Hamilton Beach Brands Holding CoHBB
Hamilton Beach Brands Holding Co Income Taxes Disclosure
Income Taxes
The components of income (loss) before income taxes and the income tax expense (benefit) for the years ended December 31 are as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| Income (loss) before income taxes | |||||||||||||||||
| Domestic | $ | 32,980 | $ | 33,403 | $ | 24,008 | |||||||||||
| Foreign | 2,661 | (27) | 7,688 | ||||||||||||||
| $ | 35,641 | $ | 33,376 | $ | 31,696 | ||||||||||||
| Income tax expense (benefit) | |||||||||||||||||
| Current income tax expense (benefit): | |||||||||||||||||
| Federal | $ | 2,555 | $ | 8,457 | $ | 3,412 | |||||||||||
| State | 1,142 | 2,790 | 1,452 | ||||||||||||||
| Foreign | 1,736 | (1,361) | 2,496 | ||||||||||||||
| Total current | 5,433 | 9,886 | 7,360 | ||||||||||||||
| Deferred income tax expense (benefit): | |||||||||||||||||
| Federal | 3,434 | (4,573) | 910 | ||||||||||||||
| State | 703 | (998) | (9) | ||||||||||||||
| Foreign | (384) | (1,698) | (1,807) | ||||||||||||||
| Total deferred | 3,753 | (7,269) | (906) | ||||||||||||||
| $ | 9,186 | $ | 2,617 | $ | 6,454 | ||||||||||||
Total cash paid for income taxes (net of refunds) by jurisdiction for the year ended December 31, 2025 is as follows:
| 2025 | |||||
| U.S. Federal | $ | 6,890 | |||
| State | $ | 2,830 | |||
| Foreign: | |||||
| Canada | $ | 826 | |||
| Mexico | 2,612 | ||||
| Other | 217 | ||||
| Foreign Subtotal | $ | 3,655 | |||
| Total cash paid for income taxes (net of refunds) | $ | 13,375 | |||
The Company made $5.8 million and $3.1 million federal income tax payments during 2024 and 2023, respectively, to the IRS. The Company made foreign and state income tax payments of $5.2 million and $3.2 million during 2024 and 2023, respectively. No income tax refunds were received in 2024. Income tax refunds totaled $0.1 million during 2023.
A reconciliation of the federal statutory and effective income tax rate for the year ended December 31, 2025 is as follows:
| 2025 | |||||||||||
| $ | % | ||||||||||
| Income (loss) before income taxes | $ | 35,641 | |||||||||
Statutory taxes at 21% | $ | 7,485 | 21.0 | % | |||||||
| State and local income taxes | 1,602 | 4.5 | % | ||||||||
| Foreign tax effects | 794 | 2.2 | % | ||||||||
| Effect of cross-border tax laws | (702) | (2.0) | % | ||||||||
| U.S. tax credits | (962) | (2.7) | % | ||||||||
| Valuation allowances | 166 | 0.5 | % | ||||||||
| Non-deductible expenses related to sec. 162(m) | 812 | 2.3 | % | ||||||||
| Unrecognized tax benefits | (9) | — | % | ||||||||
| Income tax provision | $ | 9,186 | 25.8 | % | |||||||
| Effective rate | 25.77 | % | |||||||||
| State taxes in Virginia, California, Illinois, and Pennsylvania made up the majority (greater than 50 percent) of the tax effect in the "State and Local Income Tax" category. | |||||||||||
A reconciliation of the federal statutory and effective income tax rate for the years ended December 31, 2024 and 2023 are as follows:
| 2024 | 2023 | ||||||||||||||||||||||
| $ | % | $ | % | ||||||||||||||||||||
| Income (loss) before income taxes | $ | 33,376 | $ | 31,696 | |||||||||||||||||||
Statutory taxes at 21% | $ | 7,009 | 21.0 | % | $ | 6,656 | 21.0 | % | |||||||||||||||
| State and local income taxes | 1,610 | 4.8 | % | 1,224 | 3.9 | % | |||||||||||||||||
| Valuation allowances | 635 | 1.9 | % | 13 | 0.1 | % | |||||||||||||||||
| Other non-deductible expenses | 1,196 | 3.6 | % | 402 | 1.3 | % | |||||||||||||||||
| Credits | (1,148) | (3.4) | % | (860) | (2.7) | % | |||||||||||||||||
Effect of foreign operations (1) | (4,330) | (13.1) | % | (946) | (3.0) | % | |||||||||||||||||
| Unrecognized tax benefits | (32) | (0.1) | % | 422 | 1.3 | % | |||||||||||||||||
Accounting method change (2) | (2,278) | (6.8) | % | — | — | % | |||||||||||||||||
| Other, net | (45) | (0.1) | % | (457) | (1.5) | % | |||||||||||||||||
| Income tax provision | $ | 2,617 | 7.8 | % | $ | 6,454 | 20.4 | % | |||||||||||||||
| Effective rate | 7.84 | % | 20.36 | % | |||||||||||||||||||
(1) The 2024 period includes a tax benefit for deducting certain historical foreign operating losses.
(2) During the fourth quarter of 2024, the Company filed IRS form 3115 Application for Change in Accounting Method, for depreciation. The result of the filing was a benefit of $2.3 million.
A detailed summary of the total deferred tax assets and liabilities in the Company’s Consolidated Balance Sheets resulting from differences in the book and tax basis of assets and liabilities follows:
| December 31 | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets | |||||||||||
| Tax carryforwards | $ | 7,126 | $ | 5,982 | |||||||
| Lease liabilities | 1,797 | 2,003 | |||||||||
| Inventory | 3,014 | 802 | |||||||||
| Accrued expenses and reserves | 3,670 | 2,963 | |||||||||
| Other employee benefits | 527 | 259 | |||||||||
| Depreciation and amortization | — | 3,646 | |||||||||
| Other | — | 32 | |||||||||
| Total deferred tax assets | 16,134 | 15,687 | |||||||||
| Less: Valuation allowances | (7,126) | (5,982) | |||||||||
| 9,008 | 9,705 | ||||||||||
| Deferred tax liabilities | |||||||||||
| Accrued pension benefits | 2,754 | 3,373 | |||||||||
| Depreciation and amortization | 2,636 | — | |||||||||
| Other | 11 | — | |||||||||
| Total deferred tax liabilities | 5,401 | 3,373 | |||||||||
| Net deferred tax asset | $ | 3,607 | $ | 6,332 | |||||||
As of December 31, 2025 and 2024, respectively, the Company maintained valuation allowances with respect to certain deferred tax assets relating primarily to operating losses in certain non-U.S. jurisdictions that the Company believes are not likely to be realized.
The following table summarizes the tax carryforwards and associated carryforward periods and related valuation allowances where the Company has determined that realization is uncertain:
| December 31, 2025 | |||||||||||||||||
| Net deferred tax asset | Valuation allowance | Carryforwards expire during: | |||||||||||||||
| Non-U.S. net operating loss | $ | 6,960 | $ | 6,960 | 2026 - Indefinite | ||||||||||||
| U.S. capital loss | $ | 166 | $ | 166 | 2030 | ||||||||||||
| Total | $ | 7,126 | $ | 7,126 | |||||||||||||
| December 31, 2024 | |||||||||||||||||
| Net deferred tax asset | Valuation allowance | Carryforwards expire during: | |||||||||||||||
| Non-U.S. net operating loss | $ | 5,982 | $ | 5,982 | 2025 - Indefinite | ||||||||||||
Based upon the review of historical earnings and the relevant expiration of carryforwards, the Company believes the valuation allowances are appropriate and does not expect to release valuation allowances within the next twelve months that would have a significant effect on the Company’s financial position or results of operations.
The Company continues to conclude all material entities’ foreign earnings will be indefinitely reinvested in its foreign operations and will remain offshore in order to meet the capital and business needs outside of the U.S. As a result, the Company does not provide a deferred tax liability with respect to the cumulative unremitted earnings. It is not practicable to determine the deferred tax liability associated with these undistributed earnings due to the availability of foreign tax credits and the complexity of the rules governing the utilization of such credits under the new rules under the Tax Act. The Company recognizes any tax impacts of global intangible low-taxed income (GILTI) as period costs similar to other special deductions, and not as deferred taxes for basis differences.
The following is a reconciliation of the Company’s total gross unrecognized tax benefits, defined as the aggregate tax effect of differences between tax return positions and the benefits recognized in the financial statements for the years ended December 31, 2025, 2024 and 2023. Approximately $0.6 million, $0.6 million and $1.4 million of these gross amounts as of December 31, 2025, 2024 and 2023, respectively, relate to permanent items that, if recognized, would impact the effective income tax rate.
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance as of January 1 | $ | 618 | $ | 1,447 | $ | 256 | |||||||||||
| Additions (reductions) based on tax positions related to prior years | (39) | (769) | 769 | ||||||||||||||
| Additions (reductions) based on tax positions related to the current year | — | — | 493 | ||||||||||||||
| Reductions for lapse of statute of limitations | — | (60) | (71) | ||||||||||||||
| Reductions due to settlements with taxing authorities | — | — | — | ||||||||||||||
| Balance as of December 31 | $ | 579 | $ | 618 | $ | 1,447 | |||||||||||
The Company records interest and penalties on uncertain tax positions as a component of the income tax provision. The Company recognized no income or expense for the years ended December 31, 2025, 2024 and 2023. The total amount of interest and penalties accrued was $0.1 million as of December 31, 2025. There were no accruals for interest and penalties as of December 31, 2024 and 2023.
In general, the Company operates in taxing jurisdictions that provide a statute of limitations period ranging from three to five years for the taxing authorities to review the applicable tax filings. The Company is generally open for examination of foreign jurisdictions for the tax year 2018 and beyond. In addition, the Company has extended the U.S. federal statute of limitations for tax years 2017 through 2019 related to a specific issue. Other than the extension related to a specific issue, the Company does not have any material taxing jurisdictions in which the statute of limitations has been extended beyond the applicable time frame allowed by law.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Mar 6, 2024 | |
| 2022 | Mar 9, 2023 | |
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.