SPX Technologies, Inc.SPXC
SPX Technologies, Inc. Income Taxes Disclosure
Income Taxes
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Income from continuing operations before income taxes and the (provision for)/benefit from income taxes consisted of the following:
| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Income from continuing operations: | |||||||||||||||||
| United States | $ | 205.1 | $ | 172.2 | $ | 118.0 | |||||||||||
| Foreign | 109.0 | 83.2 | 68.3 | ||||||||||||||
| $ | 314.1 | $ | 255.4 | $ | 186.3 | ||||||||||||
| Provision for income taxes: | |||||||||||||||||
| Current: | |||||||||||||||||
| United States | $ | (16.9) | $ | (47.5) | $ | (51.1) | |||||||||||
| Foreign | (25.6) | (21.2) | (15.7) | ||||||||||||||
| Total current | (42.5) | (68.7) | (66.8) | ||||||||||||||
| Deferred and other: | |||||||||||||||||
| United States | (32.0) | 7.1 | 21.3 | ||||||||||||||
| Foreign | 5.9 | 8.0 | 3.9 | ||||||||||||||
| Total deferred and other | (26.1) | 15.1 | 25.2 | ||||||||||||||
| Total provision | $ | (68.6) | $ | (53.6) | $ | (41.6) | |||||||||||
The reconciliation of income tax computed at the U.S. federal statutory tax rate to our effective income tax rate after the adoption of ASU 2023-09 is as follows:
| Year ended December 31, | |||||||||||
| 2025 | |||||||||||
| Amount | Percent | ||||||||||
| Tax at U.S. federal statutory rate | $ | 66.0 | 21.0 | % | |||||||
State and local income taxes (1) | 8.1 | 2.6 | % | ||||||||
| Foreign tax effects | |||||||||||
| U.K. patent box regime | (4.0) | (1.3) | % | ||||||||
| Other | 2.4 | 0.8 | % | ||||||||
| Effects of cross border tax laws | 5.5 | 1.7 | % | ||||||||
| Tax credits | |||||||||||
| R&D tax credits | (4.2) | (1.3) | % | ||||||||
| Nontaxable and nondeductible items | |||||||||||
| Share-based compensation | (7.5) | (2.4) | % | ||||||||
| Other | 2.1 | 0.7 | % | ||||||||
| Unrecognized tax benefits | 0.9 | 0.3 | % | ||||||||
| Other adjustments | (0.7) | (0.3) | % | ||||||||
| Tax expense | $ | 68.6 | 21.8 | % | |||||||
(1) The jurisdictions that contribute to the majority (greater than 50%) of the state and local tax expense include California, Florida, Maryland, New Jersey, Tennessee, and Wisconsin.
The reconciliation of income tax computed at the U.S. federal statutory tax rate to our effective income tax rate prior to the adoption of ASU 2023-09 is as follows:
| Year ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Tax at U.S. federal statutory rate | 21.0 | % | 21.0 | % | |||||||
| State and local taxes, net of U.S. federal benefit | 3.6 | % | 3.5 | % | |||||||
| U.S. credits and exemptions | (1.9) | % | (2.1) | % | |||||||
| Foreign earnings/losses taxed at different rates | 1.4 | % | 0.6 | % | |||||||
| Nondeductible expenses | 1.2 | % | 2.0 | % | |||||||
| Adjustments to uncertain tax positions | 0.4 | % | (0.6) | % | |||||||
| Changes in valuation allowance | (0.4) | % | (1.0) | % | |||||||
| Share-based compensation | (4.3) | % | (1.0) | % | |||||||
| Other | — | % | (0.1) | % | |||||||
| 21.0 | % | 22.3 | % | ||||||||
The amounts of cash income taxes paid by the Company were as follows:
| Year ended December 31, | |||||
| 2025 | |||||
| Federal | $ | 26.8 | |||
| State and local | 6.6 | ||||
| Foreign | |||||
| Canada | 8.1 | ||||
| China | 4.8 | ||||
| Other | 11.0 | ||||
| Income taxes, net of amounts refunded | $ | 57.3 | |||
Significant components of our deferred tax assets and liabilities were as follows:
| As of December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| NOL and credit carryforwards | $ | 90.9 | $ | 84.6 | |||||||
| Pension, other postretirement and postemployment benefits | 24.1 | 25.9 | |||||||||
| Payroll and compensation | 18.8 | 18.0 | |||||||||
| Legal, environmental and self-insurance accruals | 13.3 | 11.8 | |||||||||
| Working capital accruals | 29.2 | 27.0 | |||||||||
| Research and experimental expenditures | 3.8 | 35.9 | |||||||||
| Other | 5.9 | 5.6 | |||||||||
| Total deferred tax assets | 186.0 | 208.8 | |||||||||
| Valuation allowance | (86.7) | (77.0) | |||||||||
| Net deferred tax assets | 99.3 | 131.8 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Intangible assets recorded in acquisitions | 172.5 | 171.8 | |||||||||
| Basis difference in affiliates | 30.9 | 15.9 | |||||||||
| Accelerated depreciation | 32.4 | 30.0 | |||||||||
| Other | 3.8 | 4.4 | |||||||||
| Total deferred tax liabilities | 239.6 | 222.1 | |||||||||
| $ | (140.3) | $ | (90.3) | ||||||||
General Matters
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. We periodically assess deferred tax assets to determine if they are likely to be realized and the adequacy of deferred tax liabilities, incorporating the results of local, state, federal and foreign tax audits into our estimates and judgments.
At December 31, 2025, we had $10.5 of federal, $130.6 of state, and $240.7 of foreign tax loss carryforwards available. We also had federal, state, and foreign tax credit carryforwards of $11.6. Of these amounts, $1.2 expire in 2026 and $136.5 expire at various times between 2027 and 2043. The remaining carryforwards have no expiration date.
Realization of deferred tax assets, including those associated with net operating loss and credit carryforwards, is dependent upon generating sufficient taxable income in the appropriate tax jurisdiction. We believe that it is more likely than not that we may not realize the benefit of certain of these deferred tax assets and, accordingly, have established a valuation allowance against these deferred tax assets. Although realization is not assured for the remaining deferred tax assets, we believe it is more likely than not that the deferred tax assets will be realized through future taxable earnings or tax planning strategies. However, deferred tax assets could be reduced in the near term if our estimates of taxable income are significantly reduced or tax planning strategies are no longer viable. Our valuation allowance increased by $9.7 in 2025 and increased by $1.8 in 2024. The 2025 increase was primarily driven by foreign currency fluctuations and the impact of the One Big Beautiful Bill Act (“the Act”) on our ability to utilize our foreign tax credit carryforwards in the future.
The amount of income tax that we pay annually is dependent on various factors, including the timing of certain deductions. These deductions can vary from year-to-year, and, consequently, the amount of income taxes paid in future years will vary from the amounts paid in prior years.
Undistributed Foreign Earnings
In general, it is our practice and intention to reinvest the earnings of our non-U.S. subsidiaries in those operations. We believe future domestic cash generation will be sufficient to meet future domestic cash needs. For this reason, we have not recorded a provision for U.S. or foreign withholding taxes on the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that are essentially permanent in duration. Generally, such amounts may become subject to U.S. taxation upon the remittance of dividends and under certain other circumstances. It is not practicable to estimate the amount of a deferred tax liability related to the undistributed earnings of our foreign subsidiaries in the event these earnings are no longer considered to be indefinitely reinvested, due to the hypothetical nature of the calculation.
Unrecognized Tax Benefits
As of December 31, 2025, we had gross and net unrecognized tax benefits of $5.4 and $5.2, respectively. All of these net unrecognized tax benefits would impact our effective tax rate from continuing operations if recognized. Similarly, at December 31, 2024 and 2023, we had gross unrecognized tax benefits of $3.7 (net unrecognized tax benefits of $3.1) and $2.2 (net unrecognized tax benefits of $2.2), respectively.
We classify interest and penalties related to unrecognized tax benefits as a component of our income tax provision/benefit. As of December 31, 2025, gross interest totaled $1.9 (net accrued interest of $1.8), while the related amounts as of December 31, 2024 and 2023 were gross and net accrued interest of $1.4 and $1.3, respectively. Our income tax provision for the years ended December 31, 2025, 2024, and 2023 included gross interest income (expense) of $(0.3), $0.1, and $0.2, respectively, resulting from adjustments to our liability for uncertain tax positions. As of December 31, 2025, 2024, and 2023, we had no accrual for penalties included in our unrecognized tax benefits.
The aggregate changes in the balance of unrecognized tax benefits for the years ended December 31, 2025, 2024, and 2023 were as follows:
| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Unrecognized tax benefit — opening balance | $ | 3.7 | $ | 2.2 | $ | 4.5 | |||||||||||
| Gross increases — tax positions in prior period | 1.8 | 1.4 | — | ||||||||||||||
| Gross decreases — tax positions in prior period | — | — | (1.1) | ||||||||||||||
| Gross increases — tax positions in current period | 0.1 | 0.5 | 0.1 | ||||||||||||||
| Settlements | — | — | (1.0) | ||||||||||||||
| Statute expirations | (0.2) | (0.4) | (0.3) | ||||||||||||||
| Change due to foreign currency exchange rates | — | — | — | ||||||||||||||
| Unrecognized tax benefit — ending balance | $ | 5.4 | $ | 3.7 | $ | 2.2 | |||||||||||
Recent Tax Legislation
On July 4, 2025, the Act was signed into law in the United States and contains a broad range of tax provisions affecting businesses. The Act has several provisions which reduced our taxes paid in 2025 by approximately $15.0. We have included the impact of the Act in our consolidated balance sheet at December 31, 2025. The legislation did not have a material impact on our results of operations.
In December 2021, the Organisation for Economic Co-operation and Development (the “OECD”) issued model rules for a new global minimum tax framework (“Pillar Two”), and various governments around the world have issued, or are in the process of issuing, legislation to implement these rules. We are within the scope of the Pillar Two model rules and continue to assess the impact thereof. As of December 31, 2025 and 2024, we had $2.0 and $1.8, respectively, accrued related to these taxes.
Other Tax Matters
During 2025, our income tax provision was impacted most significantly by (i) $9.3 of excess tax benefits associated with stock-based compensation awards that vested and/or were exercised during the period and (ii) $1.4 of tax benefits resulting from increased federal tax credits and incentives.
During 2024, our income tax provision was impacted most significantly by (i) $11.0 of excess tax benefits associated with stock-based compensation awards that vested and/or were exercised during the period and (ii) $0.7 of tax benefits related to changes in our estimate of valuation allowances recognized against certain deferred tax assets, as we now expect to realize these deferred tax assets.
During 2023, our income tax provision was impacted most significantly by (i) $2.3 of tax benefits related to changes in our estimate of valuation allowances recognized against certain deferred tax assets as we now expect to realize these deferred tax assets, (ii) $1.8 of excess tax benefits associated with stock-based compensation awards that vested and/or were exercised during the period, and (iii) $1.1 of tax benefits related to revisions to liabilities for uncertain tax positions.
We perform reviews of our income tax positions on a continuous basis and accrue for potential uncertain positions when we determine that a tax position meets the criteria of the Income Taxes Topic of the Codification. Accruals for these uncertain tax positions are recorded in “Income taxes payable” and “Deferred and other income taxes” in the accompanying consolidated balance sheets based on the expectation as to the timing of when the matters will be resolved. As events change and resolutions occur, these accruals are adjusted, such as in the case of audit settlements with taxing authorities.
U.S. Federal income tax returns are subject to examination for a period of three years after filing the return. We are not currently under examination by the Internal Revenue Service and believe any contingencies in open years are adequately provided for.
State income tax returns generally are subject to examination for a period of three to five years after filing the respective tax returns. The impact on such tax returns of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states. We regularly have various state income tax returns in the process of examination. We believe any uncertain tax positions related to these examinations have been adequately provided for.
We regularly have various foreign income tax returns under examination. We believe that any uncertain tax positions related to these examinations have been adequately provided for.
An unfavorable resolution of one or more of the above matters could have a material adverse effect on our results of operations or cash flows in the period in which an adjustment is recorded or the tax is due or paid. As audits and examinations are still in process, the timing of the ultimate resolution, and any payments that may be required, for the above matters cannot be determined at this time.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 14, 2020 | |
| 2018 | Feb 15, 2019 | |
| 2017 | Feb 21, 2018 | |
| 2016 | Feb 24, 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.