ | 251,557 | $ | 241,513 | $ | 186,517 | ||||||||||||
Income tax expense allocated to noncontrolling interests was $14.9 million, $15.4 million and $11.8 million for the years ended December 31, 2025, 2024 and 2023, respectively.
The following table presents income (loss) before income taxes for the years ended December 31, 2025, 2024 and 2023:
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| United States | $ | 884,390 | $ | 1,004,292 | $ | 251,396 | |||||||||||
| Foreign | 375,729 | 526,024 | 530,266 | ||||||||||||||
| $ | 1,260,119 | $ | 1,530,316 | $ | 781,662 | ||||||||||||
Approximately $66.7 million of our undistributed foreign earnings are considered to be indefinitely reinvested outside the United States as of December 31, 2025. Because those earnings are considered to be indefinitely reinvested, no deferred income taxes have been provided thereon. If we were to make a distribution of any portion of those earnings in the form of dividends or otherwise, any such amounts would be subject to withholding taxes payable to various foreign jurisdictions; however, the amounts would not be subject to any additional U.S. income tax.
Our effective tax rates for the years ended December 31, 2025, 2024 and 2023 differ from the federal statutory rate for those periods as follows:
| Years Ended December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
| Amount | Rate | Amount | Rate | Amount | Rate | |||||||||||||||||||||
| (in thousands) | (in thousands) | (in thousands) | ||||||||||||||||||||||||
| Income from continuing operations before income taxes and equity in income of equity method investments | $ | 1,260,119 | $ | 1,530,316 | $ | 781,662 | ||||||||||||||||||||
| Federal U.S. statutory rate | 264,625 | 21.0 | % | 321,366 | 21.0 | % | 164,149 | 21.0 | % | |||||||||||||||||
| Federal tax effects: | ||||||||||||||||||||||||||
| Tax credits: | ||||||||||||||||||||||||||
| Research and development tax credits | (24,315) | (1.9) | % | (29,100) | (1.9) | % | (31,373) | (4.0) | % | |||||||||||||||||
| Transferable energy credits | (18,000) | (1.4) | % | — | — | % | — | — | % | |||||||||||||||||
| Other | (412) | — | % | (548) | — | % | (1,070) | (0.1) | % | |||||||||||||||||
| Nontaxable or nondeductible items: | ||||||||||||||||||||||||||
| Nondeductible executive compensation | 6,053 | 0.5 | % | 6,470 | 0.4 | % | 10,772 | 1.4 | % | |||||||||||||||||
| Other | 4,985 | 0.4 | % | 570 | — | % | 451 | 0.1 | % | |||||||||||||||||
| Cross-border tax laws: | ||||||||||||||||||||||||||
| Global intangible low-taxed income | 18,683 | 1.5 | % | 25,261 | 1.7 | % | 32,921 | 4.2 | % | |||||||||||||||||
| Subpart F income | 12,790 | 1.0 | % | 20,076 | 1.3 | % | 19,800 | 2.5 | % | |||||||||||||||||
| Foreign branches | (92,447) | (7.3) | % | (132,991) | (8.7) | % | (98,592) | (12.6) | % | |||||||||||||||||
| Foreign-derived intangible income | (5,497) | (0.4) | % | (7,956) | (0.5) | % | (5,164) | (0.7) | % | |||||||||||||||||
| Base Erosion Anti-Abuse Tax | 18,269 | 1.4 | % | — | — | % | — | — | % | |||||||||||||||||
| Other reconciling items: | ||||||||||||||||||||||||||
| Gain/loss on dispositions and restructuring | 100,711 | 8.0 | % | — | — | % | 50,470 | 6.5 | % | |||||||||||||||||
| Share-based compensation | 5,887 | 0.5 | % | 2,317 | 0.2 | % | 9,729 | 1.2 | % | |||||||||||||||||
| Other | (22,595) | (1.8) | % | 2,146 | 0.1 | % | 5,861 | 0.7 | % | |||||||||||||||||
| Changes in valuation allowances | (59,205) | (4.7) | % | (6,727) | (0.4) | % | (1,582) | (0.2) | % | |||||||||||||||||
State income taxes, net of federal effect(1) | 50,790 | 4.0 | % | 16,216 | 1.1 | % | 28,903 | 3.7 | % | |||||||||||||||||
| Foreign tax effects: | ||||||||||||||||||||||||||
| Hong Kong: | ||||||||||||||||||||||||||
| Nontaxable or nondeductible items | (1,951) | (0.2) | % | (16,172) | (1.1) | % | (7,004) | (0.9) | % | |||||||||||||||||
| Other | 859 | — | % | (3,310) | (0.3) | % | 2,909 | 0.4 | % | |||||||||||||||||
| Spain | 13,749 | 1.1 | % | 960 | 0.1 | % | 9,050 | 1.2 | % | |||||||||||||||||
| Other foreign jurisdictions | (13,499) | (1.1) | % | 29,029 | 1.9 | % | (7,565) | (1.0) | % | |||||||||||||||||
| Changes in unrecognized tax benefits | (7,923) | (0.6) | % | 13,906 | 0.9 | % | 3,852 | 0.5 | % | |||||||||||||||||
| Effective tax rate | $ | 251,557 | 20.0 | % | $ | 241,513 | 15.8 | % | $ | 186,517 | 23.9 | % | ||||||||||||||
(1) California, Pennsylvania and New York make up the majority (greater than 50 percent) of the state income tax expense, net of federal income tax effect category for the year ended December 31, 2025. California, Arizona, New York and New Jersey make up the majority of the state income tax expense, net of federal income tax effect category for the year ended December 31, 2024. California, Oklahoma, Pennsylvania, New Jersey and New York make up the majority of the state income tax expense, net of federal income tax effect category for the year ended December 31, 2023.
Cash paid for income taxes, net of refunds, for the years ended December 31, 2025, 2024 and 2023 was as follows:
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| U.S. Federal | $ | 430,302 | $ | 284,599 | $ | 345,827 | |||||||||||
| U.S. State & Local | 100,691 | 45,329 | 101,515 | ||||||||||||||
| Foreign: | |||||||||||||||||
| Mexico | — | 30,757 | — | ||||||||||||||
| Spain | 77,905 | 37,246 | 51,563 | ||||||||||||||
| UK | 66,772 | 67,676 | 81,238 | ||||||||||||||
| Other | 110,597 | 57,656 | 60,641 | ||||||||||||||
| Total | $ | 786,267 | $ | 523,263 | $ | 640,784 | |||||||||||
Deferred income taxes are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax laws and rates. Deferred income taxes as of December 31, 2025 and 2024 reflect the effect of temporary differences between the amounts of assets and liabilities for financial accounting and income tax purposes. As of December 31, 2025 and 2024, principal components of deferred tax items were as follows:
| 2025 | 2024 | ||||||||||
| (in thousands) | |||||||||||
| Deferred income tax assets: | |||||||||||
| Research and development costs | $ | 274,914 | $ | 286,688 | |||||||
| Foreign net operating loss carryforwards | 287,647 | 222,076 | |||||||||
| Credits | 281,915 | 200,474 | |||||||||
| Financial instruments | 132,304 | 110,621 | |||||||||
| Lease liabilities | 71,989 | 69,884 | |||||||||
| Accrued expenses | 46,664 | 48,985 | |||||||||
| Share-based compensation expense | 33,886 | 33,683 | |||||||||
| Domestic net operating loss carryforwards | 23,075 | 28,628 | |||||||||
| Other | 160,633 | 99,495 | |||||||||
| 1,313,027 | 1,100,534 | ||||||||||
| Valuation allowance | (173,836) | (241,197) | |||||||||
| 1,139,191 | 859,337 | ||||||||||
| Deferred tax liabilities: | |||||||||||
| Acquired intangibles | 1,236,865 | 1,238,613 | |||||||||
| Partnership interests | 687,785 | 646,915 | |||||||||
| Property and equipment | 386,355 | 367,078 | |||||||||
| Held for sale | 157,989 | — | |||||||||
| Right-of-use assets | 37,877 | 42,430 | |||||||||
| Other | 66,394 | 50,336 | |||||||||
| 2,573,265 | 2,345,372 | ||||||||||
| Net deferred income tax liability | $ | 1,434,074 | $ | 1,486,035 | |||||||
The net deferred income taxes reflected in our consolidated balance sheets as of December 31, 2025 and 2024 are as follows:
| 2025 | 2024 | ||||||||||
| (in thousands) | |||||||||||
| Noncurrent deferred income tax asset | $ | (171,430) | $ | (98,386) | |||||||
| Noncurrent deferred income tax liability | 1,605,504 | 1,584,421 | |||||||||
| Net deferred income tax liability | $ | 1,434,074 | $ | 1,486,035 | |||||||
A valuation allowance is provided against deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Changes to our valuation allowance during the years ended December 31, 2025, 2024 and 2023 are summarized below (in thousands):
| Balance at December 31, 2022 | $ | (110,043) | |||
| Allowance for foreign net operating losses | (674) | ||||
| Allowance for foreign tax credits | (101,271) | ||||
| Allowance for state tax credits | 3,079 | ||||
| Allowance for state interest limitation | (2,335) | ||||
| Allowance for domestic net operating losses | 195 | ||||
| Balance at December 31, 2023 | (211,049) | ||||
| Allowance for foreign net operating losses | (12,533) | ||||
| Allowance for foreign tax credits | (16,975) | ||||
| Allowance for state tax credits | (463) | ||||
| Allowance for state interest limitation | (177) | ||||
| Balance at December 31, 2024 | (241,197) | ||||
| Allowance for foreign net operating losses | 4,763 | ||||
| Allowance for foreign tax credits | 56,692 | ||||
| Allowance for state tax credits | 2,966 | ||||
| Allowance for state interest limitation | 2,513 | ||||
| Allowance for domestic net operating losses | 427 | ||||
| Balance at December 31, 2025 | $ | (173,836) | |||
The change in the valuation allowance for the year ended December 31, 2025 is primarily related to foreign and state tax credits, foreign net operating loss carryforwards, and state interest deduction carryforwards that were determined more likely than not to be realized. The change in the valuation allowance for the year ended December 31, 2024 is primarily related to increases related to foreign tax credits and foreign net operating loss carryforwards. The change in the valuation allowance for the year ended December 31, 2023 is primarily related to anticipatory foreign tax credits and state interest deduction carryforwards offset by recognition of state tax credit carryforwards determined more likely than not to be realized.
Foreign net operating loss carryforwards of $106.5 million will expire between December 31, 2026 and December 31, 2045, if not utilized. Foreign net operating loss carryforwards of $181.1 million have indefinite carryforward periods. Domestic net operating loss carryforwards of $23.0 million and tax credit carryforwards of $192.5 million will expire between December 31, 2026 and December 31, 2045, if not utilized.
We conduct business globally and file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities around the world. We are no longer subject to state income tax examinations for years ended on or before December 31, 2015, U.S. federal income tax examinations for years ended on or before December 31, 2016 and international corporation tax examinations for years ended on or before December 31, 2020.
A reconciliation of the beginning and ending amounts of unrecognized income tax benefits, excluding penalties and interest, for the years ended December 31, 2025, 2024 and 2023 is as follows:
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Balance at the beginning of the year | $ | 58,302 | $ | 43,229 | $ | 31,315 | |||||||||||
| Additions related to acquisitions | — | — | 4,054 | ||||||||||||||
| Reductions for income tax positions of prior years | (12,805) | (164) | (887) | ||||||||||||||
| Settlements with income tax authorities | (121) | (1,656) | (988) | ||||||||||||||
| Additions for income tax positions of prior years | 1,082 | 9,092 | 1,809 | ||||||||||||||
| Additions based on income tax positions related to the current year | 6,548 | 7,801 | 7,926 | ||||||||||||||
| Balance at the end of the year | $ | 53,006 | $ | 58,302 | $ | 43,229 | |||||||||||
As of December 31, 2025, the total amount of gross unrecognized income tax benefits that, if recognized, would affect the provision for income taxes is $51.1 million.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 20, 2026 | Showing above |
| 2024 | Feb 14, 2025 | |
| 2023 | Feb 14, 2024 | |
| 2022 | Feb 17, 2023 | |
| 2021 | Feb 18, 2022 | |
| 2020 | Feb 19, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 21, 2019 | |
| 2017 | Feb 23, 2018 | |
| 2016 | Jul 28, 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.