QXO, Inc.QXO
QXO, Inc. Income Taxes Disclosure
Income Taxes
The components of (loss) income before (benefit from) provision for income taxes and (benefit from) provision for income taxes are as follows:
| Year Ended December 31, | ||||||||||||||
(in millions) | 2025 | 2024 | ||||||||||||
| (Loss) income before (benefit from) provision for income taxes | ||||||||||||||
| U.S. | $ | (350.2) | $ | 50.8 | ||||||||||
| Foreign | 13.1 | — | ||||||||||||
| Total | $ | (337.1) | $ | 50.8 | ||||||||||
| (Benefit from) provision for income taxes | ||||||||||||||
| Provision for (benefit from) current income taxes | ||||||||||||||
| U.S. federal | $ | 0.7 | $ | 16.6 | ||||||||||
| Foreign | 3.4 | — | ||||||||||||
| U.S. state and local | (0.8) | 7.4 | ||||||||||||
| Total provision for current income taxes | 3.3 | 24.0 | ||||||||||||
| (Benefit from) provision for deferred income taxes | ||||||||||||||
| U.S. federal | (52.7) | (0.7) | ||||||||||||
| Foreign | — | — | ||||||||||||
| U.S. state and local | (8.3) | (0.5) | ||||||||||||
| Total benefit from deferred income taxes | (61.0) | (1.2) | ||||||||||||
| Total (benefit from) provision for income taxes | ||||||||||||||
| U.S. federal | (52.0) | 15.9 | ||||||||||||
| Foreign | 3.4 | — | ||||||||||||
| U.S. state and local | (9.1) | 6.9 | ||||||||||||
| Total (benefit from) provision for income taxes | $ | (57.7) | $ | 22.8 | ||||||||||
The following table is a reconciliation of the U.S. federal statutory income tax rate of 21% to the Company’s effective tax rate for the year ended December 31, 2025 pursuant to the disclosure requirements of ASU 2023-09. See Note 2 for additional details regarding the Company’s prospective adoption of ASU 2023-09.
| Year Ended December 31, 2025 | |||||||||||
(in millions, except percentages) | Amount | Percent | |||||||||
| U.S. federal statutory income tax rate | $ | (70.8) | 21.0 | % | |||||||
| Domestic federal | |||||||||||
| Non-taxable and non-deductible items | |||||||||||
| Section 162(m) limitation | 19.6 | (5.8) | % | ||||||||
| Non-taxable stock compensation | (5.3) | 1.6 | % | ||||||||
| Non-deductible transaction costs | 4.8 | (1.4) | % | ||||||||
| Other | 0.2 | (0.1) | % | ||||||||
| Changes in valuation allowance | (0.1) | — | % | ||||||||
| Other | 2.1 | (0.6) | % | ||||||||
Domestic state and local income taxes, net of federal effect(1) | (8.9) | 2.6 | % | ||||||||
| Foreign tax effects | |||||||||||
| Other foreign jurisdictions | 0.7 | (0.2) | % | ||||||||
| Effective tax rate | $ | (57.7) | 17.1 | % | |||||||
(1) State and local income taxes in California, Florida, Pennsylvania, Georgia, New Jersey, New York, Maryland, Illinois, and Virginia comprise the majority of the domestic state and local income taxes, net of federal effect category. | |||||||||||
The following table is a reconciliation of the U.S. federal statutory income tax rate of 21% to the Company’s effective tax rate for the year ended December 31, 2024:
| Year Ended December 31, 2024 | |||||
| U.S. federal statutory income tax rate | 21.0 | % | |||
State income tax, net of federal benefit | 10.7 | % | |||
Permanent items | 13.5 | % | |||
Return to provision for prior year | — | % | |||
| Changes in valuation allowance | (0.2) | % | |||
| Effective tax rate | 45.0 | % | |||
Deferred taxes are the result of temporary differences between the bases of assets and liabilities for financial reporting purposes. Deferred tax assets and liabilities are compromised of the following:
As of | |||||||||||
| December 31, | |||||||||||
(in millions) | 2025 | 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Lease liabilities | $ | 164.9 | $ | — | |||||||
| Share-based payments | 20.4 | 1.4 | |||||||||
| Accrued expenses | 20.9 | 0.1 | |||||||||
| Inventory valuation | 38.5 | — | |||||||||
| Allowance for credit losses | 16.4 | 0.1 | |||||||||
| Net operating loss | 25.9 | 0.7 | |||||||||
| Tax credit carryforwards | 0.3 | — | |||||||||
| Intangible assets | — | 0.5 | |||||||||
| Other | 0.2 | — | |||||||||
| Total deferred tax assets | 287.5 | 2.8 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Intangible assets | (848.5) | — | |||||||||
| Lease right-of-use assets | (170.5) | — | |||||||||
| Property and equipment | (107.9) | (0.1) | |||||||||
| Financing | (7.8) | — | |||||||||
| Total deferred tax liabilities | (1,134.7) | (0.1) | |||||||||
| Valuation allowance | — | (0.1) | |||||||||
| Net deferred income tax (liabilities) assets | $ | (847.2) | $ | 2.6 | |||||||
As of December 31, 2025 and December 31, 2024, the Company had U.S. federal net operating loss carryforwards of $102.5 million and $3.4 million, respectively, all of which have an indefinite carryforward. Certain acquired net operating loss carryforwards are subject to an annual limitation but are expected to be realized. As of December 31, 2025, the Company had state net operating loss carryforwards of $5.5 million that expire in varying amounts over the next 20 years. As of December 31, 2024, the Company had no state net operating loss carryforwards.
The Company regularly assesses the need for a valuation allowance of its deferred tax assets, and to the extent it is determined that an adjustment is needed, such adjustment will be recorded in the period that the determination is made.
As a result of the Beacon Acquisition, the Company recorded net deferred tax liabilities of $910.3 million. This consists of $900.4 million of intangible assets and $122.7 million of fixed assets, partially offset by inventories, net operating losses, 163(j) carryforwards, and other deferred tax assets and credit carryforwards of $112.8 million.
The increase in deferred tax assets as of December 31, 2025 as compared to December 31, 2024 primarily relates to additional U.S. federal and state net operating loss carryforwards from the current year taxable loss position and increases in the book basis of inventories from the Beacon Acquisition. The increase in deferred tax liabilities as of December 31, 2025 as compared to December 31, 2024 primarily relates to intangible and fixed assets recognized in connection with the Beacon Acquisition, which are not deductible for tax purposes when amortized or depreciated.
In July 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law in the U.S. The OBBBA includes numerous provisions that affect corporate taxation, including changes to bonus depreciation, the expensing of domestic research costs, and modifications to certain U.S. international tax rules. The Company has analyzed the impacts of the OBBBA and reflected them in the current period. These impacts do not have a material effect on the tax rate for the year ended December 31, 2025. The majority of the tax law changes will take effect in future years.
The Company’s non-domestic subsidiary, Beacon Roofing Supply Canada Company (“BRSCC”), is treated as a controlled foreign corporation. BRSCC’s taxable income, which reflects all of the Company’s Canadian operations, is being taxed only in Canada and would generally be taxed in the U.S. only upon an actual or deemed distribution. The Company expects that BRSCC’s earnings will be indefinitely reinvested for the foreseeable future; therefore, no U.S. deferred tax asset or liability for the differences between the book basis and the tax basis of BRSCC has been recorded as of December 31, 2025. Under the Tax Cuts and Jobs Act enacted in December 2017, future distributions from foreign subsidiaries will generally be subject to a federal dividends received deduction in the U.S. Should the earnings be remitted as dividends, the Company may be subject to additional foreign withholding and state income taxes. It is not practicable to estimate the amount of any additional taxes which may be payable on the undistributed earnings.
As of December 31, 2025 and December 31, 2024, there were no uncertain tax positions which, if recognized, would affect the Company’s effective tax rate.
The following table presents income taxes paid, net of refunds, disaggregated by significant federal, state, and foreign jurisdictions for the year ended December 31, 2025. The significant federal, state, and foreign jurisdictions were determined based on a threshold of 5% of total income taxes paid, net of refunds, in accordance with ASU 2023-09.
(in millions) | Year Ended December 31, 2025 | ||||
| U.S. federal | $ | 22.0 | |||
| U.S. state and local | |||||
| Connecticut | 6.0 | ||||
| Other | 7.0 | ||||
| Total U.S. state and local income taxes paid, net of refunds | 13.0 | ||||
| Foreign | |||||
| Canada | 3.2 | ||||
| Total income taxes paid, net of refunds | $ | 38.2 | |||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Mar 4, 2025 | |
| 2023 | Mar 14, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Mar 29, 2022 | |
| 2020 | Mar 25, 2021 | |
| 2019 | Mar 26, 2020 | |
| 2018 | Mar 28, 2019 | |
| 2017 | Mar 26, 2018 | |
| 2016 | Mar 24, 2017 | |
| 2015 | Mar 30, 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.