INSULET CORPPODD
INSULET CORP Income Taxes Disclosure
Income Taxes
The U.S. and foreign components of income before income taxes were as follows:
| Years Ended December 31, | |||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| U.S. | $ | 248.0 | $ | 253.9 | $ | 199.5 | |||||||||||
Foreign | 91.5 | 46.3 | 15.1 | ||||||||||||||
| Income before income taxes | $ | 339.5 | $ | 300.2 | $ | 214.7 | |||||||||||
The provision for income taxes consists of the following:
| Years Ended December 31, | |||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
Current | |||||||||||||||||
Federal | $ | 2.9 | $ | 5.8 | $ | — | |||||||||||
State | 1.8 | 6.4 | 3.7 | ||||||||||||||
Foreign | 25.4 | 6.6 | 4.1 | ||||||||||||||
Total current tax expense | 30.1 | 18.8 | 7.8 | ||||||||||||||
Deferred | |||||||||||||||||
Federal | 58.9 | (111.1) | 0.1 | ||||||||||||||
| State | 4.8 | (18.6) | — | ||||||||||||||
Foreign | (1.5) | (7.2) | 0.4 | ||||||||||||||
Total deferred tax expense (benefit) | 62.3 | (136.9) | 0.5 | ||||||||||||||
Income tax expense (benefit) | $ | 92.4 | $ | (118.1) | $ | 8.3 | |||||||||||
Reconciliations of the U.S. federal statutory rate to the Company’s effective tax rate for the year ended December 31, 2025 are as follows:
| Year Ended December 31, 2025 | |||||||||||
(in millions) | Amount | Percent | |||||||||
| U.S. federal statutory tax rate | $ | 71.3 | 21.0 | % | |||||||
State and local income taxes, net of federal income tax effect(1) | 6.0 | 1.8 | |||||||||
| Foreign tax effects | |||||||||||
| United Kingdom | 4.8 | 1.4 | |||||||||
| Other foreign jurisdictions | (0.1) | — | |||||||||
| Effect of cross-border tax laws | — | — | |||||||||
| Tax credits: | |||||||||||
| R&D | (14.6) | (4.3) | |||||||||
| Foreign tax credit | (3.6) | (1.1) | |||||||||
| Change in valuation allowance | 0.5 | 0.1 | |||||||||
| Nontaxable or nondeductible items | |||||||||||
| Extinguishment of debt | 22.8 | 6.7 | |||||||||
| Other nondeductible items | 2.0 | 0.6 | |||||||||
| Other | (0.1) | — | |||||||||
| Changes in unrecognized tax benefits | 3.6 | 1.1 | |||||||||
| Effective tax rate | $ | 92.4 | 27.2 | % | |||||||
(1) State and local taxes in Colorado comprise the majority of this category.
Reconciliations of the U.S. federal statutory rate to the Company’s effective tax rate for the years ended December 31, 2024 and 2023 are as follows:
| Year Ended December 31, 2024 | Year Ended December 31, 2023 | ||||||||||||||||||||||
| Amount | Percent | Amount | Percent | ||||||||||||||||||||
U.S. federal statutory rate | $ | 63.0 | 21.0 | % | $ | 45.1 | 21.0 | % | |||||||||||||||
Foreign tax rate differential | 3.2 | 1.1 | 1.3 | 0.6 | |||||||||||||||||||
| State taxes, net of federal benefit | 6.9 | 2.3 | 5.2 | 2.4 | |||||||||||||||||||
Federal and state R&D credits | (13.2) | (4.4) | (12.6) | (5.9) | |||||||||||||||||||
| Stock-based compensation | 1.4 | 0.5 | (6.8) | (3.2) | |||||||||||||||||||
| Non-deductible officers’ compensation | 1.8 | 0.6 | 2.8 | 1.3 | |||||||||||||||||||
Permanent items | 3.2 | 1.1 | 1.6 | 0.7 | |||||||||||||||||||
| Change in valuation allowance | (179.4) | (59.8) | (23.2) | (10.8) | |||||||||||||||||||
Change to prior year R&D credit | (8.3) | (2.8) | (6.0) | (2.8) | |||||||||||||||||||
| Other | 3.2 | 1.1 | 1.2 | 0.6 | |||||||||||||||||||
| Effective tax rate | $ | (118.1) | (39.3) | % | $ | 8.3 | 3.9 | % | |||||||||||||||
During the year ended December 31, 2024, following the evaluation of the positive and negative evidence including cumulative income (loss) position, revenue growth, current profitability, and expectations regarding future forecasted income, the Company released a substantial portion of its valuation allowance against deferred tax assets.
For all periods presented, no provision for income taxes has been provided on undistributed earnings of the Company’s foreign subsidiaries, except for Canada, because such earnings are indefinitely reinvested in the foreign operations. The Company has recorded a deferred tax liability for the tax costs on these earnings to the extent they cannot be repatriated in a tax-free manner. No deferred tax liability has been recorded related to the repatriation of $127.2 million in earnings that are indefinitely reinvested. Events that could trigger a tax liability include, but are not limited to, distributions, reorganizations or restructurings, and/or tax law changes. Determining the amount of unrecognized deferred tax liabilities on these indefinitely reinvested earnings is not practicable due to complexities associated with the hypothetical calculation.
The Company files federal, state, and foreign tax returns, which are subject to examination by the relevant tax authorities. The U.S. Internal Revenue Service is currently examining the Company’s U.S. federal income tax return for 2023. The Company’s U.S. federal and state tax returns are currently open to examination for tax years 2022 and 2024. In addition, the Company’s U.S. net operating loss carryforwards from 2001 and forward may be subject to examination in the periods that they are utilized.
The following table summarizes the activity related to the Company’s unrecognized tax benefits:
Years Ended December 31, | |||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
Unrecognized tax benefits at beginning of year | $ | 12.8 | $ | 5.0 | $ | — | |||||||||||
Additions related to current period tax positions | 3.8 | 2.7 | 2.4 | ||||||||||||||
Additions related to prior period tax positions | 0.1 | 5.1 | 2.6 | ||||||||||||||
Unrecognized tax benefits at end of year | $ | 16.7 | $ | 12.8 | $ | 5.0 | |||||||||||
As of December 31, 2025, 2024, and 2023, the Company had unrecognized tax benefits that would impact the effective tax rate if recognized of $16.7 million, $12.8 million, and $5.0 million, respectively. No interest and penalties were recognized related to uncertain tax positions for the years ended December 31, 2025, 2024, and 2023, respectively, and no interest or penalties were accrued as of December 31, 2025 and 2024, respectively.
Income taxes paid by jurisdiction for the year ended December 31, 2025 were as follows:
| (in millions) | |||||
| U.S. federal | $ | 14.7 | |||
U.S. state and local | |||||
Colorado | 2.2 | ||||
Other | 3.8 | ||||
Foreign | |||||
United Kingdom | 11.9 | ||||
Other | 5.8 | ||||
Total income taxes paid | $ | 38.5 | |||
The components of the net deferred tax asset were as follows:
| As of December 31, | |||||||||||
| (in millions) | 2025 | 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss carryforwards | $ | 19.6 | $ | 23.4 | |||||||
| Tax credits | 69.8 | 56.7 | |||||||||
| Capitalized research and development expenditures | 15.7 | 78.8 | |||||||||
| Accrued expenses | 39.0 | 34.5 | |||||||||
| Inventory capitalization | 8.2 | 8.2 | |||||||||
| Intangible assets | 6.9 | 6.4 | |||||||||
| Incentive compensation | 21.3 | 14.7 | |||||||||
| Stock-based compensation | 12.2 | 10.2 | |||||||||
| Other | 7.5 | 11.3 | |||||||||
| Total deferred tax assets | 200.2 | 244.0 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Prepaid assets | (12.0) | (9.3) | |||||||||
| Property, plant and equipment | (56.7) | (47.5) | |||||||||
| Capitalized contract acquisition costs | (17.4) | (13.1) | |||||||||
| Other | (2.0) | (8.6) | |||||||||
| Total deferred tax liabilities | (88.1) | (78.4) | |||||||||
| Net deferred tax asset before valuation allowance | 112.1 | 165.6 | |||||||||
| Valuation allowance | (30.6) | (23.9) | |||||||||
| Net deferred tax asset | $ | 81.6 | $ | 141.7 | |||||||
During the year ended December 31, 2025, the Company recognized a $69.2 million decrease in deferred tax assets associated with the One Big Beautiful Bill Act primarily resulting from the immediate expensing of domestic capitalized research and development expenditures. The $6.7 million increase in the valuation allowance for the year ended December 31, 2025 was primarily due to an increase in state research and development credits.
As of December 31, 2025, the Company’s net operating loss carryforwards were as follows:
(in millions) | Expiration Period | Net Operating Loss Carryforwards | |||||||||
U.S. federal | 2032 - 2037 | $ | 40.2 | ||||||||
State | 2026 - 2042 | $ | 196.4 | ||||||||
Foreign | Indefinite | $ | 1.5 | ||||||||
As of December 31, 2025, the Company’s tax credit carryforwards were as follows:
(in millions) | Expiration Period | Tax Credit Carryforwards | |||||||||
U.S. federal | 2026 - 2045 | $ | 54.1 | ||||||||
| State | 2026 - 2045 | $ | 39.6 | ||||||||
The Company's net operating loss and tax credit carryforwards may be subject to limitations as a result of changes in the ownership of the Company's stock.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 18, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Feb 26, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Feb 22, 2018 | |
| 2016 | Feb 28, 2017 | |
| 2015 | Feb 29, 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.