PLEXUS CORPPLXS
PLEXUS CORP Income Taxes Disclosure
Income Taxes
The domestic and foreign components of income (loss) before income tax expense for fiscal 2025, 2024 and 2023 were as follows (in thousands):
| 2025 | 2024 | 2023 | ||||||||||||||||||
| U.S. | $ | (83,155) | $ | (114,757) | $ | (84,557) | ||||||||||||||
| Foreign | 271,173 | 244,289 | 245,570 | |||||||||||||||||
| $ | 188,018 | $ | 129,532 | $ | 161,013 | |||||||||||||||
Income tax expense (benefit) for fiscal 2025, 2024 and 2023 were as follows (in thousands):
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Current: | ||||||||||||||||||||
| Federal | $ | 886 | $ | 2,849 | $ | 24,779 | ||||||||||||||
| State | 589 | (26) | 302 | |||||||||||||||||
| Foreign | 29,958 | 21,993 | 19,276 | |||||||||||||||||
| 31,433 | 24,816 | 44,357 | ||||||||||||||||||
| Deferred: | ||||||||||||||||||||
| Federal | (11,680) | (9,343) | (21,098) | |||||||||||||||||
| State | (4,529) | (1,045) | (1,371) | |||||||||||||||||
| Foreign | (91) | 3,289 | 31 | |||||||||||||||||
| (16,300) | (7,099) | (22,438) | ||||||||||||||||||
| $ | 15,133 | $ | 17,717 | $ | 21,919 | |||||||||||||||
The following is a reconciliation of the federal statutory income tax rate to the effective income tax rates reflected in the Consolidated Statements of Comprehensive Income for fiscal 2025, 2024 and 2023:
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Federal statutory income tax rate | 21.0 | % | 21.0 | % | 21.0 | % | ||||||||||||||
| (Decrease) increase resulting from: | ||||||||||||||||||||
| Foreign tax rate differences | (20.7) | (30.0) | (23.8) | |||||||||||||||||
| Withholding tax on dividends | 3.2 | 6.2 | 1.2 | |||||||||||||||||
| Permanent differences | (0.1) | (1.7) | (1.3) | |||||||||||||||||
| Excess tax benefits related to share-based compensation | (2.1) | (0.8) | (1.1) | |||||||||||||||||
| Global intangible low-taxed income ("GILTI") | 4.8 | 12.8 | 13.1 | |||||||||||||||||
| Audit settlements | — | (0.2) | — | |||||||||||||||||
| Non-deductible compensation | 3.2 | 3.9 | 2.8 | |||||||||||||||||
| Valuation allowances | 1.5 | 2.0 | 3.5 | |||||||||||||||||
| Tax credits, net | (2.2) | (1.8) | (2.1) | |||||||||||||||||
| Other, net | (0.6) | 2.3 | 0.3 | |||||||||||||||||
| Effective income tax rate | 8.0 | % | 13.7 | % | 13.6 | % | ||||||||||||||
The effective tax rate for fiscal 2025 was lower than the effective tax rate for fiscal 2024 primarily due to an increase in discrete tax benefits and the geographic distribution of worldwide earnings. During fiscal 2025, the Company released a state valuation allowance of $3.3 million due to a tax law change and released tax reserves of $4.9 million following the closure of the statute of limitations. The effective tax rate for fiscal 2024 was largely consistent with the effective tax rate for fiscal 2023. During fiscal 2024, the company recognized a benefit of approximately $6.9 million as a result of making a U.S. method change impacting the timing of income recognition for advanced payments. This benefit was largely offset by a $4.0 million withholding tax accrual under the indefinite reinvestment assertion for one of its APAC subsidiaries.
During fiscal 2025, 2024 and 2023, the Company recorded a $2.8 million, $2.7 million and $5.7 million increase to its valuation allowance due to continuing losses in various jurisdictions in all operating segments, respectively.
The components of the net deferred income tax assets as of September 27, 2025 and September 28, 2024, were as follows (in thousands):
| 2025 | 2024 | |||||||||||||
| Deferred income tax assets: | ||||||||||||||
| Loss/credit carryforwards | $ | 37,418 | $ | 32,998 | ||||||||||
| Inventories | 25,994 | 17,537 | ||||||||||||
| Accrued employee benefits | 20,048 | 16,805 | ||||||||||||
| Advanced payments from customers | 30,098 | 31,445 | ||||||||||||
| Lease obligations | 15,932 | 16,497 | ||||||||||||
| Research and development capitalization | 16,274 | 14,521 | ||||||||||||
| Other | 7,249 | 6,545 | ||||||||||||
| Total gross deferred income tax assets | 153,013 | 136,348 | ||||||||||||
| Less valuation allowances | (38,523) | (35,641) | ||||||||||||
| Deferred income tax assets | 114,490 | 100,707 | ||||||||||||
| Deferred income tax liabilities: | ||||||||||||||
| Property, plant and equipment | 15,120 | 18,206 | ||||||||||||
| Right-of-use assets | 8,977 | 8,956 | ||||||||||||
| Tax on unremitted earnings | 5,044 | 7,860 | ||||||||||||
| Deferred income tax liabilities | 29,141 | 35,022 | ||||||||||||
| Net deferred income tax assets | $ | 85,349 | $ | 65,685 | ||||||||||
During fiscal 2025, the Company’s valuation allowance increased by $2.9 million, including the impact of foreign exchange movement. This increase is the result of increases to the valuation allowances against the net deferred tax assets in the EMEA, AMER, and APAC regions of $1.2 million, $0.8 million and $0.9 million, respectively.
As of September 27, 2025, the Company had approximately $252.5 million of pre-tax state net operating loss carryforwards that expire between fiscal 2026 and 2046. Certain state net operating losses have a full valuation allowance against them. The Company also had approximately $76.5 million of pre-tax foreign net operating loss carryforwards that expire between fiscal 2027 and 2034 or are indefinitely carried forward. Certain foreign net operating losses have a full valuation allowance against them.
The Company has been granted a tax holiday for a foreign subsidiary in the APAC segment. This tax holiday will expire on December 31, 2034, and is subject to certain conditions. During fiscal 2025, 2024 and 2023, the tax holiday resulted in tax reductions, net of the impact of the GILTI provisions of U.S. Tax Reform, of approximately $43.1 million ($1.59 per basic share, $1.56 per diluted share), $37.3 million ($1.36 per basic share, $1.34 per diluted share) and $25.9 million ($0.94 per basic share, $0.92 per diluted share), respectively.
The Company does not provide for taxes that would be payable if certain undistributed earnings of foreign subsidiaries were remitted because the Company considers these earnings to be permanently reinvested. The deferred tax liability that has not been recorded for these earnings was approximately $11.7 million as of September 27, 2025.
The Company has approximately $19.1 million of unrecognized tax benefits as of September 27, 2025. The Company has classified these amounts in the Consolidated Balance Sheets as "Other liabilities" (non-current) in the amount of $18.5 million and an offset to "Deferred income taxes" (non-current asset) in the amount of $0.6 million as the payment is not anticipated within one year.
The following is a reconciliation of the beginning and ending amounts of gross unrecognized tax benefits, excluding interest and penalties, for the indicated fiscal years (in thousands):
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Balance at beginning of fiscal year | $ | 17,771 | $ | 13,950 | $ | 8,998 | ||||||||||||||
| Gross increases for tax positions of prior years | 116 | 1,284 | 3,778 | |||||||||||||||||
| Gross increases for tax positions of the current year | 3,421 | 3,922 | 2,105 | |||||||||||||||||
| Gross decreases for tax positions of prior years | (4,076) | (1,385) | (931) | |||||||||||||||||
| Balance at end of fiscal year | $ | 17,232 | $ | 17,771 | $ | 13,950 | ||||||||||||||
The amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate is $18.5 million and $19.2 million for the fiscal years ended September 27, 2025 and September 28, 2024, respectively.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. The total accrued penalties and net accrued interest with respect to income taxes was approximately $1.8 million as of September 27, 2025 and September 28, 2024, and approximately $1.1 million as of September 30, 2023. The Company recognized less than $0.1 million of expense for accrued penalties and net accrued interest in the Consolidated Statements of Comprehensive Income for fiscal 2025, $0.7 million for fiscal 2024 and $0.6 million for fiscal 2023.
Within the next 12 months, it is reasonably possible that federal, state and foreign tax audit resolutions could reduce unrecognized tax benefits by approximately $3.7 million, either because the Company’s tax positions are sustained on audit, the Company agrees to their disallowance or the statute of limitations closes.
The Company files income tax returns, including returns for its subsidiaries, with federal, state, local and foreign taxing jurisdictions. The following tax years remain subject to examination by the respective major tax jurisdictions:
| Jurisdiction | Fiscal Years | |||||||
| China | 2021-2025 | |||||||
| Germany | 2020-2025 | |||||||
| Malaysia | 2021-2025 | |||||||
| Mexico | 2021-2025 | |||||||
| Romania | 2023-2025 | |||||||
| Thailand | 2021-2025 | |||||||
| United Kingdom | 2022-2025 | |||||||
| United States | ||||||||
| Federal | 2019-2020,2022-2025 | |||||||
| State | 2005-2006,2009-2025 | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 14, 2025 | Showing above |
| 2024 | Nov 15, 2024 | |
| 2023 | Nov 17, 2023 | |
| 2022 | Nov 18, 2022 | |
| 2021 | Nov 19, 2021 | |
| 2020 | Nov 20, 2020 | |
| 2019 | Nov 15, 2019 | |
| 2018 | Nov 16, 2018 | |
| 2017 | Nov 17, 2017 | |
| 2016 | Nov 18, 2016 | |
| 2015 | Nov 20, 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.