NORDSON CORPNDSN
NORDSON CORP Income Taxes Disclosure
Note 8 — Income taxes
Income before income taxes and income tax expense (benefit) are comprised of the following:
| 2025 | 2024 | 2023 | |||||||||||||||
| Income before income taxes: | |||||||||||||||||
| Domestic | $ | 430,297 | $ | 314,263 | $ | 269,934 | |||||||||||
| Foreign | 167,351 | 271,218 | 345,405 | ||||||||||||||
| Total income before income taxes | $ | 597,648 | $ | 585,481 | $ | 615,339 | |||||||||||
| Current: | |||||||||||||||||
| U.S. federal | $ | 73,858 | $ | 65,085 | $ | 54,157 | |||||||||||
| State and local | 9,501 | 2,017 | 285 | ||||||||||||||
| Foreign | 42,426 | 69,652 | 89,520 | ||||||||||||||
| Total current | $ | 125,785 | $ | 136,754 | $ | 143,962 | |||||||||||
| Deferred: | |||||||||||||||||
| U.S. federal | $ | (8,868) | $ | (11,622) | $ | (9,119) | |||||||||||
| State and local | (1,124) | (1,387) | (1,279) | ||||||||||||||
| Foreign | (2,619) | (5,548) | (5,718) | ||||||||||||||
| Total deferred | (12,611) | (18,557) | (16,116) | ||||||||||||||
| $ | 113,174 | $ | 118,197 | $ | 127,846 | ||||||||||||
A reconciliation of the U.S. statutory federal rate to the worldwide consolidated effective tax rate follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| Statutory federal income tax rate | 21.00 | % | 21.00 | % | 21.00 | % | |||||||||||
| Share-based and other compensation | 0.14 | (0.02) | (0.25) | ||||||||||||||
| Foreign tax rate variances | 0.78 | 1.22 | 1.83 | ||||||||||||||
| State and local taxes, net of federal income tax benefit | 1.11 | 0.08 | (0.13) | ||||||||||||||
| Foreign-Derived Intangible Income Deduction | (2.49) | (2.54) | (2.24) | ||||||||||||||
| Global Intangible Low-Taxed Income net of foreign tax credits | — | 0.40 | 0.71 | ||||||||||||||
| Changes in federal valuation allowances | (0.73) | 0.68 | 1.45 | ||||||||||||||
| Changes in unrecognized tax benefits | (0.25) | 0.05 | (0.17) | ||||||||||||||
| Other – net | (0.62) | (0.68) | (1.42) | ||||||||||||||
| Effective tax rate | 18.94 | % | 20.19 | % | 20.78 | % | |||||||||||
Deferred income taxes are not provided on undistributed earnings of international subsidiaries that are intended to be permanently invested in their operations. These undistributed earnings represent the post-income tax earnings under U.S. GAAP not adjusted for previously taxed income which aggregated approximately $1,508,911 and $1,433,106 at October 31, 2025 and 2024, respectively. Should these earnings be distributed, applicable foreign tax credits, distributions of previously taxed income and utilization of other attributes would substantially offset taxes due upon the distribution. It is not practical to estimate the amount of additional taxes that might be payable on these basis differences because of the multiple methods by which these differences could reverse and the impact of withholding, U.S. state and local taxes and currency translation considerations.
At October 31, 2025 and 2024, total unrecognized tax benefits were $5,965 and $7,481, respectively. The amounts that, if recognized, would impact the effective tax rate were $5,005 and $6,670 at October 31, 2025 and 2024, respectively. During 2025, unrecognized tax benefits related primarily to domestic positions and, as recognized, a substantial portion of the gross unrecognized tax benefits were offset against assets recorded in the Consolidated Balance Sheets.
A reconciliation of the beginning and ending amount of unrecognized tax benefits for 2025, 2024 and 2023 is as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| Gross balance at beginning of year | $ | 7,481 | $ | 8,002 | $ | 2,872 | |||||||||||
| Additions based on tax positions related to the current year | — | 300 | 410 | ||||||||||||||
| Additions for tax positions of prior years | 80 | — | 10 | ||||||||||||||
| Increases related to acquired businesses | — | — | 6,602 | ||||||||||||||
| Reductions for tax positions of prior years | (1,296) | (418) | — | ||||||||||||||
| Lapse of statute of limitations | (300) | (403) | (1,892) | ||||||||||||||
| Gross balance at end of year | $ | 5,965 | $ | 7,481 | $ | 8,002 | |||||||||||
At October 31, 2025 and 2024, we had accrued interest and penalty expense related to unrecognized tax benefits of $853 and $800, respectively. We include interest accrued related to unrecognized tax benefits in interest expense. Penalties, if incurred, would be recognized as other income (expense).
We are subject to U.S. Federal income tax as well as income taxes in numerous state and foreign jurisdictions. We are subject to examination in the United States by the Internal Revenue Service ("IRS") for the years 2022 through 2025; years prior to 2022 year are closed to further examination by the IRS. Generally, major state and foreign jurisdiction tax years remain open to examination for years after 2019. Within the next twelve months, it is reasonably possible that certain statute of limitations periods would expire, which could result in a minimal decrease in our unrecognized tax benefits.
Significant components of deferred tax assets and liabilities are as follows:
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Lease Liabilities | $ | 19,640 | $ | 25,254 | |||||||
| Employee benefits | 15,192 | 29,291 | |||||||||
| Tax credit and loss carryforwards | 27,765 | 35,258 | |||||||||
| Other accruals not currently deductible for taxes | 9,966 | 9,190 | |||||||||
| Inventory adjustments | 12,883 | 16,634 | |||||||||
| Total deferred tax assets | 85,446 | 115,627 | |||||||||
| Valuation allowance | (24,523) | (33,596) | |||||||||
| Total deferred tax assets | $ | 60,923 | $ | 82,031 | |||||||
| Deferred tax liabilities: | |||||||||||
| Depreciation and amortization | $ | 235,281 | $ | 256,183 | |||||||
| Lease right-of-use assets | 18,528 | 24,204 | |||||||||
| Other - net | (11,946) | (3,865) | |||||||||
| Total deferred tax liabilities | 241,863 | 276,522 | |||||||||
| Net deferred tax liabilities | $ | (180,940) | $ | (194,491) | |||||||
At October 31, 2025, we had $16,549 of tax credit carryforwards, $12,577 of which expires in 2026-2044 and $3,972 of which has an indefinite carryforward period. We also had $29,055 of state operating loss carryforwards, $43,967 of foreign operating loss carryforwards, and a $2,917 capital loss carryforward, of which $53,403 will expire in 2026 through 2043, and $22,536 of which has an indefinite carryforward period. The net change in the valuation allowance was a decrease of $9,073 in 2025 and an increase of $9,864 in 2024. The valuation allowance of $24,523 at October 31, 2025, related primarily to tax credits and loss carryforwards that may expire before being realized. We continue to assess the need for valuation allowances against deferred tax assets based on determinations of whether it is more likely than not that deferred tax benefits will be realized.
One Big Beautiful Bill Act
On July 4, 2025, the One Big Beautiful Bill Act (the "OBBBA") was signed into law in the United States. The OBBBA includes significant tax law changes, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. As the provisions under the OBBBA do not take effect until after the Company’s fiscal year end of October 31, 2025, the effects of these changes are not reflected in the accompanying Consolidated Financial Statements for the year ended October 31, 2025. The Company is currently evaluating the OBBBA’s impact on future tax periods and will update its income
tax disclosures in future filings once the impact of the OBBBA has been fully assessed. At this time, the Company does not expect the OBBBA to have a material impact on its deferred tax balances.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Dec 17, 2025 | Showing above |
| 2024 | Dec 18, 2024 | |
| 2023 | Dec 20, 2023 | |
| 2022 | Dec 19, 2022 | |
| 2021 | Dec 17, 2021 | |
| 2020 | Dec 18, 2020 | |
| 2019 | Dec 13, 2019 | |
| 2018 | Dec 14, 2018 | |
| 2017 | Dec 15, 2017 | |
| 2016 | Dec 15, 2016 | |
| 2015 | Dec 15, 2015 | |
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.