PARK OHIO HOLDINGS CORPPKOH
PARK OHIO HOLDINGS CORP Income Taxes Disclosure
Income Taxes
(Loss) income from continuing operations before income taxes consists of the following:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| United States | $ | (21.3) | $ | (5.9) | $ | 0.2 | |||||||||||
| Outside the United States | 45.1 | 50.3 | 41.3 | ||||||||||||||
| $ | 23.8 | $ | 44.4 | $ | 41.5 | ||||||||||||
Income tax expense consists of the following:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current expense: | |||||||||||||||||
| Federal | $ | 0.3 | $ | 2.8 | $ | 1.7 | |||||||||||
| State | 1.0 | 1.1 | 0.1 | ||||||||||||||
| Foreign | 15.4 | 15.6 | 13.9 | ||||||||||||||
| 16.7 | 19.5 | 15.7 | |||||||||||||||
| Deferred (benefit) expense: | |||||||||||||||||
| Federal | (9.1) | (11.9) | (7.1) | ||||||||||||||
| State | (0.7) | (1.8) | (1.2) | ||||||||||||||
| Foreign | (4.1) | (0.9) | 1.1 | ||||||||||||||
| (13.9) | (14.6) | (7.2) | |||||||||||||||
| Income tax expense | $ | 2.8 | $ | 4.9 | $ | 8.5 | |||||||||||
In 2025, the effective income tax rate of 11.8% was less than the U.S. statutory rate of 21%, primarily as a result of the tax benefit of the research and development tax credit partially offset by the impact of non-deductible expenses
Several countries in which Park-Ohio Holdings does business have proposed or enacted new tax laws or are actively considering changes to their tax laws to align with the Organization for Economic Co-operation and Development (“OECD”) proposals. For tax year 2025, the impact for those countries in which Park-Ohio Holdings operates who have enacted Pillar Two laws was not material to income tax expense. We will continue to monitor and reflect the impact of such legislative changes in future financial statements as appropriate.
In 2024, the effective tax rate of 11.0% was less than the U.S. statutory rate of 21%, primarily as a result of the tax benefit of the research and development tax credit and the release of certain valuation allowances.
In 2023, the effective tax rate of 20.5% approximated the U.S. statutory rate of 21%, as the tax benefits of the foreign tax credit and research and development tax credit were offset by the tax expense of foreign earnings, GILTI and non-deductible expenses.
The provision (benefit) for income taxes differs from the amount that would result by applying the applicable federal income tax rate to income before incomes taxes, as follows:
| Year Ended December 31, 2025 | |||||||||||
| Amount | Percent | ||||||||||
| US federal statutory income tax | $ | 5.0 | 21.0 | % | |||||||
State and local income taxes, net of federal effect1 | |||||||||||
| Changes in valuation allowance | 0.8 | 3.3 | % | ||||||||
| Other | (0.7) | (2.7) | % | ||||||||
| Foreign tax effects | |||||||||||
| Mexico | |||||||||||
| Foreign rate differential | 1.0 | 4.0 | % | ||||||||
| Prior period adjustment | (0.7) | (2.8) | % | ||||||||
| Other | (0.8) | (3.3) | % | ||||||||
| Other jurisdictions | 1.6 | 6.8 | % | ||||||||
| Effect of cross-border tax laws | |||||||||||
| Global intangible low-taxed income | 0.6 | 2.5 | % | ||||||||
| Other | (0.3) | (1.4) | % | ||||||||
| Income tax credits | |||||||||||
| Research and development | (4.9) | (20.6) | % | ||||||||
| Foreign tax credits - general | (0.9) | (3.7) | % | ||||||||
| Nontaxable or nondeductible items | |||||||||||
| Effect of non-controlling interest | 1.0 | 4.2 | % | ||||||||
| Officers' compensation | 1.0 | 4.3 | % | ||||||||
| Other | 0.3 | 1.2 | % | ||||||||
| Changes in unrecognized tax benefits | (0.3) | (1.4) | % | ||||||||
| Other adjustments | 0.1 | 0.4 | % | ||||||||
| Effective tax rate | $ | 2.8 | 11.8 | % | |||||||
| (1) State taxes in Pennsylvania made up the majority (greater than 50%) of the tax effect in this category. | |||||||||||
As previously disclosed for the years ending December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective income tax rate differed from the statutory federal income tax rate as follows:
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Income tax expense at U.S. statutory rate | $ | 9.3 | $ | 8.7 | |||||||
| Effect of state income taxes, net | (0.9) | (1.1) | |||||||||
| Effect of foreign operations | 5.7 | 4.4 | |||||||||
| Valuation allowance | (2.3) | (1.3) | |||||||||
| Uncertain tax positions | 0.7 | 0.3 | |||||||||
| Non-deductible items | 1.2 | 2.3 | |||||||||
| Equity compensation | 0.8 | 1.4 | |||||||||
| Foreign tax credit | (4.7) | (4.3) | |||||||||
| Other tax credits | (7.0) | (3.3) | |||||||||
| GILTI | 1.5 | 2.4 | |||||||||
| FDII | (0.5) | (0.8) | |||||||||
| Other, net | 1.1 | (0.2) | |||||||||
| Income tax expense as recorded | $ | 4.9 | $ | 8.5 | |||||||
Significant components of the Company’s net deferred income tax assets and liabilities are as follows:
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred income tax assets: | |||||||||||
| Postretirement benefit obligation | $ | 0.3 | $ | 0.2 | |||||||
| Inventory | 11.3 | 12.5 | |||||||||
| Net operating loss and credit carryforwards | 26.5 | 17.9 | |||||||||
| Operating lease liabilities | 10.6 | 10.1 | |||||||||
| Compensation | 2.1 | 3.3 | |||||||||
| Capitalized research and development expenditures | 34.5 | 29.6 | |||||||||
| Disallowed interest | 5.9 | 7.6 | |||||||||
| Other | 8.8 | 5.8 | |||||||||
| Total deferred income tax assets | 100.0 | 87.0 | |||||||||
| Deferred income tax liabilities: | |||||||||||
| Depreciation | 12.5 | 14.7 | |||||||||
| Pension | 20.9 | 19.0 | |||||||||
| Intangible assets | 16.9 | 16.8 | |||||||||
| Lease right-of-use assets | 10.6 | 10.1 | |||||||||
| Other | 5.2 | 5.5 | |||||||||
| Total deferred income tax liabilities | 66.1 | 66.1 | |||||||||
| Net deferred income tax assets prior to valuation allowances | 33.9 | 20.9 | |||||||||
| Valuation allowances | (5.5) | (4.9) | |||||||||
| Net deferred income tax asset | $ | 28.4 | $ | 16.0 | |||||||
At December 31, 2025, the Company has U.S., state and foreign net operating loss carryforwards as well as U.S. foreign tax credit carryforwards and research and development tax credit carryforwards for income tax purposes. The foreign net operating loss carryforward is $16.7 million, of which $9.5 million expires between 2026 and 2043 and the remainder has no expiration date. The Company has a tax benefit from a state net operating loss carryforward of $4.9 million, of which $4.1 million expires between 2026 and 2045 and the remainder has no expiration date. The Company also has a non-consolidated U.S. net operating loss carryforward of $1.1 million that expires between 2035 and 2036. The Company has recorded a valuation allowance of $5.5 million against these net operating loss carryforwards in jurisdictions where those losses are not expected to be realized. The foreign tax credit carryforward is $4.0 million and expires between 2032 and 2035. The U.S. research and development tax credit carryforward is $10.6 million and expires between 2031 and 2045.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| Unrecognized Tax Benefit — January 1 | $ | 1.2 | $ | 0.5 | $ | 0.8 | |||||||||||
| Gross Increases to Tax Positions Related to Prior Years | — | 0.8 | — | ||||||||||||||
| Gross Decreases related to settlements with taxing authorities | — | — | — | ||||||||||||||
| Expiration of Statute of Limitations | (0.4) | (0.1) | (0.3) | ||||||||||||||
| Unrecognized Tax Benefit — December 31 | $ | 0.8 | $ | 1.2 | $ | 0.5 | |||||||||||
The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $0.8 million at both December 31, 2025 and December 31, 2024, respectively. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. During 2025 and 2024, the Company recognized a tax benefit of
approximately $0.1 million in net interest and penalties due to the expiration of various uncertain tax positions. The Company had approximately $0.1 million for the payment of interest and penalties accrued at December 31, 2025.
The Company is subject to taxation in the U.S. and various state and foreign jurisdictions. The Company’s tax years for 2015 through 2025 remain open for examination by the Internal Revenue Service and 2019 through 2025 remain open for examination by various state and foreign taxing authorities.
As of December 31, 2025, the Company has accumulated undistributed earnings generated by our foreign subsidiaries of approximately $272.8 million. We intend to indefinitely reinvest these earnings and expect future U.S. cash generation to be sufficient to meet future U.S. cash needs.
Income taxes paid, net of refunds, were as follows:
| Year Ended December 31, 2025 | |||||
| U.S. Federal | $ | 1.4 | |||
| U.S. State | 0.8 | ||||
| Foreign | |||||
| Canada | 1.4 | ||||
| China | 3.1 | ||||
| Germany | 2.6 | ||||
| Mexico | 5.9 | ||||
| United Kingdom | 3.2 | ||||
| Other | 5.9 | ||||
| Total income taxes paid, net of refunds | $ | 24.3 | |||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 5, 2026 | Showing above |
| 2024 | Mar 6, 2025 | |
| 2023 | Mar 6, 2024 | |
| 2022 | Mar 16, 2023 | |
| 2021 | Mar 16, 2022 | |
| 2020 | Mar 5, 2021 | |
| 2019 | Mar 12, 2020 | |
| 2018 | Mar 5, 2019 | |
| 2017 | Mar 8, 2018 | |
| 2016 | Mar 9, 2017 | |
| 2015 | Mar 14, 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.