ROPER TECHNOLOGIES INCROP
ROPER TECHNOLOGIES INC Income Taxes Disclosure
Income Taxes
Earnings before income taxes for the years ended December 31, 2025, 2024, and 2023 consisted of the following components:
| 2025 | 2024 | 2023 | |||||||||||||||
| United States | $ | 1,588.2 | $ | 1,701.7 | $ | 1,480.3 | |||||||||||
| Other | 347.9 | 265.5 | 262.8 | ||||||||||||||
| Earnings before income taxes | $ | 1,936.1 | $ | 1,967.2 | $ | 1,743.1 | |||||||||||
Components of income tax expense for the years ended December 31, 2025, 2024, and 2023 were as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 67.7 | $ | 317.8 | $ | 352.6 | |||||||||||
| State | 70.4 | 101.7 | 80.7 | ||||||||||||||
| Foreign | 91.0 | 78.0 | 69.9 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | 188.5 | (42.8) | (94.1) | ||||||||||||||
| State | (8.3) | (15.9) | (27.7) | ||||||||||||||
| Foreign | (9.5) | (20.9) | (6.7) | ||||||||||||||
| Income tax expense | $ | 399.8 | $ | 417.9 | $ | 374.7 | |||||||||||
The Company adopted ASU 2023-09 on a prospective basis beginning with the 2025 annual reporting period. Reconciliations between the U.S. federal statutory income tax rate and the effective income tax rate for the year ended December 31, 2025 were as follows:
| 2025 | |||||||||||
| Amount | Percent | ||||||||||
| Federal statutory tax expense and rate | $ | 406.6 | 21.0 | % | |||||||
State and local income tax, net of federal income tax effect (1) | 52.3 | 2.7 | |||||||||
| Foreign tax effects: | |||||||||||
| Other foreign jurisdictions | 11.6 | 0.6 | |||||||||
| Effect of cross-border tax laws: | |||||||||||
| Other | 2.0 | 0.1 | |||||||||
| Tax credits: | |||||||||||
| R&D tax credits | (32.0) | (1.7) | |||||||||
| Other credits | (6.9) | (0.4) | |||||||||
| Nontaxable or nondeductible items: | |||||||||||
| Stock-based compensation | (14.8) | (0.8) | |||||||||
| Legal entity restructuring | (25.8) | (1.3) | |||||||||
| Other | 10.4 | 0.6 | |||||||||
| Changes in unrecognized tax benefits | (3.6) | (0.2) | |||||||||
| Income tax expense and effective tax rate | $ | 399.8 | 20.6 | % | |||||||
(1) Taxes in California, Illinois, Massachusetts, Minnesota, New York, Pennsylvania, and Tennessee made up the majority of the tax effect in this category for 2025.
Reconciliations between the U.S. federal statutory income tax rate and the effective income tax rate for the years ended December 31, 2024 and 2023 were as follows:
| 2024 | 2023 | ||||||||||
| Federal statutory tax rate | 21.0 | % | 21.0 | % | |||||||
| Foreign operations, net | 0.6 | 0.5 | |||||||||
| R&D tax credits | (2.0) | (1.9) | |||||||||
| State taxes, net of federal benefit | 3.6 | 3.5 | |||||||||
| Stock-based compensation | (1.0) | (1.5) | |||||||||
| Changes in valuation allowances | (1.4) | (0.4) | |||||||||
| Other, net | 0.4 | 0.3 | |||||||||
| Effective tax rate | 21.2 | % | 21.5 | % | |||||||
The amount of cash income taxes paid (net of refunds received), disaggregated by individual jurisdiction in which income taxes paid (net of refunds received) was greater than or equal to 5% of total income taxes paid (net of refunds received), during the year ended December 31, 2025 was as follows:
| 2025 | |||||
Federal (1) | $ | 238.1 | |||
| State | 92.4 | ||||
| Foreign: | |||||
| Canada | 39.3 | ||||
| Other | 44.4 | ||||
| Total cash income taxes paid | $ | 414.2 | |||
(1) Includes $45.7 of cash paid for transferable tax credits purchased during the year ended December 31, 2025.
Total cash income taxes paid (net of refunds received) during the years ended December 31, 2024 and 2023 was $483.8 and $455.9, respectively.
The deferred income tax balance sheet accounts arise from temporary differences between the amounts of assets and liabilities recognized for financial reporting and tax purposes.
Components of deferred tax assets and liabilities at December 31 were as follows:
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Reserves and accrued expenses | $ | 250.4 | $ | 243.6 | |||||||
| Net operating loss carryforwards | 104.5 | 94.6 | |||||||||
| R&D credits | 17.1 | 12.6 | |||||||||
| Capitalized R&D expenditures | 165.5 | 271.1 | |||||||||
| Interest expense limitation carryforwards | 49.3 | 49.3 | |||||||||
| Lease liabilities | 53.5 | 50.8 | |||||||||
| Valuation allowances | (10.9) | (8.9) | |||||||||
| Total deferred tax assets | $ | 629.4 | $ | 713.1 | |||||||
| Deferred tax liabilities: | |||||||||||
| Reserves and accrued expenses | $ | 10.4 | $ | 13.1 | |||||||
| Amortizable intangible assets | 2,109.3 | 1,985.2 | |||||||||
| Plant and equipment | 14.7 | 11.8 | |||||||||
| Accrued tax on unremitted foreign earnings | 12.6 | 9.7 | |||||||||
| Right-of-use assets | 50.7 | 48.7 | |||||||||
| Outside basis difference in Indicor | 241.5 | 221.1 | |||||||||
| Total deferred tax liabilities | $ | 2,439.2 | $ | 2,289.6 | |||||||
As of December 31, 2025, the Company has $57.8 of tax-effected U.S. federal net operating loss carryforwards and $49.8 of tax-effected state net operating loss carryforwards without regard for federal benefit of state. The majority of the net operating loss carryforwards are subject to limitation under the Internal Revenue Code of 1986, as amended (“IRC”) Section 382. As of December 31, 2025, the Company has $7.3 of tax-effected foreign net operating loss carryforwards, certain of which are subject to limitation. Additionally, as of December 31, 2025, the Company has $49.3 of IRC Section 163(j) interest expense limitation carryforwards which have an indefinite carryforward period.
On July 4, 2025, the OBBBA was enacted, which introduced tax reform provisions, including the repeal of the requirement to capitalize and amortize domestic R&D expenditures as previously required under IRC Section 174. The legislation includes multiple effective dates and the Company has recognized the financial effects of the OBBBA provisions to the extent they are applicable through the year ended December 31, 2025.
As of December 31, 2025, the Company has a $165.5 deferred tax asset related to R&D expenditures capitalized under the IRC. The Company amortizes foreign R&D costs for tax purposes over 15 years for R&D performed outside of the U.S.
The Company has a deferred tax liability of $241.5 in outside basis difference as of December 31, 2025 associated with the retained minority equity interest in Indicor. See Note 9 for additional information on this minority equity interest.
As of December 31, 2025, the Company determined that total valuation allowances of $10.9 were necessary to reduce U.S. federal and state deferred tax assets by $7.2 and foreign deferred tax assets by $3.7, where it was more likely than not that all such deferred tax assets will not be realized. As of December 31, 2025, the Company believes it is more likely than not that the remaining net deferred tax assets will be realized based on the Company’s estimate of future taxable income and any applicable tax planning strategies within various tax jurisdictions.
The Company recognizes in the Consolidated Financial Statements only those tax positions determined to be “more likely than not” of being sustained upon examination based on the technical merits of the positions.
Reconciliations of the beginning and ending amounts of unrecognized tax benefits are as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| Beginning balances | $ | 27.9 | $ | 35.6 | $ | 29.0 | |||||||||||
| Additions for tax positions of prior periods | 3.6 | 1.2 | 4.3 | ||||||||||||||
| Additions for tax positions of the current period | 0.7 | 0.9 | 4.3 | ||||||||||||||
| Reductions for tax positions of prior periods | — | (3.5) | — | ||||||||||||||
| Reductions attributable to lapses of applicable statutes of limitations | (7.8) | (5.1) | (2.0) | ||||||||||||||
| Reductions attributable to settlements with taxing authorities | — | (1.2) | — | ||||||||||||||
| Ending balances | $ | 24.4 | $ | 27.9 | $ | 35.6 | |||||||||||
As of December 31, 2025, the total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate is $24.4. Interest and penalties related to unrecognized tax benefits were $0.7 in 2025 and are classified as a component of income tax expense. Accrued interest and penalties were $8.5 at December 31, 2025 and $7.8 at December 31, 2024. During the next twelve months, it is reasonably possible that the unrecognized tax benefits may decrease by a net amount of $6.0, mainly due to anticipated statute of limitations lapses in various jurisdictions.
The Company and its subsidiaries are subject to examinations for U.S. federal income tax as well as income tax in various state, city, and foreign jurisdictions. The Company’s federal income tax returns for 2022 through the current period remain open to examination and the relevant state, city, and foreign statutes vary. The Company does not expect the assessment of any significant additional tax in excess of amounts reserved.
The Company intends to distribute substantially all historical unremitted foreign earnings up to the amount of excess foreign cash, as well as substantially all future foreign earnings that can be repatriated without incremental U.S. federal tax cost. Any remaining outside basis differences relating to the Company’s investment in foreign subsidiaries are not expected to be material and are expected to be reinvested indefinitely.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 24, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Feb 22, 2022 | |
| 2020 | Feb 22, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Feb 25, 2019 | |
| 2017 | Feb 23, 2018 | |
| 2016 | Feb 27, 2017 | |
| 2015 | Feb 26, 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.