Ingredion IncINGR

Ingredion Inc Income Taxes Disclosure

10-KFiled Feb 17, 20266 min read
Income Taxes
The components of income before income taxes and the provision for income taxes for 2025, 2024 and 2023 are presented below:
202520242023
Income before income taxes:
U.S.$338 $396 $244 
Foreign636 535 595 
Total income before income taxes974 931 839 
Provision for income taxes:
Current tax expense:
U.S. federal34 31 6 
State and local6 6 5 
Foreign192 255 183 
Total current tax expense232 292 194 
Deferred tax expense (benefit):
U.S. federal7 11 — 
State and local3 2 1 
Foreign(4)(28)(7)
Total deferred tax expense (benefit)6 (15)(6)
Total provision for income taxes$238 $277 $188 
Cash paid for income taxes, net of refunds, consisted of the following:
2025
U.S. federal$47 
State and local7 
Foreign:
Mexico142 
Germany58 
Canada53 
Colombia25 
All other foreign57 
Total income taxes paid, net of refunds$389 
Deferred income taxes are provided for the tax effects of temporary differences between the financial reporting basis and tax basis of assets and liabilities. Significant temporary differences as of December 31, 2025 and 2024 are summarized as follows:
20252024
Deferred tax assets attributable to:
Employee benefit accruals$33 $31 
Pensions and postretirement plans14 9 
Lease liabilities48 51 
Allowance for credit losses3 3 
Inventory reserve15 16 
Net operating loss carryforwards47 51 
Tax credit carryforwards9 7 
Derivative contracts1 — 
Uniform capitalization11 8 
Equity method investments2 9 
Other54 46 
Total deferred tax assets237 231 
Valuation allowances(52)(60)
Net deferred tax assets$185 $171 
Deferred tax liabilities attributable to:
Property, plant and equipment173 161 
Identified intangibles20 25 
Right-of-use lease assets45 48 
Foreign withholding and state taxes on unremitted earnings10 1 
Goodwill45 38 
Derivative contracts— 3 
Total deferred tax liabilities293 276 
Net deferred tax liabilities$108 $105 
Of the $47 million of tax-effected net operating loss carryforwards as of December 31, 2025, $31 million are for foreign loss carryforwards, $14 million for state loss carryforwards, and $2 million for U.S. federal loss carryforwards. Of the $31 million of foreign loss carryforwards, $25 million are related to Canada, $3 million to Argentina, and $1 million to the United Kingdom, with carryforward periods of 20 years, 10 years, and indefinite. U.S. federal and state loss carryforwards have various expiration periods beginning in 2026.
A valuation allowance is established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. Prior to establishing a valuation allowance, we consider historical taxable income, scheduled reversal of deferred tax liabilities, tax planning strategies, tax carryovers and projected future taxable income. As of December 31, 2025, we maintained valuation allowances of $52 million, consisting of $16 million primarily related to foreign loss carryforwards, $12 million for state loss carryforwards, and $2 million for U.S. federal loss carryforwards. Additionally, we have $7 million for state credits, $6 million for capital loss carryforwards, $5 million primarily related to equity method investments, and $4 million for certain foreign tax credits and net deferred tax assets, all of which we have determined will more likely than not expire prior to realization.
Net operating loss carryforwards disclosed in the financial statements differ from the as-filed tax returns due to an unrecognized tax benefit. Foreign net operating loss carryforwards and valuation allowances would increase $10 million absent the unrecognized tax benefit.
The following table reconciles the U.S. federal statutory income tax rate to the Company’s effective tax rate for 2025.
2025
AmountPercent
Federal statutory tax rate$204 21.0 %
U.S. tax effects:
State and local income taxes, net of federal benefit (i)
7 0.7 
Effect of cross-border tax laws:
Foreign-derived intangible income(17)(1.7)
Other2 0.2 
Tax credits:
Foreign tax credit(26)(2.7)
Other(3)(0.3)
Nontaxable or nondeductible items6 0.6 
Other9 0.9 
Foreign tax effects:
Mexico:
Statutory tax rate difference25 2.6 
Other9 0.9 
Foreign currency foreign exchange(14)(1.5)
Germany:
Provincial tax13 1.3 
Other(4)(0.4)
Colombia11 1.1 
Other foreign jurisdictions19 2.0 
Changes in unrecognized tax benefits(3)(0.3)
Effective income tax rate$238 24.4 %
(i) Illinois and New York make up the majority (greater than 50 percent) of state and local income taxes, net of federal benefit.
As previously disclosed for the years ended December 31, 2024 and 2023, prior to our adoption of ASU 2023-09, the effective income tax rate differed from the statutory federal income tax rate as follows:
20242023
Provision for tax at U.S. statutory rate21.0 %21.0 %
Tax rate difference on foreign income5.4 6.1 
Foreign currency foreign exchange1.9 (1.8)
Inflation adjustments(0.4)(0.5)
Tax benefit of intercompany financing(0.3)(0.4)
U.S. international tax implications1.4 1.0 
Favorable judgment on the treatment of credits and interest on indirect taxes— (0.2)
Sale of our South Korea business(1.6)— 
Unfavorable judgment and related reserve on transfer pricing matters1.6 — 
Valuation allowance on investments1.2 — 
Foreign-derived intangible income (“FDII”)(1.6)(1.5)
Brazil exclusion of certain tax incentives(0.3)(1.2)
Other items, net1.5 (0.1)
Provision at effective tax rate29.8 %22.4 %
During the year ended December 31, 2025, we announced our intention to divest the Pakistan business as described in Note 2. As a result of this decision, management concluded that we no longer have the intent or ability to indefinitely reinvest the historical earnings of this foreign subsidiary and therefore reversed our indefinite reinvestment assertion related to this entity.
As of December 31, 2025, we recorded a $10 million deferred tax liability resulting primarily from a change in our permanent reinvestment assertion regarding our foreign subsidiary in Pakistan. We continue to assert indefinite reinvestment for the accumulated earnings of our other foreign subsidiaries, for which no material foreign taxes, U.S. federal or state taxes, or foreign currency gains or losses have been provided. It is not practicable to estimate the additional income taxes, including applicable foreign withholding taxes, that would be payable if such earnings were repatriated.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding interest and penalties, for 2025 and 2024 were as follows:
20252024
Balance at January 1$40 $31 
Additions for tax positions related to prior years2 7 
Reductions for tax positions related to prior years— (1)
Additions based on tax positions related to the current year2 3 
Settlements with taxing authorities(3)— 
Reductions related to a lapse in the statute of limitations(2)— 
Balance at December 31$39 $40 
Of the $39 million of unrecognized tax benefits as of December 31, 2025, $29 million represents the amount that, if recognized, could affect the effective tax rate in future periods. The remaining $10 million represents net operating loss carryforwards that would have otherwise had a valuation allowance.
We account for interest and penalties related to income tax matters within the provision for income taxes. We have accrued $7 million of interest expense and penalties related to unrecognized tax benefits as of December 31, 2025.
We are subject to U.S. federal income tax as well as income tax in multiple states and non-U.S. jurisdictions. The U.S. federal tax returns are subject to audit for the years 2022 through 2025. In general, our foreign subsidiaries remain subject to audit for years 2014 and later.
It is reasonably possible that the total amount of unrecognized tax benefits including interest and penalties will increase or decrease within twelve months of December 31, 2025, as a result of the expiration of a statute of limitations period and potential settlement.

Historical Timeline

Fiscal YearFiled
2025Feb 17, 2026Showing above
2024Feb 20, 2025
2023Feb 21, 2024
2022Feb 21, 2023
2021Feb 22, 2022
2020Feb 24, 2021
2019Feb 19, 2020
2018Feb 25, 2019
2017Feb 21, 2018
2016Feb 22, 2017
2015Feb 19, 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.

Other Available Disclosures

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