NCR Atleos CorpNATL
NCR Atleos Corp Income Taxes Disclosure
6. INCOME TAXES
Our income tax provision for the first three quarters of 2023 was prepared using a separate return method. The separate return method applies the accounting guidance for income taxes to the standalone financial statements as if we were a separate taxpayer and a standalone entity. We believe the assumptions supporting the allocation and presentation of income taxes on a separate return basis are reasonable.
For all periods prior to the Separation, the Company was part of NCR’s consolidated U.S. federal income tax return, as well as separate and combined NCR income tax returns in numerous state and international jurisdictions. The Company’s current tax liabilities computed under the separate return method were considered to be effectively settled in the Consolidated Financial Statements at the time the transaction is recorded, with the offset recorded against Net investment from NCR Corporation.
For the years ended December 31, income (loss) before income taxes consisted of the following:
| In millions | 2025 | 2024 | 2023 | |||||||||||||||||
| Income (loss) before income taxes | ||||||||||||||||||||
| United States | $ | 87 | $ | 14 | $ | (22) | ||||||||||||||
| Foreign | 102 | 111 | 111 | |||||||||||||||||
| Total income (loss) before income taxes | $ | 189 | $ | 125 | $ | 89 | ||||||||||||||
For the years ended December 31, income tax expense (benefit) consisted of the following:
| In millions | 2025 | 2024 | 2023 | |||||||||||||||||
| Income tax expense (benefit) | ||||||||||||||||||||
| Current | ||||||||||||||||||||
| Federal | $ | 10 | $ | 22 | $ | 80 | ||||||||||||||
| State | 2 | 6 | 15 | |||||||||||||||||
| Foreign | 16 | 35 | 68 | |||||||||||||||||
| Deferred | ||||||||||||||||||||
| Federal | 3 | (12) | (111) | |||||||||||||||||
| State | (1) | 5 | (23) | |||||||||||||||||
| Foreign | (3) | (12) | 208 | |||||||||||||||||
| Total income tax expense | $ | 27 | $ | 44 | $ | 237 | ||||||||||||||
The following table presents cash paid for income taxes, net of refunds:
| For the year ended December 31, | |||||
| In millions | 2025 | ||||
| Cash paid during the period for income taxes, net of refunds: | |||||
| U.S. Federal | $ | 27 | |||
| U.S. State and local | 9 | ||||
| India | 12 | ||||
| Philippines | 6 | ||||
| Saudi Arabia | 4 | ||||
| All other foreign | 25 | ||||
| Total cash paid during the period for income taxes | $ | 83 | |||
Cash paid for income taxes, net of refunds, prior to the adoption of ASU 2023-09, was $54 million and $69 million for the years ended December 31, 2024 and 2023, respectively.
The following table provides the updated requirements of ASU 2023-09 for the year ended 2025. See the Recent Accounting Pronouncements section of Note 1, “Basis of Presentation and Significant Accounting Policies”, for additional details on the adoption of ASU 2023-09.
| For the year ended December 31, | |||||||||||
| 2025 | |||||||||||
| Earnings from continuing operations, before income tax expense | $ | 189 | |||||||||
| U.S Federal Statutory Tax Rate | 40 | 21.0 | % | ||||||||
State and Local Income Tax, Net of Federal (National) Income Tax Effect (1) | — | — | % | ||||||||
| Effect of Cross-Border Tax Laws | |||||||||||
| Foreign tax credits | (11) | (5.7) | % | ||||||||
| Foreign-derived intangible income | (8) | (4.2) | % | ||||||||
| Changes in Valuation Allowances | 3 | 1.8 | % | ||||||||
| Nontaxable or Nondeductible Items | |||||||||||
| Executive Compensation | 2 | 1.2 | % | ||||||||
| Other | 3 | 1.7 | % | ||||||||
| Other Adjustments | (5) | (2.5) | % | ||||||||
| Argentina | |||||||||||
| Changes in Valuation Allowances | 3 | 1.6 | % | ||||||||
| Other | (3) | (1.8) | % | ||||||||
| Australia | |||||||||||
| Changes in Valuation Allowances | 3 | 1.5 | % | ||||||||
| Other | (2) | (1.1) | % | ||||||||
| Canada | |||||||||||
| Effect of Rates Different than Statutory | 2 | 1.2 | % | ||||||||
| Changes in Valuation Allowances | (25) | (13.1) | % | ||||||||
| Withholding tax | (2) | (1.1) | % | ||||||||
| Other | (1) | (0.7) | % | ||||||||
| China | |||||||||||
| Changes in Valuation Allowances | (7) | (3.9) | % | ||||||||
| Other | 8 | 4.2 | % | ||||||||
| Cyprus | |||||||||||
| Enactment of new tax laws | (3) | (1.7) | % | ||||||||
| Other | 6 | 2.9 | % | ||||||||
| Germany | |||||||||||
| Enactment of new tax laws | 20 | 10.5 | % | ||||||||
| Changes in Valuation Allowances | (19) | (10.2) | % | ||||||||
| India | 4 | 2.2 | % | ||||||||
| Mexico | 3 | 1.6 | % | ||||||||
| Pakistan | 6 | 3.1 | % | ||||||||
| Saudi Arabia | 2 | 1.2 | % | ||||||||
| South Africa | 2 | 1.2 | % | ||||||||
| Turkey | |||||||||||
| Changes in Valuation Allowances | 4 | 2.1 | % | ||||||||
| Other | 1 | 0.5 | % | ||||||||
| United Kingdom | 5 | 2.6 | % | ||||||||
| Other Foreign Jurisdictions | 8 | 4.2 | % | ||||||||
| Changes in Unrecognized Tax Benefits | (12) | (6.1) | % | ||||||||
| Income Tax Expense | $ | 27 | 14.2 | % | |||||||
(1) State taxes in California, New York, and Texas made up the majority (greater than 50%) of the tax effect in this category.
The following table presents the statutory federal income tax expense and our total income tax expense for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09:
| In millions | 2024 | 2023 | |||||||||
| Income tax (benefit) expense at the U.S. federal tax rate of 21% | $ | 26 | $ | 18 | |||||||
| Foreign income tax differential | 8 | 23 | |||||||||
| U.S. tax impact on foreign income | (10) | 17 | |||||||||
| State and local income taxes (net of federal effect) | 7 | (8) | |||||||||
| Tax effects of intercompany restructurings prior to the Spin-Off | — | 120 | |||||||||
| Nondeductible transaction costs | — | 1 | |||||||||
| Disallowed executive compensation | 2 | 6 | |||||||||
| Excess benefit/deficit from share-based payments | 5 | 5 | |||||||||
| Foreign Derived Intangible Income deduction | (17) | — | |||||||||
| Research and development tax credits | — | (2) | |||||||||
| Valuation allowances | 27 | 44 | |||||||||
| Change in liability for unrecognized tax benefits | 2 | 4 | |||||||||
| Change in tax estimates for prior periods | (6) | 6 | |||||||||
| Other, net | — | 3 | |||||||||
| Total income tax expense | $ | 44 | $ | 237 | |||||||
Our tax provisions include a provision for income taxes in certain tax jurisdictions where our subsidiaries are profitable, but reflect only a portion of the tax benefits related to certain foreign subsidiaries’ tax losses due to the uncertainty of the ultimate realization of future benefits from these losses. During 2025, our tax rate benefited from $25 million release of valuation allowance offset by $9 million Foreign Derived Intangible Income decrease in benefit as compared to prior year. During 2024, our tax rate benefited from $17 million Foreign Derived Intangible Income deduction and $17 million provision to return adjustments, of which $11 million is classified as U.S. tax impact on foreign income. Additionally, in 2024 our tax rate was impacted by an increase in the valuation allowance on U.S. interest expense disallowance carryforward by $32 million.
We did not provide additional U.S. income tax or foreign withholding taxes, if any, on approximately $3.7 billion of undistributed earnings of our foreign subsidiaries, given the intention continues to be that those earnings are reinvested indefinitely. The amount of unrecognized deferred tax liability associated with these indefinitely reinvested earnings is approximately $144 million.
We regularly review our deferred tax assets for recoverability and establish a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. The determination as to whether a deferred tax asset will be realized is made on a jurisdictional basis and is based on the evaluation of positive and negative evidence. This evidence includes historical taxable income/loss, projected future taxable income, the expected timing of the reversal of existing temporary differences and the implementation of tax planning strategies.
Deferred income tax assets and liabilities included in the Consolidated Balance Sheets as of December 31 were as follows:
| In millions | 2025 | 2024 | ||||||||||||
| Deferred income tax assets | ||||||||||||||
| Employee pensions and other benefits | $ | 48 | $ | 81 | ||||||||||
| Other balance sheet reserves and allowances | 148 | 136 | ||||||||||||
| Tax loss and credit carryforwards | 272 | 287 | ||||||||||||
| Capitalized research and development | 123 | 116 | ||||||||||||
| Property, plant and equipment | — | 10 | ||||||||||||
| Lease liabilities | 48 | 37 | ||||||||||||
| Other | 33 | 22 | ||||||||||||
| Total deferred income tax assets | $ | 672 | $ | 689 | ||||||||||
| Valuation allowance | (243) | (265) | ||||||||||||
| Net deferred income tax assets | $ | 429 | $ | 424 | ||||||||||
| Deferred income tax liabilities | ||||||||||||||
| Intangible assets | $ | 124 | $ | 137 | ||||||||||
| Right of use assets | 48 | 37 | ||||||||||||
| Capitalized software | 10 | 5 | ||||||||||||
| Total deferred income tax liabilities | $ | 182 | $ | 179 | ||||||||||
| Total net deferred income tax assets | $ | 247 | $ | 245 | ||||||||||
We have previously recorded valuation allowances related to certain deferred tax assets due to the uncertainty of the ultimate realization of the future benefits from those assets. The recorded valuation allowances cover deferred tax assets, primarily tax loss carryforwards in tax jurisdictions where there is uncertainty as to the ultimate realization of those tax losses. If we are unable to generate sufficient future taxable income of the proper source in the time period within which the temporary differences underlying our deferred tax assets become deductible, or before the expiration of our loss carryforwards, additional valuation allowances could be required.
As of December 31, 2025, we had U.S. federal, U.S. state (tax effected), and foreign net operating loss carryforwards of approximately $1.1 billion. These carryforwards that are subject to expiration will expire in the years 2026 through 2036. As a result of stock ownership changes, our U.S. tax attributes could be subject to limitations under Section 382 of the U.S. Internal Revenue Code of 1986, as amended, if further material stock ownership changes occur. Additionally, our tax credit carryforwards of approximately $16 million, will expire in the years 2033 through 2035.
The aggregate changes in the balance of our gross unrecognized tax benefits were as follows for the years ended December 31:
| In millions | 2025 | 2024 | 2023 | |||||||||||||||||
| Gross unrecognized tax benefits - January 1 | $ | 33 | $ | 34 | $ | 32 | ||||||||||||||
| Increases related to tax positions from prior years | 2 | 1 | — | |||||||||||||||||
| Decreases related to tax positions from prior years | (7) | (4) | (2) | |||||||||||||||||
| Increases related to tax positions taken during the current year | 3 | 6 | 6 | |||||||||||||||||
| Settlements with tax authorities | (1) | — | — | |||||||||||||||||
| Lapses of statutes of limitation | (5) | (4) | (1) | |||||||||||||||||
| Settlements (closed out to Net Investment from NCR Corporation) | — | — | (1) | |||||||||||||||||
| Total gross unrecognized tax benefits - December 31 | $ | 25 | $ | 33 | $ | 34 | ||||||||||||||
Of the total amount of gross unrecognized tax benefits as of December 31, 2025, $15 million would affect our effective tax rate if realized. Our liability arising from uncertain tax positions is recorded in Income tax accruals in the Consolidated Balance Sheets.
We recognized interest and penalties associated with uncertain tax positions as part of the provision for income taxes in our Consolidated Statements of Operations of $3 million of benefit, $2 million of benefit, and $3 million of expense for the years ended December 31, 2025, 2024, and 2023, respectively. The gross amount of interest and penalties accrued as of December 31, 2025 and 2024 was $8 million and $11 million, respectively.
In the United States, we file consolidated federal and state income tax returns where statutes of limitations generally range from three to five years. Years beginning on or after 2016 are still open to examination by certain foreign taxing authorities.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Mar 26, 2024 | |
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.