Monster Beverage Corp Income Taxes Disclosure
14.INCOME TAXES
The Company evaluated the various provisions of the Tax Reform Act, including, the global intangible low-taxed income (“GILTI”) and the foreign derived intangible income provisions. The Company will treat any U.S. tax on foreign earnings under GILTI as a current period expense when incurred.
Consolidated retained earnings at December 31, 2025 included undistributed after-tax earnings from certain non-U.S. subsidiaries that were not indefinitely reinvested. At December 31, 2025, the Company had a deferred tax liability of $10.0 million for the estimated taxes associated with the repatriation of these earnings. Undistributed earnings of approximately $22.5 million in foreign subsidiaries were indefinitely reinvested in foreign operations. Quantification of the deferred tax liability, if any, associated with indefinitely reinvested earnings was not practicable.
The domestic and foreign components of the Company’s income before provision for income taxes are as follows:
Year Ended December 31, | |||||||||
| 2025 | | 2024 | | 2023 | ||||
Domestic* |
| $ | 2,302,984 |
| $ | 1,540,619 |
| $ | 1,809,418 |
Foreign* | 179,545 | 448,840 | 259,064 | ||||||
Income before provision for income taxes |
| $ | 2,482,529 |
| $ | 1,989,459 |
| $ | 2,068,482 |
*After intercompany royalties, management fees and interest charges from the Company’s domestic to foreign entities of $110.3 million, $108.4 million and $101.4 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Components of the provision for income taxes are as follows:
Year Ended December 31, | |||||||||
| 2025 | | 2024 | | 2023 | ||||
Current: | |||||||||
Federal |
| $ | 308,032 |
| $ | 273,825 |
| $ | 259,911 |
State | 61,927 | 55,087 | 47,079 | ||||||
Foreign | 202,791 | 145,118 | 99,563 | ||||||
572,750 | 474,030 | 406,553 | |||||||
Deferred: | |||||||||
Federal | 304 | 11,395 | 42,237 | ||||||
State | (1,228) | (900) | 2,376 | ||||||
Foreign | (1,309) | (12,772) | (13,936) | ||||||
(2,233) | (2,277) | 30,677 | |||||||
Valuation allowance | 6,580 | 8,658 | 264 | ||||||
| $ | 577,097 |
| $ | 480,411 |
| $ | 437,494 | |
A reconciliation of the U.S. federal statutory income tax rate to the Company’s effective tax rate after the adoption of ASU 2023-09 for the year ended December 31, 2025 is as follows:
| 2025 |
| ||||
U.S. federal statutory tax rate | $ | 521,331 | | 21.0 | % | |
State and local income tax, net of federal income tax effect1 |
| 49,399 |
| 2.0 | % | |
Foreign tax effect |
| 36,628 |
| 1.5 | % | |
Effect of cross-border tax laws2 |
| (1,390) |
| (0.1) | % | |
Tax Credits |
| |
| | ||
Foreign tax credits |
| (21,357) |
| (0.9) | % | |
Energy-related tax credits |
| (4,335) |
| (0.2) | % | |
Change in valuation allowance |
| 12,378 |
| 0.5 | % | |
Nontaxable or nondeductible Items |
| (9,830) |
| (0.4) | % | |
Changes in unrecognized tax benefit |
| 837 |
| 0.0 | % | |
Other adjustments |
| (6,564) |
| (0.2) | % | |
$ | 577,097 |
| 23.2 | % | ||
(1) | State taxes in California, Illinois, Minnesota, Michigan, New Jersey and New York make up the majority (greater than 50%) of the tax effect in this category. |
(2) | Includes the impact of any tax credits. |
A reconciliation of the total provision for income taxes after applying the U.S. federal statutory rate of 21% to income before provision for income taxes to the reported provision for income taxes prior to the adoption of ASU 2023-09 are as follows for the years ended:
Year ended December 31, | ||||||
| 2024 | | 2023 | |||
U.S. federal tax expense at statutory rates |
| $ | 417,786 |
| $ | 434,381 |
State income taxes, net of federal tax benefit | 38,850 | 39,416 | ||||
Permanent differences | (21,298) | (27,235) | ||||
Stock-based compensation | 5,266 | (43,846) | ||||
Residual tax on undistributed foreign earnings | 3,903 | 8,423 | ||||
Other | (10,843) | (5,132) | ||||
Foreign rate differential | 38,089 | 31,223 | ||||
Valuation allowance | 8,658 | 264 | ||||
| $ | 480,411 |
| $ | 437,494 | |
Cash paid for income taxes, net of refunds received, by jurisdiction for the year ended December 31, 2025 is as follows:
| 2025 | ||
Federal | $ | 321,000 | |
State |
| 51,407 | |
Foreign |
| | |
Brazil |
| 38,351 | |
Ireland |
| 28,495 | |
Other |
| 110,865 | |
$ | 550,118 | ||
The amount of cash income taxes paid by the Company during the years ended December 31, 2024 and 2023 was $476.2 million and $423.2 million, respectively.
Major components of the Company’s deferred tax assets (liabilities) at December 31, 2025 and 2024 are presented in the table below. Certain amounts as of December 31, 2024 have been reclassified to conform to the presentation as of December 31, 2025.
| 2025 | | 2024 | |||
Deferred tax assets: | ||||||
Capitalization of inventory costs | $ | 11,326 | $ | 13,253 | ||
Accrued compensation | 16,722 | 13,941 | ||||
Deferred revenue | 48,208 | 53,802 | ||||
Stock-based compensation | 18,704 | 19,649 | ||||
Net operating loss carryforward | 25,632 | 33,159 | ||||
Termination payments | 32,920 | 39,489 | ||||
Operating lease liabilities | 13,078 | 13,201 | ||||
Intangible assets | 100,129 | 84,455 | ||||
Accrued liabilities | 21,824 | 16,725 | ||||
Foreign tax credit carryforward | 12,378 | — | ||||
Other deferred tax assets | 81,214 | 76,593 | ||||
Total gross deferred tax assets |
| $ | 382,135 |
| $ | 364,267 |
Deferred tax liabilities: | ||||||
Amortization of intangibles |
| $ | (107,473) |
| $ | (93,511) |
Operating lease ROU assets | (13,078) | (13,201) | ||||
Bang transaction gain | (11,672) | (11,740) | ||||
Depreciation | (56,344) | (57,168) | ||||
Other deferred tax liabilities | (13,749) | (12,741) | ||||
Total gross deferred tax liabilities | $ | (202,316) | $ | (188,361) | ||
Valuation allowance | (45,245) | (38,665) | ||||
Net deferred tax assets |
| $ | 134,574 |
| $ | 137,241 |
During the years ended December 31, 2025, 2024 and 2023, the Company recorded valuation allowances against certain deferred tax assets from cumulative net operating losses incurred by certain foreign subsidiaries of the Company, state income tax related to cumulative net operating losses incurred by certain U.S. subsidiaries, and foreign tax credit carryforwards. The effect of the valuation allowances and the subsequent related impact on the Company’s overall tax rate was to increase the Company’s provision for income taxes by $6.6 million, $8.6 million and $0.2 million for the years ended December 31, 2025, 2024 and 2023, respectively. At December 31, 2025, the Company had net state operating loss carryforwards of approximately $96.0 million and net foreign operating loss carryforwards of approximately $77.0 million. Of these amounts, $68.4 million of net foreign operating loss carryforwards may be carried forward indefinitely. The remaining $104.6 million of net state and foreign operating loss carryforwards will begin to expire in 2026.
The following is a roll-forward of the Company’s total gross unrecognized tax benefits, not including interest and penalties, for the years ended December 31, 2025, 2024 and 2023:
| Gross Unrecognized Tax | ||
Benefits | |||
Balance at December 31, 2022 | $ | 3,020 | |
Additions for tax positions related to the current year |
| — | |
Additions for tax positions related to the prior year |
| 739 | |
Decreases for tax positions related to prior years |
| (650) | |
Balance at December 31, 2023 | $ | 3,109 | |
Additions for tax positions related to the current year | — | ||
Additions for tax positions related to the prior year | 631 | ||
Decreases for tax positions related to prior years | (1,114) | ||
Balance at December 31, 2024 | $ | 2,626 | |
Additions for tax positions related to the current year | — | ||
Additions for tax positions related to the prior year | 1,440 | ||
Decreases for tax positions related to prior years |
| (836) | |
Balance at December 31, 2025 | $ | 3,230 | |
The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Company’s consolidated financial statements. As of December 31, 2025, the Company had accrued approximately $0.9 million in interest and penalties related to unrecognized tax benefits. If the Company were to prevail on all uncertain tax positions, it would not have a significant impact on the Company’s effective tax rate.
It is expected that any change in the amount of unrecognized tax benefit change within the next 12 months will not be significant.
The Company is subject to U.S. federal income tax as well as to income tax in multiple state and foreign jurisdictions.
The Company is in various stages of examination with certain states and certain foreign jurisdictions. The Company’s 2022 through 2025 income tax returns are subject to examination by the . The Company’s income tax returns are generally subject to examination for the 2021 through 2025 tax years. The and income tax returns are subject to examination for the 2021 through 2025 tax years.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Mar 1, 2017 | |
| 2015 | Feb 29, 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.