EchoStar CORP Income Taxes Disclosure

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11.Income Taxes and Accounting for Uncertainty in Income Taxes

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Income Taxes

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Our income tax policy is to record the estimated future tax effects of temporary differences between the tax bases of assets and liabilities and amounts reported on our Consolidated Balance Sheets, as well as net operating loss, tax credit and other carryforwards. We periodically evaluate our need for a valuation allowance. Determining necessary valuation allowances requires us to make assessments about historical financial information as well as the timing of future events, including the probability of expected future taxable income and available tax planning opportunities.

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We file consolidated tax returns in the United States. The income taxes of domestic and foreign subsidiaries not included in the United States tax group are presented in our consolidated financial statements on a separate return basis for each tax paying entity.

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In December 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires entities to provide additional information in the income tax rate reconciliation and additional disclosures about income taxes paid. The new accounting guidance requires entities to disclose in their rate reconciliation table additional categories of information about federal, state and foreign income taxes and to provide more details about the reconciling items in some categories if the items meet a quantitative threshold. We adopted this accounting guidance on December 31, 2025, and applied it prospectively in our consolidated financial statements.

On July 4, 2025, the One Big Beautiful Bill Act (the "OBBBA") was enacted into law in the United States. The OBBBA includes changes to certain U.S. federal income tax provisions, including the restoration of 100% bonus depreciation on certain assets and modifications to the limitation on business interest expense and the treatment of research and experimental expenditures. We evaluated the impact of the OBBBA in accordance with ASC 740, Income Taxes. The enactment did not have a material impact on our income tax expense, effective tax rate, or cash taxes for the year ended December 31, 2025, and we do not expect the OBBBA to result in a material rate benefit in future periods.

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However, certain provisions of the OBBBA resulted in additional deductible interest expense and changes to the amortization of research and experimental expenditures, which increased our U.S. federal net operating loss carryforwards as of December 31, 2025. The related deferred tax effects have been reflected in our consolidated financial statements. 

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As of December 31, 2025, we had $1.184 billion net operating loss carryforwards (“NOLs”) for federal income tax purposes, $491 million of NOL carryforwards for state income tax purposes and $236 million of foreign NOL carryfowards which are partially offset by a valuation allowance. In addition, there are $414 million of tax benefits related to credit carryforwards which are partially offset by a valuation allowance. Portions of the state NOL and credit carryforwards expired in 2025. All of our federal net operating loss carryforwards of $1.184 billion may be carried forward indefinitely. Certain state and foreign NOL carryforwards are subject to expiration at various dates beginning in 2026.

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The components of the (benefit from) provision for income taxes were as follows:

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As previously described above, we have elected to prospectively adopt the guidance in ASU 2023-09. The following table is a reconciliation of the U.S. federal statutory rate of 21% to our effective rate for the year ended December 31, 2025 in accordance with the guidance in ASU No. 2023-09:

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The state and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category include California, Illinois, Michigan, New York, Alabama, Georgia, Louisiana, Maryland, and Pennsylvania.

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The following table is a reconciliation of the U.S. federal statutory rate of 21% to our effective rate for years prior to the adoption of ASU 2023-09:

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Significant components of deferred tax assets and liabilities were as follows:

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As of December 31, 2025, we had undistributed earnings attributable to foreign subsidiaries for which no provision for U.S. income taxes or foreign withholding taxes has been made because it is expected that such earnings will be reinvested outside the U.S. indefinitely. It is not practicable to determine the amount of the unrecognized deferred tax liability at this time.

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The components of total cash paid for income taxes, net of (refunds) were as follows:

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Accounting for Uncertainty in Income Taxes

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In addition to filing federal income tax returns, we and one or more of our subsidiaries file income tax returns in all states that impose an income tax. We are subject to United States federal, state and local income tax examinations by tax authorities for the years as early as tax year 2008. We are currently under a federal income tax examination for years 2008 through 2011, 2013 through 2016 and 2021 through 2022. We also file income tax returns in the United Kingdom, Germany, Brazil, India and a number of other foreign jurisdictions. We generally are open to income tax examination in these foreign jurisdictions for taxable years beginning in 2004.

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A reconciliation of the beginning and ending amount of unrecognized tax benefits included in “Long-term deferred revenue and other long-term liabilities” on our Consolidated Balance Sheets was as follows:

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We have $833 million in unrecognized tax benefits that, if recognized, could favorably affect our effective tax rate. Accrued interest and penalties on uncertain tax positions are recorded as a component of “Interest expense, net of amounts capitalized” and “Other, net,” respectively, on our Consolidated Statements of Operations and Comprehensive Income (Loss). During the years ended December 31, 2025, 2024 and 2023, we recorded $47 million, $52 million and $39 million in net interest and penalty expense to earnings, respectively. Accrued interest and penalties were $263 million and $216 million at December 31, 2025 and 2024, respectively. The above table excludes these amounts.