Ingersoll Rand Inc.IR
Ingersoll Rand Inc. Income Taxes Disclosure
Income Taxes
Income before income taxes for the years ended December 31, 2025, 2024 and 2023 consisted of the following.
| 2025 | 2024 | 2023 | |||||||||||||||
| U.S. | $ | 220.3 | $ | 383.7 | $ | 356.0 | |||||||||||
| Non-U.S. | 715.0 | 749.1 | 675.1 | ||||||||||||||
| Income before income taxes | $ | 935.3 | $ | 1,132.8 | $ | 1,031.1 | |||||||||||
The following table details the components of the Provision for income taxes for the years ended December 31, 2025, 2024 and 2023.
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| U.S. federal | $ | 81.2 | $ | 87.5 | $ | 111.5 | |||||||||||
| U.S. state and local | 24.0 | 22.8 | 23.7 | ||||||||||||||
| Non-U.S. | 193.6 | 185.3 | 181.7 | ||||||||||||||
| Deferred: | |||||||||||||||||
| U.S. federal | (26.2) | (9.7) | (44.0) | ||||||||||||||
| U.S. state and local | (6.5) | (5.7) | (6.9) | ||||||||||||||
| Non-U.S. | (46.7) | (17.7) | (26.0) | ||||||||||||||
| Provision for income taxes | $ | 219.4 | $ | 262.5 | $ | 240.0 | |||||||||||
The U.S. federal corporate statutory rate is reconciled to the Company’s effective income tax rate for the year ended December 31, 2025 after the adoption of ASU 2023-09 as follows.
| 2025 | |||||||||||
| U.S. federal corporate statutory rate | $ | 196.4 | 21.0 | % | |||||||
State and local taxes, less federal tax benefit (1) | 13.3 | 1.4 | |||||||||
| Foreign tax effects | |||||||||||
| China | |||||||||||
| Withholding tax | 16.6 | 1.8 | |||||||||
| Other | 4.9 | 0.5 | |||||||||
| India | 10.3 | 1.1 | |||||||||
| Malta | |||||||||||
| Interest on equity | (24.2) | (2.6) | |||||||||
| Other | 7.6 | 0.8 | |||||||||
| Switzerland | (13.4) | (1.4) | |||||||||
| Other foreign jurisdictions | 16.4 | 1.7 | |||||||||
| Effect of cross-border tax laws | |||||||||||
| Foreign Derived Intangible Income (“FDII”) deduction | (14.4) | (1.5) | |||||||||
| Repatriation cost | 2.5 | 0.3 | |||||||||
| Global Intangible Low-Tax Income (“GILTI”) | 13.0 | 1.4 | |||||||||
| Tax credits | |||||||||||
| Foreign tax credits | (23.8) | (2.5) | |||||||||
| Other | (3.8) | (0.4) | |||||||||
| Changes in valuation allowances | 4.4 | 0.5 | |||||||||
| Nontaxable and nondeductible items | 18.7 | 2.0 | |||||||||
| Changes in unrecognized tax benefits | 4.2 | 0.4 | |||||||||
| Other adjustments | (9.3) | (1.0) | |||||||||
| Effective income tax rate | $ | 219.4 | 23.5 | % | |||||||
(1)During the year ended December 31, 2025, state taxes in California, Florida, Georgia, Illinois, Indiana, Minnesota, Pennsylvania, Tennessee and Texas comprised greater than 50% of the tax effect in this category.
The U.S. federal corporate statutory rate is reconciled to the Company’s effective income tax rate for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09 as follows.
| 2024 | 2023 | ||||||||||
| U.S. federal corporate statutory rate | 21.0 | % | 21.0 | % | |||||||
| State and local taxes, less federal tax benefit | 1.4 | 1.3 | |||||||||
| Net effects of foreign tax rate differential | 2.5 | 1.8 | |||||||||
| Withholding tax | 1.3 | 1.5 | |||||||||
| Repatriation cost | (1.5) | (2.0) | |||||||||
| Global Intangible Low-Tax Income (“GILTI”) | 0.4 | 0.7 | |||||||||
| ASC 740-30 (formerly APB 23) | 1.5 | 1.7 | |||||||||
| Changes in valuation allowances | 0.4 | 1.7 | |||||||||
| Changes in unrecognized tax benefits | 0.9 | 0.9 | |||||||||
| Equity compensation | (1.3) | (0.6) | |||||||||
| Nondeductible acquisition costs | 0.3 | 0.4 | |||||||||
| Foreign Derived Intangible Income (“FDII”) deduction | (1.1) | (1.4) | |||||||||
| Tax credits | (0.6) | (0.7) | |||||||||
| Income not subject to tax | (0.3) | (1.6) | |||||||||
| Amortization of goodwill and other intangible assets | (1.3) | (0.8) | |||||||||
| Interest on equity | (1.8) | (0.7) | |||||||||
| Return to provision adjustment | (0.2) | 0.1 | |||||||||
| Loss on sale | 1.1 | — | |||||||||
| Other, net | 0.5 | — | |||||||||
| Effective income tax rate | 23.2 | % | 23.3 | % | |||||||
The principal items that gave rise to deferred income tax assets and liabilities as of December 31, 2025 and 2024 are as follows.
| 2025 | 2024 | ||||||||||
| Deferred Tax Assets: | |||||||||||
| Reserves and accruals | $ | 95.3 | $ | 83.4 | |||||||
| Allowance for credit losses | 9.8 | 7.4 | |||||||||
| Inventory reserve | 9.6 | 9.0 | |||||||||
Pension and postretirement benefit plans | 18.6 | 20.0 | |||||||||
| Tax loss carryforwards | 94.1 | 112.4 | |||||||||
| Deferred taxes recorded in other comprehensive income | 36.2 | 1.4 | |||||||||
| Foreign tax credit carryforwards | 50.9 | 50.7 | |||||||||
| Other | 12.7 | 22.4 | |||||||||
| Total deferred tax assets | 327.2 | 306.7 | |||||||||
| Valuation allowance | (107.4) | (125.6) | |||||||||
| Deferred Tax Liabilities: | |||||||||||
| LIFO inventory | (19.6) | (20.3) | |||||||||
| Investment in partnership | — | (30.2) | |||||||||
| Property, plant and equipment | (44.3) | (50.0) | |||||||||
| Intangible assets | (763.7) | (770.4) | |||||||||
| Unremitted foreign earnings | (50.4) | (41.8) | |||||||||
| Total deferred tax liabilities | (878.0) | (912.7) | |||||||||
| Net deferred income tax liability | $ | (658.2) | $ | (731.6) | |||||||
The Company believes that it is more likely than not that it will realize its deferred tax assets through the reduction of future taxable income, other than for the deferred tax assets reflected below. Tax attributes and related valuation allowances as of December 31, 2025 were as follows.
| Tax Benefit | Valuation Allowance | Carryforward Period Ends | |||||||||||||||
| Tax Attributes to be Carried Forward | |||||||||||||||||
| U.S. federal net operating loss | $ | 1.9 | $ | (0.1) | 2032-2038 | ||||||||||||
| U.S. federal capital loss | 0.6 | (0.6) | 2028 | ||||||||||||||
| U.S. federal tax credit | 50.9 | (50.9) | 2026-2035 | ||||||||||||||
| Alternative minimum tax credit | 0.4 | (0.4) | Unlimited | ||||||||||||||
| U.S. state and local net operating losses | 6.2 | (0.7) | 2027-2042 | ||||||||||||||
| U.S. state capital loss | 0.3 | (0.1) | 2028 | ||||||||||||||
| Non U.S. net operating losses | 70.3 | (36.8) | 2026-Unlimited | ||||||||||||||
| Non U.S. capital losses | 0.7 | — | Unlimited | ||||||||||||||
| Excess interest | 14.1 | (12.9) | Unlimited | ||||||||||||||
| Other deferred tax assets | 4.9 | (4.9) | Unlimited | ||||||||||||||
| Total tax carryforwards | $ | 150.3 | $ | (107.4) | |||||||||||||
A reconciliation of the changes in the valuation allowance for deferred tax assets for the years ended December 31, 2025, 2024 and 2023 are as follows.
| 2025 | 2024 | 2023 | |||||||||||||||
| Beginning balance | $ | 125.6 | $ | 115.7 | $ | 107.3 | |||||||||||
Revaluation or additions due to acquisitions or mergers(1) | (15.6) | 22.9 | — | ||||||||||||||
| Charged to tax expense (benefit) | (5.9) | (10.8) | 6.4 | ||||||||||||||
| Charged to other accounts | 3.3 | (2.2) | 2.0 | ||||||||||||||
| Ending balance | $ | 107.4 | $ | 125.6 | $ | 115.7 | |||||||||||
(1)Revaluation for the tax year ended December 31, 2024 relates to the inclusion of ILC Dover’s opening balance sheet beginning valuation allowance.
Total unrecognized tax benefits were $32.8 million, $26.4 million and $19.1 million for the years ended December 31, 2025, 2024 and 2023, respectively. The net increase in this balance primarily relates to current year additions to previously established reserves. Included in total unrecognized benefits at December 31, 2025 is $32.8 million of unrecognized tax benefits that would affect the Company’s effective tax rate if recognized. Below is a tabular reconciliation of the changes in total unrecognized tax benefits during the years ended December 31, 2025, 2024 and 2023.
| 2025 | 2024 | 2023 | |||||||||||||||
| Beginning balance | $ | 26.4 | $ | 19.1 | $ | 10.8 | |||||||||||
| Gross increases for tax positions of prior years | 0.1 | 0.8 | 0.4 | ||||||||||||||
| Gross decreases for tax positions of prior years | — | (0.3) | — | ||||||||||||||
| Gross increases for tax positions of current year | 4.6 | 8.1 | 7.9 | ||||||||||||||
| Lapse of statute of limitations | (0.1) | (0.6) | (0.2) | ||||||||||||||
| Changes due to currency fluctuations | 1.8 | (0.7) | 0.2 | ||||||||||||||
| Ending balance | $ | 32.8 | $ | 26.4 | $ | 19.1 | |||||||||||
The Company includes interest expense and penalties related to unrecognized tax benefits as part of the provision for income taxes. The Company’s income tax liabilities at December 31, 2025 and 2024 include accrued interest and penalties of $5.9 million and $3.2 million, respectively.
The statutes of limitations for U.S. Federal tax returns are open beginning with the 2020 tax year, and state returns are open beginning with the 2015 tax year. The Internal Revenue Service (“IRS”) has completed its examination of the 2020 tax year, but it is not yet settled. There are no material adjustments proposed. The Company is currently under U.S. Federal income tax audit for the 2021 and 2022 tax years and no material adjustments are known.
The Company is subject to income tax in 49 jurisdictions outside the U.S. The statute of limitations varies by jurisdiction with 2013 being the oldest year still open. Note that any liabilities arising from legacy Ingersoll Rand Industrial entities for tax years prior to the merger with Ingersoll Rand Industrial would be indemnified.
The Company does not assert the ASC 740-30 (formerly APB 23) indefinite reinvestment of the Company’s historical non-U.S. earnings or future non-U.S. earnings. The Company records a deferred foreign tax liability to cover all estimated withholding, state income tax and foreign income tax associated with repatriating all non-U.S. earnings back to the United States. The Company’s deferred income tax liability as of December 31, 2025 was $50.4 million.
The amounts of cash income taxes paid by the Company were as follows:
| 2025 | |||||
| Federal | $ | 40.3 | |||
| State and local | 22.7 | ||||
| Foreign | |||||
| China | 54.2 | ||||
| France | 18.4 | ||||
| India | 23.5 | ||||
| Italy | 30.7 | ||||
| All other foreign | 79.5 | ||||
| Cash paid for income taxes, net of refunds | $ | 269.3 | |||
The amount of cash income taxes paid by the Company during the years ended December 31, 2024 and 2023 was $276.7 million and $302.0 million, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 17, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 21, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 26, 2020 | |
| 2018 | Feb 27, 2019 | |
| 2017 | Feb 16, 2018 | |
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.