LITTELFUSE INC /DELFUS
LITTELFUSE INC /DE Income Taxes Disclosure
Income Taxes
The U.S. federal statute of limitations remains open for the Company for the 2022 tax year and later years. Non-U.S. and U.S. state statutes of limitations generally range from three to seven years, although certain jurisdictions do not have a statute expiration. Tax examinations occur from time to time, including examinations currently in process in China, Germany, the Netherlands, Singapore, other non-U.S. jurisdictions and certain U.S. states. The Company does not expect to recognize a significant amount of additional tax expense as a result of concluding these examinations.
During the fiscal year ended December 27, 2025, the Company elected to prospectively adopt the guidance in ASU 2023-09. The footnote below reflects this adopted guidance for the fiscal year ended December 27, 2025. For the fiscal years ended December 28, 2024, and December 30, 2023, the footnote reflects the guidance in effect prior to the adoption of ASU 2023-09.
The 2017 Tax Cuts and Jobs Act (the "Tax Act"), among other things, imposed a one-time tax (the “Toll Charge”) on accumulated earnings of certain non-U.S. subsidiaries and included base broadening provisions commonly referred to as the global intangible low-taxed income provisions ("GILTI").
The Company elected to pay its 2017 Toll Charge over the eight-year period prescribed by the Tax Act. The eighth and final installment of the Toll Charge of $8.2 million was paid in 2025, and accordingly, there was no remaining liability on the Consolidated Balance Sheet as of December 27, 2025.
In accordance with guidance issued by the FASB staff, the Company has adopted an accounting policy to treat any GILTI inclusions as a period cost if and when incurred. Thus, for the fiscal years ended December 27, 2025, December 28, 2024, and December 30, 2023, deferred taxes were computed without consideration of the possible future impact of the GILTI provisions, and any current year impact was recorded as a part of the current portion of income tax expense.
On July 4, 2025, the United States enacted into law the legislation formally titled “An Act to provide for reconciliation pursuant to title II of H. Con. Res. 14,” and commonly referred to as the One Big Beautiful Bill Act (“OBBB”). The OBBB contains multiple business tax provisions, including the permanent extension of several expiring provisions of the Tax Act and multiple modifications to the international tax framework. The legislation has multiple effective dates with certain provisions effective in 2025 and others to be implemented in future years, and the Company determined the impact for the year ended December 27, 2025 is not significant. The Company will continue to monitor future administrative guidance and regulations that clarify the legislative text of the OBBB and the bill’s potential effect on the Company’s income taxes.
Domestic and foreign income (loss) before income taxes is as follows:
(in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Domestic | $ | (94,209) | $ | 3,151 | $ | 40,571 | |||||||||||
| Foreign | 97,816 | 148,712 | 288,027 | ||||||||||||||
| Income before income taxes | $ | 3,607 | $ | 151,863 | $ | 328,598 | |||||||||||
Federal, state, and foreign income tax expense (benefit) consists of the following:
(in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 3,875 | $ | (5,881) | $ | 8,188 | |||||||||||
| State | 3,449 | 1,826 | 2,880 | ||||||||||||||
| Foreign | 64,644 | 58,551 | 57,999 | ||||||||||||||
| Subtotal | $ | 71,968 | $ | 54,496 | $ | 69,067 | |||||||||||
| Deferred: | |||||||||||||||||
| Federal (including State for 2024 and 2023) | $ | 1,304 | $ | 4,091 | $ | 1,751 | |||||||||||
| State | $ | (2,070) | $ | — | $ | — | |||||||||||
| Foreign | 4,105 | (6,914) | (1,705) | ||||||||||||||
| Subtotal | $ | 3,339 | $ | (2,823) | $ | 46 | |||||||||||
| Provision for income taxes | $ | 75,307 | $ | 51,673 | $ | 69,113 | |||||||||||
As described above, the Company elected to prospectively adopt the guidance in ASU 2023-09. In accordance with the guidance in ASU 2023-09, for the ear ended December 27, 2025, a reconciliation between income taxes computed on income before income taxes at the federal statutory rate and the provision for income taxes is provided below:
(in thousands) | 2025 | ETR% | ||||||||||||
| Tax expense at statutory rate of 21% | $ | 757 | 21.0 | % | ||||||||||
| Effect of Cross-Border Tax Laws: | US Tax on Non-US income (GILTI) | 4,738 | 131.4 | % | ||||||||||
| US Tax on Non-US income (Subpart F) | 6,760 | 187.4 | % | |||||||||||
| Other | (2,503) | (69.4) | % | |||||||||||
| Tax Credits: | Foreign Tax Credits | (4,301) | (119.2) | % | ||||||||||
| Other | (1,106) | (30.7) | % | |||||||||||
| Nontaxable or Non-deductible items: | Non-deductible goodwill impairment | 23,028 | 638.4 | % | ||||||||||
| Non-deductible expenses | 3,378 | 93.7 | % | |||||||||||
| Other | 397 | 11.0 | % | |||||||||||
| Valuation Allowance | 409 | 11.3 | % | |||||||||||
| Other | 138 | 3.8 | % | |||||||||||
| State Taxes, Net of Federal Tax Effect (a) | 1,089 | 30.2 | % | |||||||||||
| Foreign Tax Effects: | ||||||||||||||
| China | Withholding Taxes | 6,129 | 169.9 | % | ||||||||||
| Other | (2,895) | (80.2) | % | |||||||||||
| Germany | Non-U.S. income tax rate differential | 10,079 | 279.4 | % | ||||||||||
| Non-deductible goodwill impairment | 17,031 | 472.2 | % | |||||||||||
| Valuation allowance | 26,839 | 744.1 | % | |||||||||||
| German Trade Tax | (13,740) | (380.9) | % | |||||||||||
| Other | (674) | (18.7) | % | |||||||||||
| Korea | Withholding Taxes | 4,752 | 131.7 | % | ||||||||||
| Other | 611 | 17.0 | % | |||||||||||
| Mexico | Non-U.S. income tax rate differential (b) | (4,604) | (127.6) | % | ||||||||||
| Netherlands | Valuation allowance | 6,990 | 193.8 | % | ||||||||||
| Other | (462) | (12.8) | % | |||||||||||
| Philippines | Non-U.S. income tax rate differential (c) | (4,659) | (129.2) | % | ||||||||||
| Withholding Taxes | 4,712 | 130.6 | % | |||||||||||
| Other | 288 | 8.1 | % | |||||||||||
| Singapore | Non-U.S. income tax rate differential | (3,906) | (108.3) | % | ||||||||||
| Nontaxable Income | (5,100) | (141.4) | % | |||||||||||
| Other | (346) | (9.6) | % | |||||||||||
| United Kingdom | Non-deductible goodwill impairment | 7,018 | 194.6 | % | ||||||||||
| Other | 57 | 1.5 | % | |||||||||||
| Other Foreign Jurisdictions | 230 | 6.2 | % | |||||||||||
| Worldwide Changes in Unrecognized Tax Benefits | (5,827) | (161.5) | % | |||||||||||
| Provision for income taxes | 75,307 | 2,087.8 | % | |||||||||||
(a) In 2025, state and local income taxes in Illinois and Minnesota comprise the majority of the state and local income taxes, net of federal effect category.
(b) The Company operates certain manufacturing activities in Mexico under a Maquiladora structure. The non-U.S. income tax rate differential represents the tax benefits associated with the Maquiladora safe harbor as defined under Mexican tax law.
(c) The Company conducts certain operations in the Philippines under the Philippine Economic Zone Authority ("PEZA") regime. The non-U.S. income tax rate differential represents the preferential tax rate benefits associated with the PEZA regime as defined under Philippines tax law.
For the years 2024 and 2023, in accordance with the guidance in effect prior to ASU 2023-09, a reconciliation between income taxes computed on income before income taxes at the federal statutory rate and the provision for income taxes is provided below:
(in thousands) | 2024 | 2023 | |||||||||
| Tax expense at statutory rate of 21% | $ | 31,891 | $ | 69,006 | |||||||
| Non-U.S. income tax rate differential | (1,130) | (25,623) | |||||||||
| Non-U.S. losses and expenses with no tax benefit | 9,401 | 11,261 | |||||||||
| Tax on unremitted earnings | 6,616 | 6,394 | |||||||||
| Non-deductible goodwill impairment | 5,810 | — | |||||||||
| Net impact associated with U.S. tax on non-U.S. income, including GILTI | 5,809 | 4,739 | |||||||||
| State and local taxes, net of federal tax benefit | 2,533 | 1,503 | |||||||||
| Certain changes in unrecognized tax benefits and related accrued interest | (8,692) | (172) | |||||||||
| Other, net | (565) | 2,005 | |||||||||
| Provision for income taxes | $ | 51,673 | $ | 69,113 | |||||||
Deferred income taxes are provided for the tax effects of temporary differences between the financial reporting bases and the tax bases of the Company’s assets and liabilities. Significant components of the Company’s deferred tax assets and liabilities at December 27, 2025 and December 28, 2024, were as follows:
| (in thousands) | 2025 | 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss carryforwards | $ | 66,851 | $ | 46,263 | |||||||
| Interest expense carryforwards | 47,581 | 34,800 | |||||||||
| Accrued expenses and reserves | 42,154 | 32,336 | |||||||||
| Lease liabilities | 16,559 | 13,016 | |||||||||
| Excess of tax basis over the book basis for intangible assets and goodwill | 16,016 | — | |||||||||
| Capitalized expenses | 11,032 | 18,939 | |||||||||
| U.S. foreign tax credit carryforwards | 3,772 | 3,490 | |||||||||
| U.S. research and other general business tax credit carryforwards | 1,222 | 1,252 | |||||||||
| Other | — | 196 | |||||||||
| Deferred tax assets | 205,187 | 150,292 | |||||||||
| Less: Valuation allowance | (97,557) | (55,468) | |||||||||
| Total deferred tax assets | 107,630 | 94,824 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Excess of book basis over the tax basis for intangible assets and goodwill | 134,666 | 133,701 | |||||||||
| Excess of book basis over the tax basis for property, plant, and equipment | 34,448 | 24,238 | |||||||||
| Right of use lease assets | 17,289 | 12,906 | |||||||||
| Tax on unremitted earnings | 16,311 | 14,612 | |||||||||
| Other | 1,996 | — | |||||||||
| Total deferred tax liabilities | 204,710 | 185,457 | |||||||||
| Net deferred tax liabilities | $ | 97,080 | $ | 90,633 | |||||||
The deferred tax asset valuation allowance is mainly related to certain U.S. and non-U.S. net operating loss, non-U.S. interest expense carryforwards, and U.S. foreign tax credit carryforwards which are not more likely that not to be realized. The remaining U.S. and non-U.S. net operating loss, interest expense, and foreign tax credit carryforwards either have no expiration date or are expected to be utilized prior to expiration (which begin expiring in 2028). No deferred tax asset nor valuation allowance has been recorded for certain U.S. and non-U.S. net operating loss carryforwards for which the possibility of usage has been determined to be remote.
As described above, the Company has elected to prospectively adopt the guidance in ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Taxes Disclosures, or ASU 2023-09. In accordance with the guidance in ASU 2023-09, for the year ended December 27, 2025, a summary of income taxes paid net of refunds by jurisdiction is provided below:
| Jurisdiction | 2025 | ||||
| Federal | $ | 10,154 | |||
| State | 1,792 | ||||
| Foreign | |||||
| China | 25,016 | ||||
| Singapore | 12,581 | ||||
| Philippines | 8,141 | ||||
| Mexico | 5,961 | ||||
| Korea | 5,853 | ||||
| Other | $ | 12,103 | |||
| Total income taxes paid net of refunds received | $ | 81,601 | |||
State income taxes paid in Texas and Minnesota make up the majority (greater than 50%) of the total 2025 state income taxes paid. The Company paid income taxes of $88.1 million, and $81.1 million in 2024, and 2023, respectively, and received income tax refunds of $4.3 million, and $7.2 million in 2024, and 2023, respectively.
Deferred income taxes are not provided on the excess of the investment value for financial reporting over the tax basis of investments in those subsidiaries for which such excess is considered to be permanently reinvested in those operations. The Company recognized deferred tax liabilities of $16.3 million as of December 27, 2025 and $14.6 million as of December 28, 2024, related to taxes on certain non-U.S. earnings which are not considered to be permanently reinvested.
The Company has two subsidiaries in China which benefit from lower tax rates due to “tax holidays” which apply for three-year periods. The tax holiday for one of the subsidiaries expired at the end of 2023, but was later extended for an additional three years, retroactive to include all of 2024, as well as 2025 and 2026, and for the other subsidiary the tax holiday expired at the end of 2025. The Company intends to seek an extension for the expired tax holiday. Together, the tax holidays contributed $6.6 million in current tax benefits, or $0.27 per diluted share, during 2025. Future year tax benefits will depend upon the Company’s ability to obtain extensions, after the three-year periods expire. There can be no assurance that future extensions will be granted.
A reconciliation of the beginning and ending amount of unrecognized tax benefits as of December 27, 2025, December 28, 2024, and December 30, 2023 is as follows:
(in thousands) | Unrecognized Tax Benefits | ||||
| Balance at December 30, 2023 | $ | 31,449 | |||
| Additions for tax positions taken in the current year | 1,251 | ||||
| Additions for tax positions taken in the prior year | 375 | ||||
| Decreases for lapses in statute of limitations | (7,650) | ||||
| Other | 574 | ||||
| Balance at December 28, 2024 | $ | 25,999 | |||
| Additions for tax positions taken in the current year | 1,695 | ||||
| Additions for tax positions taken in the prior year | 170 | ||||
| Decreases for lapses in statute of limitations | (5,850) | ||||
| Decreases for settlements | (563) | ||||
| Other | 4,356 | ||||
| Balance at December 27, 2025 | $ | 25,807 | |||
As of December 27, 2025, the net amount of tax benefits that, if recognized, would favorably affect the effective tax rate in future periods is approximately $23.2 million. None of the positions included in unrecognized tax benefits are related to tax positions for which the ultimate deductibility is highly certain, but for which there is uncertainty about the timing of such deductibility.
The Company recognizes accrued interest and penalties associated with uncertain tax positions as part of . The Company recognized such interest benefit of $2.3 million (including a $3.5 million decrease due to a lapse in the statute of limitations), $2.7 million expense (net of a $4.1 million decrease due to a lapse in the statute of limitations) and $0.5 million expense (net of a $1.7 million decrease due to a lapse in the statute of limitations) in 2025, 2024, and 2023, respectively. Accrued interest for such matters included in Other long-term liabilities within the Consolidated Balance Sheets was $8.7 million and $11.1 million as of December 27, 2025 and December 28, 2024, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Mar 13, 2025 | |
| 2023 | Feb 16, 2024 | |
| 2022 | Feb 16, 2023 | |
| 2020 | Feb 18, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 22, 2019 | |
| 2017 | Feb 23, 2018 | |
| 2016 | Feb 27, 2017 | |
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.