CHART INDUSTRIES INCGTLS
CHART INDUSTRIES INC Income Taxes Disclosure
Income Taxes
Income from Continuing Operations Before Income Taxes
Income from continuing operations before income taxes consists of the following:
| For the Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| United States | $ | (44.3) | $ | 75.5 | $ | (100.9) | |||||||||||
| Foreign | 72.4 | 243.0 | 158.9 | ||||||||||||||
| Income from continuing operations before income taxes | $ | 28.1 | $ | 318.5 | $ | 58.0 | |||||||||||
Provision
Significant components of income tax (benefit) expense, net are as follows:
| For the Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 1.3 | $ | 27.4 | $ | (15.5) | |||||||||||
| State and local | (1.4) | 7.6 | 6.6 | ||||||||||||||
| Foreign | 86.9 | 69.7 | 91.2 | ||||||||||||||
| Total current | 86.8 | 104.7 | 82.3 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | (59.0) | (21.4) | 1.5 | ||||||||||||||
| State and local | (5.0) | 0.7 | (1.8) | ||||||||||||||
| Foreign | (33.2) | (5.4) | (79.0) | ||||||||||||||
| Total deferred | (97.2) | (26.1) | (79.3) | ||||||||||||||
| Total income tax (benefit) expense, net | $ | (10.4) | $ | 78.6 | $ | 3.0 | |||||||||||
See Note 20, “Discontinued Operations” for the income (loss) from discontinued operations and related income taxes.
Effective Tax Rate Reconciliation
The following table presents the reconciliation of income taxes computed at the U.S. federal statutory tax rate to income tax benefit, net for the year ended December 31, 2025 after the adoption of ASU 2023-09:
| Year Ended December 31, 2025 | |||||||||||
| Amount | Rate | ||||||||||
| Income tax expense at U.S. statutory rate | $ | 5.9 | 21.0 | % | |||||||
State income taxes, net of federal tax benefit (1) | (6.1) | (21.7) | % | ||||||||
| Foreign tax effects: | |||||||||||
| China: | |||||||||||
| Tax rate differential | 0.7 | 2.5 | % | ||||||||
| Germany: | |||||||||||
| Tax rate differential | 4.9 | 17.4 | % | ||||||||
| Enacted changes in tax laws or rates | (3.2) | (11.4) | % | ||||||||
| Other | (0.8) | (2.8) | % | ||||||||
| Italy: | |||||||||||
| Withholding tax | 2.1 | 7.5 | % | ||||||||
| Tax rate differential | 0.4 | 1.4 | % | ||||||||
| Other | (0.4) | (1.4) | % | ||||||||
| United Kingdom: | |||||||||||
| Changes in valuation allowances | (3.1) | (11.0) | % | ||||||||
| Tax rate differential | 1.8 | 6.4 | % | ||||||||
| Other | 1.2 | 4.3 | % | ||||||||
| Other foreign jurisdictions | 1.4 | 5.0 | % | ||||||||
| Effect of cross-border tax laws: | |||||||||||
| Foreign derived intangible income | (7.3) | (26.0) | % | ||||||||
| Foreign tax credits | (4.3) | (15.3) | % | ||||||||
| Other cross-border | 0.8 | 2.8 | % | ||||||||
| Tax credits | (4.3) | (15.3) | % | ||||||||
| Changes in valuation allowances | 1.7 | 6.0 | % | ||||||||
| Nontaxable or nondeductible items: | |||||||||||
| Executive compensation | 2.3 | 8.2 | % | ||||||||
| Other nontaxable or nondeductible items | 0.9 | 3.2 | % | ||||||||
| Change in uncertain tax positions | (4.7) | (16.7) | % | ||||||||
| Other items | (0.3) | (1.1) | % | ||||||||
| Income tax benefit, net | $ | (10.4) | (37.0) | % | |||||||
_______________
(1)State income taxes in Louisiana made up the majority (greater than 50 percent) of the tax effect within this category.
The following table presents the reconciliation of income taxes computed at the U.S. federal statutory tax rate to income tax expense, net for the years ended December 31, 2024 and 2023 prior the adoption of ASU 2023-09:
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Income tax expense at U.S. statutory rate | $ | 66.8 | $ | 12.2 | |||||||
| State income taxes, net of federal tax benefit | 6.8 | 3.1 | |||||||||
| Foreign withholding taxes | 2.4 | 6.3 | |||||||||
| U.S. taxation of international operations | (6.1) | 18.7 | |||||||||
| Effective tax rate differential of earnings outside of United States | 10.7 | 2.8 | |||||||||
| Change in valuation allowance | 3.0 | (2.0) | |||||||||
| Research & experimentation | (2.2) | (2.0) | |||||||||
| Provision to return | (8.4) | 0.8 | |||||||||
| Non-deductible (non-taxable) items | (0.8) | 0.1 | |||||||||
| Change in uncertain tax positions | 3.7 | 2.0 | |||||||||
| Share-based compensation | 2.1 | 0.1 | |||||||||
| Capital (loss) | — | (40.5) | |||||||||
| Unremitted earnings not permanently reinvested | 0.5 | 0.9 | |||||||||
| Other items | 0.1 | 0.5 | |||||||||
| Income tax expense, net | $ | 78.6 | $ | 3.0 | |||||||
The Company adopted ASU 2023‑09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, effective January 1, 2025, and applied the guidance prospectively, as permitted. The amendments related to the effective tax rate reconciliation affect presentation and disaggregation requirements only and do not impact the recognition or measurement of income taxes. The Company applied the guidance using existing underlying balances. Prior‑period amounts have not been reclassified to conform to the new disclosure framework; therefore, the current‑period effective tax rate reconciliation is not directly comparable to prior‑year disclosures.
Deferred Taxes
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. Significant components of our deferred tax assets and liabilities are as follows:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets (“DTA”): | |||||||||||
| Accruals and reserves | $ | 23.0 | $ | 13.4 | |||||||
| Inventory | 163.6 | 166.8 | |||||||||
| Research and development (“R&D”) amortization | 20.0 | 22.3 | |||||||||
| Interest limitation carryover | 184.0 | 172.3 | |||||||||
| Net operating loss carryforwards | 43.6 | 35.5 | |||||||||
| Property, plant and equipment - net DTA | 11.7 | 6.8 | |||||||||
| Other - net DTA | 15.7 | 11.5 | |||||||||
| Pensions | 11.1 | — | |||||||||
| Termination fee | 61.8 | — | |||||||||
| Total deferred tax assets before valuation allowance | 534.5 | 428.6 | |||||||||
| Valuation allowances | (100.9) | (98.6) | |||||||||
| Total deferred tax assets, net of valuation allowances | $ | 433.6 | $ | 330.0 | |||||||
| Deferred tax liabilities (“DTL”): | |||||||||||
| Property, plant and equipment – net DTL | $ | 67.2 | $ | 54.5 | |||||||
| Goodwill and intangible assets | 595.8 | 587.4 | |||||||||
| Pensions | — | 6.2 | |||||||||
| Unremitted earnings (APB23) | 19.8 | 20.2 | |||||||||
| Other – net DTL | 11.7 | 9.3 | |||||||||
| Deferred revenue | 193.2 | 167.4 | |||||||||
| Total deferred tax liabilities | $ | 887.7 | $ | 845.0 | |||||||
| Net deferred tax liabilities | $ | 454.1 | $ | 515.0 | |||||||
| The net deferred tax liability is classified as follows: | |||||||||||
| Other assets | $ | (99.6) | $ | (29.9) | |||||||
| Deferred tax liabilities | 553.7 | 544.9 | |||||||||
| Net deferred tax liabilities | $ | 454.1 | $ | 515.0 | |||||||
We evaluate the recoverability of our deferred tax assets on a jurisdictional basis by considering whether deferred tax assets will be realized on a more likely than not basis. To the extent a portion or all of the applicable deferred tax assets do not meet the more likely than not threshold, a valuation allowance is recorded. As of December 31, 2025, we have valuation allowances totaling $100.9 consisting primarily of our operations in the United Kingdom, France, and Belgium.
The Company has U.S. state net operating loss carryforwards of $81.4 which are subject to varying statutory expiration periods; however, management expects to utilize these attributes before expiration. As of December 31, 2025, we had $156.9 foreign net operating loss carryforwards primarily in France, Belgium, the Netherlands, Australia, and Italy, subject to local tax limitations. The foreign net operating losses can be carried forward indefinitely, except in applicable jurisdictions that make up less than 11% of available net operating losses. We have tax credit carryforwards of $4.7.
We consider the undistributed earnings of our non-US subsidiaries as of December 31, 2025, to be partially reinvested. We are not permanently reinvested on $317.7 of the undistributed earnings of our foreign subsidiaries. The remaining earnings continue to be indefinitely reinvested outside the United States. We have assessed a total deferred tax liability of $19.8 as of December 31, 2025 on such earnings that have not been indefinitely reinvested. This is a decrease of $0.4 as compared to the deferred tax liability as of December 31, 2024. We have made no provision for U.S. income taxes or additional non-U.S. taxes
on certain undistributed earnings of non-U.S. subsidiaries. These earnings could become subject to additional tax if we were to dividend those earnings or sell our interest in the non-U.S. subsidiary. We cannot practically determine the amount of additional taxes that might be payable on those earnings.
The Organisation for Economic Co‑operation and Development (OECD) has established a framework to implement a global minimum corporate tax of 15% for multinational enterprises with revenues above certain thresholds (commonly referred to as “Pillar 2”). Certain aspects of Pillar 2 became effective for fiscal years beginning on or after January 1, 2024, with additional elements becoming effective for fiscal years beginning on or after January 1, 2025. A number of jurisdictions in which the Company operates have enacted, or are in the process of enacting, legislation implementing Pillar 2.
In January 2026, the OECD issued additional administrative guidance related to Pillar 2, including a “side‑by‑side” framework intended to allow certain minimum tax regimes to operate alongside Pillar 2 and, in certain circumstances, limit the application of Pillar 2 top‑up taxes. This guidance is effective for fiscal years beginning on or after January 1, 2026, and did not impact the Company’s financial statements for the year ended December 31, 2025.
The Company continues to monitor developments related to Pillar 2 and the related administrative guidance. Based on current law and available guidance, the Company does not expect Pillar 2 to have a material impact on its effective tax rate or its consolidated results of operations, financial position, or cash flows.
Cash paid for income taxes during the years ended December 31, 2025, 2024, and 2023 was $118.6, $92.7, and $49.7, respectively.
| 2025 | |||||
| Federal | $ | 13.5 | |||
| State | 3.7 | ||||
| Foreign | 101.4 | ||||
| Total | $ | 118.6 | |||
Income taxes paid (net of refunds) exceeded five percent of total income taxes paid (net of refunds) in the following jurisdictions:
| Foreign | 2025 | ||||
| China | $ | 22.4 | |||
| South Africa | 11.8 | ||||
| United Kingdom | 10.5 | ||||
| Denmark | 8.7 | ||||
| Germany | 8.3 | ||||
| Other | 39.7 | ||||
| Total | $ | 101.4 | |||
Unrecognized Income Tax Benefits
We record a liability for unrecognized income tax benefits for the amount of benefit included in our previously filed income tax returns and in our financial results expected to be included in income tax returns to be filed for periods through the date of our consolidated financial statements for income tax positions for which it is not more likely than not to be sustained upon examination by the respective tax authority.
The reconciliation of beginning to ending gross unrecognized tax benefits is as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Unrecognized tax benefits at beginning of the year | $ | 50.3 | $ | 37.0 | $ | 0.7 | |||||||||||
| Change in beginning of year balance due to foreign exchange fluctuations | 2.7 | — | — | ||||||||||||||
| Additions for tax positions acquired during the current period | — | — | 34.4 | ||||||||||||||
| (Reductions) additions for tax positions taken during the prior period | (3.0) | 14.1 | 3.7 | ||||||||||||||
| Additions (reductions) for tax positions taken during the current period | 4.2 | (0.1) | — | ||||||||||||||
| Reductions related to settlements with taxing authorities | (7.7) | (0.6) | (1.6) | ||||||||||||||
| Lapse of statutes of limitation | (0.1) | (0.1) | (0.2) | ||||||||||||||
| Unrecognized tax benefits at end of the year | $ | 46.4 | $ | 50.3 | $ | 37.0 | |||||||||||
We are subject to income taxes in the U.S. federal jurisdiction and various state and foreign jurisdictions and file numerous group and separate returns in U.S. federal and state jurisdictions as well as international jurisdictions. We are routinely examined by tax authorities around the world, and tax examinations remain in process in multiple countries including, but not limited to, Denmark, Germany, and India. In the United States, the Company is currently under examination by tax authorities for the 2020 and 2023 tax years. With some exceptions, other major tax jurisdictions generally are not subject to examinations for years beginning before 2009.
Included in the balance of unrecognized tax benefits at December 31, 2025 and 2024 was $32.5 and $36.5, respectively of income tax expenses, which, if ultimately recognized, would impact our annual effective tax rate.
We recognize interest accrued related to unrecognized tax benefits and penalties as income tax expense. We accrued approximately $0.4 and $4.0 of interest and penalties at December 31, 2025 and 2024, respectively We recognized a liability related to interest and penalties on unrecognized tax benefits of $12.3 and $11.0 as of December 31, 2025 and 2024 respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Feb 14, 2020 | |
| 2018 | Feb 22, 2019 | |
| 2017 | Feb 22, 2018 | |
| 2016 | Feb 23, 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.