Invesco Ltd.IVZ
Invesco Ltd. Income Taxes Disclosure
TAXATION
The components of the company's income tax expense (benefit) for the years ended December 31, 2025, 2024 and 2023 were as follows:
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 152.5 | $ | 201.2 | $ | 164.0 | |||||||||||
| State | (44.2) | 51.3 | 42.7 | ||||||||||||||
| Foreign | 72.4 | 38.5 | 32.8 | ||||||||||||||
| 180.7 | 291.0 | 239.5 | |||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | $ | (292.0) | $ | (19.3) | $ | (235.3) | |||||||||||
| State | (101.7) | (2.0) | (44.1) | ||||||||||||||
| Foreign | 8.4 | (16.8) | (29.8) | ||||||||||||||
| (385.3) | (38.1) | (309.2) | |||||||||||||||
| Total income tax expense (benefit) | $ | (204.6) | $ | 252.9 | $ | (69.7) | |||||||||||
A reconciliation between the income tax provision at the statutory U.S. federal income tax rate and the income tax provision at the effective tax rate per the Consolidated Statements of Income for the year ended December 31, 2025, after the adoption of ASU 2023-09, is as follows:
| (in millions) | 2025 | ||||||||||
Income tax provision at the U.S federal statutory income tax rate (1) | $ | (79.7) | 21.0 | % | |||||||
State taxes, net of federal tax effect (2) | (76.4) | 20.1 | % | ||||||||
| Foreign tax effects: | |||||||||||
| United Kingdom: | |||||||||||
| (Income)/loss attributable to equity method investments in corporate joint ventures | (19.8) | 5.2 | % | ||||||||
| Other | 3.6 | (1.0) | % | ||||||||
| Other foreign jurisdictions | 33.2 | (8.8) | % | ||||||||
| Worldwide changes in UTBs, including interest and penalties | (38.9) | 10.3 | % | ||||||||
| Nontaxable or nondeductible items | 5.2 | (1.4) | % | ||||||||
| (Income)/loss attributable to noncontrolling interests in consolidated entities | (22.2) | 5.9 | % | ||||||||
| Other adjustments | (9.6) | 2.6 | % | ||||||||
| Income tax provision at the effective tax rate per Consolidated Statements of Income | $ | (204.6) | 53.9 | % | |||||||
__________
(1) Since the revenues, net income and associated tax provision in the U.S. is significantly greater than any other single taxing jurisdiction within the worldwide group, the above reconciliation is presented on the basis of the U.S. statutory federal income tax rate of 21% as opposed to the Bermuda 2025 statutory income tax rate of 15%. For years prior to 2025, the statutory income tax rate in Bermuda was zero.
(2) State taxes in Illinois made up the majority (greater than 50%) of the tax effect in this category.
A reconciliation between the statutory U.S. federal income tax rate and the effective tax rate per the Consolidated Statements of Income for the years ended December 31, 2024 and December 31, 2023, prior to the adoption of ASU 2023-09, is as follows:
| 2024 | 2023(1) | ||||||||||
| U.S. federal statutory income tax rate | 21.0 | % | 21.0 | % | |||||||
| State taxes, net of federal tax effect | 3.9 | % | 3.2 | % | |||||||
| Foreign tax rate differential | (2.8) | % | 11.1 | % | |||||||
| Income/(loss) attributable to noncontrolling interests in consolidated entities | 0.5 | % | (6.3) | % | |||||||
| Income/(loss) attributable to equity method investments in corporate joint ventures | (1.3) | % | 7.4 | % | |||||||
| Valuation allowance | 1.2 | % | (2.9) | % | |||||||
| Nondeductible regulatory settlements | 1.1 | % | — | % | |||||||
| Nondeductible executive compensation | — | % | (4.6) | % | |||||||
| Nontaxable gain | — | % | 3.9 | % | |||||||
| Other | 1.6 | % | (3.5) | % | |||||||
| Effective tax rate per the Consolidated Statements of Income | 25.2 | % | 29.3 | % | |||||||
__________
(1) Certain signs within the table in the year ended December 31, 2023 are the opposite compared to the year ended December 31, 2024 as a result of applying each line’s total income tax benefit or expense to the loss before income taxes.
The company’s effective tax rate is affected by the tax rates in foreign jurisdictions, which are different than the U.S. federal statutory tax rate of 21%, and the relative amount of income earned in those jurisdictions. As a result, the effective tax rate will vary from year to year depending on the mix of the profits and losses from each jurisdiction.
The components of income/(loss) before taxes for the years ended December 31, 2025, 2024 and 2023 were as follows:
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Domestic | $ | (714.0) | $ | 850.6 | $ | (469.2) | |||||||||||
| Foreign | 334.6 | 154.7 | 231.3 | ||||||||||||||
| Income/(loss) before income taxes | $ | (379.4) | $ | 1,005.3 | $ | (237.9) | |||||||||||
The components of the deferred tax assets and liabilities reflected in the Consolidated Balance Sheets at December 31, 2025 and 2024 included the following:
| (in millions) | 2025 | 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Compensation and benefits | $ | 108.5 | $ | 118.3 | |||||||
| Lease obligations | 75.0 | 85.5 | |||||||||
| Net operating loss carryforwards | 154.3 | 165.0 | |||||||||
| Fixed assets | 7.1 | 24.9 | |||||||||
| Accrued liabilities | 28.2 | 38.0 | |||||||||
| Other | 1.8 | 4.7 | |||||||||
| Total deferred tax assets | 374.9 | 436.4 | |||||||||
| Valuation allowance | (96.1) | (99.2) | |||||||||
| Deferred tax assets, net of valuation allowance | 278.8 | 337.2 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Goodwill and intangibles | (1,081.3) | (1,522.1) | |||||||||
| Leased assets | (51.7) | (60.0) | |||||||||
| Other | (38.7) | (27.3) | |||||||||
| Total deferred tax liabilities | (1,171.7) | (1,609.4) | |||||||||
| Net deferred tax liability | $ | (892.9) | $ | (1,272.2) | |||||||
Deferred income tax assets and liabilities are recorded net when related to the same tax jurisdiction. At December 31, 2025, the company recorded on the Consolidated Balance Sheets net deferred tax assets of $8.6 million in Other assets and net Deferred tax liabilities of $901.5 million. At December 31, 2024, the company recorded on the Consolidated Balance Sheets net deferred tax assets of $9.7 million in Other assets and net Deferred tax liabilities of $1,281.9 million.
At December 31, 2025, the company had state net operating loss carryforwards of $28.6 million, which will expire, if not utilized, between 2026 and 2038 except for approximately $3.4 million which have an indefinite life. At December 31, 2025, the company also had foreign net operating loss carryforwards of $125.7 million, of which approximately $8.1 million will expire over several years starting in 2026, with the remaining $117.6 million having an indefinite life. A valuation allowance has been recorded against certain carryforwards and certain deferred tax assets related to tax jurisdictions in which it is unlikely that the deferred tax asset will be realized.
Deferred tax liabilities are recognized for taxes that would be payable on the unremitted earnings of the company's foreign subsidiaries and corporate joint ventures, except where it is our intention to indefinitely reinvest the undistributed earnings. A deferred tax liability has not been recognized for our Canadian unremitted earnings, which are indefinitely reinvested, of approximately $1,028.0 million and $989.1 million at December 31, 2025 and 2024, respectively. If these earnings were distributed as a dividend, Canadian withholding tax of 5.0% would be due on the dividend. There are no other significant jurisdictions for which a deferred tax liability has not been recognized on unremitted earnings.
A reconciliation of the gross UTBs for the years ended December 31, 2025, 2024 and 2023 is as follows:
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Balance at January 1 | $ | 99.3 | $ | 91.3 | $ | 100.2 | |||||||||||
| Additions for tax positions related to the current year | 2.9 | 11.7 | 9.6 | ||||||||||||||
| Additions for tax positions related to prior years | 2.7 | 1.3 | 1.3 | ||||||||||||||
| Reductions for tax positions related to prior years | (40.9) | (0.6) | (7.7) | ||||||||||||||
| Reductions related to lapse of statute of limitations | (9.0) | (4.4) | (1.8) | ||||||||||||||
| Reductions related to settlements | (0.3) | — | (10.3) | ||||||||||||||
| Balance at December 31 | $ | 54.7 | $ | 99.3 | $ | 91.3 | |||||||||||
The amount of UTBs that, if recognized, would favorably affect the company's effective tax rate was $43.6 million at December 31, 2025. The company recognizes accrued interest and penalties related to UTBs as a component of the income tax provision. The Consolidated Balance Sheets include accrued interest and penalties related to UTBs of $16.7 million, $21.6 million and $17.0 million at December 31, 2025, 2024 and 2023, respectively. The company recognized a benefit for interest and penalties related to UTBs of $(4.9) million in 2025 and an expense of $4.5 million and $1.9 million in 2024 and 2023, respectively.
The company files U.S. federal, U.S. state and local, and numerous foreign income tax returns. The company is periodically examined by various taxing authorities. With few exceptions, the company is no longer subject to income tax examinations for years prior to 2014.
The components of the Company’s income taxes paid (net of refunds received) by jurisdiction, as reflected in the Consolidated Statements of Cash Flows for the year ended December 31, 2025, were as follows:
| (in millions) | 2025 | ||||
| Federal | $ | 164.5 | |||
| State: | |||||
| Illinois | (15.8) | ||||
| Other | 32.1 | ||||
| Foreign: | |||||
| Japan | 12.1 | ||||
| Other | 45.8 | ||||
| Total income taxes paid (net of refunds) | $ | 238.7 | |||
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.