MCCORMICK & CO INCMKC
MCCORMICK & CO INC Income Taxes Disclosure
INCOME TAXES
The provision for income taxes for the years ended November 30 consists of the following:
| (millions) | 2025 | 2024 | 2023 | ||||||||
| Income taxes | |||||||||||
| Current | |||||||||||
| Federal | $ | 76.6 | $ | 103.0 | $ | 82.4 | |||||
| State | 17.0 | 16.6 | 15.1 | ||||||||
| International | 108.7 | 94.7 | 82.4 | ||||||||
| 202.3 | 214.3 | 179.9 | |||||||||
| Deferred | |||||||||||
| Federal | 2.6 | (15.2) | (2.2) | ||||||||
| State | (9.6) | (6.3) | 2.7 | ||||||||
| International | 0.5 | (8.8) | (5.9) | ||||||||
| (6.5) | (30.3) | (5.4) | |||||||||
| Total income tax expense | $ | 195.8 | $ | 184.0 | $ | 174.5 | |||||
The components of income from consolidated operations before income taxes for the years ended November 30 follow:
| (millions) | 2025 | 2024 | 2023 | ||||||||
| Pretax income | |||||||||||
| United States | $ | 620.4 | $ | 634.8 | $ | 569.6 | |||||
| International | 292.6 | 263.5 | 229.1 | ||||||||
| $ | 913.0 | $ | 898.3 | $ | 798.7 | ||||||
A reconciliation of the U.S. federal statutory rate with the effective tax rate for the years ended November 30 follows:
| 2025 | 2024 | 2023 | |||||||||
| Federal statutory tax rate | 21.0 | % | 21.0 | % | 21.0 | % | |||||
| State income taxes, net of federal benefits | 0.7 | 0.9 | 1.9 | ||||||||
| International tax at different effective rates | 0.7 | 0.6 | 0.3 | ||||||||
| U.S. tax on remitted and unremitted earnings | 2.1 | 1.8 | 0.9 | ||||||||
| Changes in prior year tax contingencies | (1.1) | (1.4) | (0.8) | ||||||||
| Legal entity reorganization | — | (2.3) | — | ||||||||
| Valuation allowances | — | 0.7 | (0.4) | ||||||||
| U.S. research credits | (1.4) | (1.3) | (1.5) | ||||||||
| Other, net | (0.6) | 0.5 | 0.4 | ||||||||
| Total | 21.4 | % | 20.5 | % | 21.8 | % | |||||
Deferred tax assets and liabilities are comprised of the following as of November 30:
| (millions) | 2025 | 2024 | ||||||
| Deferred tax assets | ||||||||
| Employee benefit liabilities | $ | 39.4 | $ | 48.9 | ||||
| Other accrued liabilities | 37.9 | 36.0 | ||||||
| Inventory | 17.9 | 18.3 | ||||||
| Tax loss and credit carryforwards | 76.4 | 69.0 | ||||||
| Lease liabilities | 10.9 | 10.6 | ||||||
| Research expenditures | 86.3 | 64.0 | ||||||
| Other | 27.8 | 28.0 | ||||||
| Valuation allowance | (41.1) | (33.5) | ||||||
| 255.5 | 241.3 | |||||||
| Deferred tax liabilities | ||||||||
| Depreciation | 107.7 | 96.8 | ||||||
| Intangible assets | 852.1 | 849.5 | ||||||
| Lease ROU assets | 20.0 | 16.1 | ||||||
| Other | 12.6 | 19.7 | ||||||
| 992.4 | 982.1 | |||||||
| Net deferred tax liability | $ | (736.9) | $ | (740.8) | ||||
At November 30, 2025, we have tax loss carryforwards of $166.5 million. Of these carryforwards, $4.9 million expire in 2026, $13.8 million from 2027 through 2028, $35.5 million from 2029 through 2042, and $112.3 million may be carried forward indefinitely. At November 30, 2025, we also have U.S. foreign tax credit carryforwards of $32.5 million. Of these carryforwards, $6.4 million expires in 2030, $8.1 million from 2031 through 2032, and $18.0 million from 2033 through 2035.
A valuation allowance has been provided to cover deferred tax assets that are not more likely than not realizable. The net increase of $7.6 million in the valuation allowance from November 30, 2024 to November 30, 2025 resulted primarily from the net increase of valuation allowances for net operating losses and other tax attributes in the U.S. and certain non-U.S. jurisdictions.
Income taxes are not provided for unremitted earnings of our non-U.S. subsidiaries and joint ventures where our intention is to reinvest those earnings indefinitely. As of November 30, 2025, we have $1.7 billion of earnings that are considered indefinitely reinvested. We have not provided any deferred taxes with respect to items such as foreign withholding taxes, other income taxes, or foreign exchange gain or loss with respect to those earnings. It is not practicable for us to determine the amount of unrecognized tax expense on these reinvested international earnings.
The following table summarizes the activity related to our gross unrecognized tax benefits for the years ended November 30:
| (millions) | 2025 | 2024 | 2023 | ||||||||
| Balance at beginning of year | $ | 17.8 | $ | 24.0 | $ | 25.1 | |||||
| Additions for current year tax positions | 2.9 | 4.4 | 3.9 | ||||||||
| Additions for prior year tax positions | 0.1 | — | 1.3 | ||||||||
| Reductions of prior year tax positions | (4.0) | — | (3.6) | ||||||||
| Statute expirations | (4.6) | (10.5) | (1.3) | ||||||||
| Settlements | — | — | (1.3) | ||||||||
| Foreign currency translation | 0.1 | (0.1) | (0.1) | ||||||||
| Balance at November 30 | $ | 12.3 | $ | 17.8 | $ | 24.0 | |||||
As of November 30, 2025, 2024, and 2023, if recognized, $12.3 million, $17.8 million, and $24.0 million, respectively, of the unrecognized tax benefits would affect the effective rate.
We record interest and penalties on income taxes in income tax expense. We recognized interest and penalty expense (benefit) of $(0.8) million, $(0.9) million, and $(0.5) million in 2025, 2024, and 2023, respectively. As of November 30, 2025 and 2024, we had accrued $2.1 million and $2.9 million, respectively, of interest and penalties related to unrecognized tax benefits.
Tax settlements or statute of limitation expirations could result in a change to our uncertain tax positions. We believe that the reasonably possible total amount of unrecognized tax benefits as of November 30, 2025 that could
decrease in the next 12 months as a result of various statute expirations, audit closures and/or tax settlements would not be material.
We file income tax returns in the U.S. federal jurisdiction and various state and non-U.S. jurisdictions. The open years subject to tax audits vary depending on the tax jurisdictions. In the U.S federal jurisdiction, we are no longer subject to income tax audits by taxing authorities for years before 2022. In other major jurisdictions, we are no longer subject to income tax audits by taxing authorities for years before 2014.
We are under normal recurring tax audits in the U.S. and in several jurisdictions outside the U.S. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, we believe that our reserves for uncertain tax positions are adequate to cover existing risks and exposures.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Jan 22, 2026 | Showing above |
| 2024 | Jan 23, 2025 | |
| 2023 | Jan 25, 2024 | |
| 2022 | Jan 26, 2023 | |
| 2021 | Jan 27, 2022 | |
| 2020 | Jan 28, 2021 | |
| 2019 | Jan 28, 2020 | |
| 2018 | Jan 25, 2019 | |
| 2017 | Jan 25, 2018 | |
| 2016 | Jan 25, 2017 | |
| 2015 | Jan 28, 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.