INSIGHT ENTERPRISES INCNSIT

INSIGHT ENTERPRISES INC Income Taxes Disclosure

10-KFiled Feb 12, 20264 min read
Income Taxes
The following table presents the U.S. and foreign components of earnings before income taxes and the related income tax expense (in thousands):
Years Ended December 31,
202520242023
Earnings before income taxes:
United States$119,210 $207,715 $263,421 
Foreign106,609 125,198 114,433 
$225,819 $332,913 $377,854 
Income tax expense:
Current:
U.S. Federal$28,195 $32,195 $62,575 
U.S. State and local7,194 8,205 16,764 
Foreign31,193 34,526 30,286 
66,582 74,926 109,625 
Deferred:
U.S. Federal773 7,701 (10,923)
U.S. State and local(239)2,369 (3,324)
Foreign1,356 (1,774)1,167 
1,890 8,296 (13,080)
$68,472 $83,222 $96,545 
The following schedule reconciles the differences between the U.S. federal income taxes at the U.S. statutory rate and our income tax expense (dollars in thousands):
202520242023
Amount PercentAmount PercentAmount Percent
Income (loss) before income taxes$225,819 $332,913 $377,854 
US federal statutory tax rate47,422 21.0 %69,912 21.0 %79,349 21.0 %
Tax credits
Research credits(3,065)(1.4)(3,862)(1.2)(2,466)(0.7)
Other(1,338)(0.6)(1,833)(0.6)(89)— 
Nontaxable and nondeductible items
Limitation on executive compensation2,592 1.1 2,448 0.7 2,511 0.7 
Change in fair value of earnout liabilities4,179 1.9 3,948 1.2 — — 
Stock warrants5,264 2.3 — — — — 
Other(1,759)(0.8)1,803 0.6 3,012 0.8 
State and local income tax, net of federal effect6,742 3.0 11,362 3.4 12,113 3.2 
Cross-border tax laws(1,118)(0.5)(3,949)(1.2)(3,998)(1.1)
Enactment of new tax laws644 0.3 — — — — 
Change in valuation allowances(2,460)(1.1)(163)— (316)(0.1)
Foreign tax effects
Canada
Statutory income tax rate differential2,857 1.3 2,891 0.9 2,906 0.8 
Other(105)— 24 — 53 — 
Other foreign jurisdictions6,404 2.8 3,512 1.1 4,395 1.2 
Worldwide changes in unrecognized tax benefits2,213 1.0 (2,871)(0.9)(925)(0.2)
Total$68,472 30.3 %$83,222 25.0 %$96,545 25.6 %

The majority of the domestic state and local income tax expense (net of federal effect) for 2025 was driven by California, Illinois, New York, Minnesota, and New York City. For 2024, California, Illinois, Arizona, Minnesota, and New York comprised the majority, and in 2023, the majority was comprised of Illinois, California, New Jersey, Florida, and New York.
As of December 31, 2025, we have accumulated undistributed earnings generated by our foreign subsidiaries, most of which have been taxed in the U.S. as a result of the Tax Cuts and Jobs Act of 2017. For foreign subsidiary earnings not yet taxed under these provisions, we continue to assert permanent reinvestment of earnings earned in foreign jurisdictions which impose a withholding tax on dividends and, accordingly, have not accrued any additional income or withholding taxes on the potential repatriation of these earnings. At the present time, given the various complexities involved in repatriating earnings, it is not practicable to estimate the amount of tax that may be payable if these earnings were not reinvested indefinitely.
The significant components of deferred tax assets and liabilities are as follows (in thousands):
December 31,
20252024
Deferred tax assets:
Capitalized research expenses$29,683 $42,827 
Loss carryforwards27,943 26,244 
Foreign tax credits8,915 8,880 
Other30,957 33,930 
Gross deferred tax assets97,498 111,881 
Valuation allowances(34,654)(32,978)
Total deferred tax assets62,844 78,903 
Deferred tax liabilities:
Goodwill and other intangibles(82,869)(86,737)
Property and equipment(28,757)(33,223)
Contract assets (net)(18,337)(18,026)
Other(1,682)(1,940)
Total deferred tax liabilities(131,645)(139,926)
Net deferred tax liabilities$(68,801)$(61,023)
The net non-current deferred tax assets and liabilities are as follows (in thousands):
December 31,
20252024
Net non-current deferred tax assets, which are included in "Other assets"
$1,914 $3,436 
Net non-current deferred tax liabilities(70,715)(64,459)
Net deferred tax liabilities$(68,801)$(61,023)

As of December 31, 2025, we have U.S. state and foreign net operating loss carryforwards (“NOLs”) that will expire between 2026 and 2044, while the majority have no expiration date. Due to the uncertainty around future utilization, we have recorded a valuation allowance against the majority of these NOLs.

We have provided valuation allowances for certain of our deferred tax assets where we believe it is more likely than not that the related tax benefits will not be realized. At December 31, 2025 and 2024, our valuation allowances totaled $34,654,000 and $32,978,000, respectively, relating primarily to foreign tax credits and NOLs. This increase was primarily the result of current year losses in certain jurisdictions.
As of December 31, 2025 and 2024, we had approximately $13,272,000 and $11,060,000, respectively, of unrecognized tax benefits. Of these amounts, approximately $1,667,000 and $1,449,000, respectively, related to accrued interest. The changes in the unrecognized tax benefits balance during the year reflect additions for tax positions taken in prior and current periods, net of reductions related to audit settlements and statute expirations.
We are currently under audit in various jurisdictions for tax years 2017 through 2022. Although the timing of the resolutions and/or closures of audits is highly uncertain, it is reasonably possible that the examination phase of these audits may be concluded within the next 12 months which could increase or decrease the balance of our gross unrecognized tax benefits. However, based on the status of the various examinations in multiple jurisdictions, an estimate of the range of reasonably possible outcomes cannot be made at this time, but the estimated effect on our income tax expense and net earnings is not expected to be significant.
In the U.S., federal income tax returns for years subsequent to 2021 remain open to examination. For state and foreign jurisdictions, the statute of limitations generally varies between three and ten years. However, to the extent allowable by law, the tax authorities may have a right to examine and make adjustment to prior periods when amended returns have been filed, or when net operating losses or tax credits were generated and carried forward for subsequent utilization.
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Historical Timeline

Fiscal YearFiled
2025Feb 12, 2026Showing above
2024Feb 14, 2025
2023Feb 22, 2024
2022Feb 16, 2023
2021Feb 18, 2022
2020Feb 17, 2021
2019Feb 21, 2020
2018Feb 22, 2019
2017Feb 26, 2018
2016Feb 17, 2017
2015Feb 19, 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.

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