Simpson Manufacturing Co., Inc.SSD
Simpson Manufacturing Co., Inc. Income Taxes Disclosure
Income Taxes
The provision for income taxes from operations consisted of the following:
| Years Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Current | |||||||||||||||||
| Federal | $ | 65,387 | $ | 75,783 | $ | 89,954 | |||||||||||
| State | 21,820 | 22,418 | 24,323 | ||||||||||||||
| Foreign | 18,446 | 17,855 | 15,824 | ||||||||||||||
| Deferred | — | — | |||||||||||||||
| Federal | 15,813 | (787) | (6,466) | ||||||||||||||
| State | 1,999 | 690 | (860) | ||||||||||||||
| Foreign | (6,075) | (4,140) | (215) | ||||||||||||||
| $ | 117,390 | $ | 111,819 | $ | 122,560 | ||||||||||||
Income from operations before income taxes for the years ended December 31, 2025, 2024, and 2023, respectively, consisted of the following:
| Years Ended December 31, | |||||||||||||||||
(in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Domestic | $ | 418,154 | $ | 395,777 | $ | 427,296 | |||||||||||
| Foreign | 44,319 | 38,266 | 49,251 | ||||||||||||||
| $ | 462,473 | $ | 434,043 | $ | 476,547 | ||||||||||||
The Company adopted ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” on a prospective basis beginning with the year ended December 31, 2025. The following table presents required disclosure pursuant to ASU 2023-09 and reconciles the US federal statutory tax amount and rate to our actual global effective amount and rate for the year ended December 31, 2025.
| Year Ended December 31, 2025 | |||||||||||
| (in thousands) | Amount | Percentages | |||||||||
| U.S. Federal tax at statutory rate | $ | 97,120 | 21.0 | % | |||||||
State and local income taxes, net of federal effect (1) | 18,330 | 4.0 | % | ||||||||
| Foreign Tax Effects | 3,823 | 0.8 | % | ||||||||
| Effect of cross-border tax laws | (597) | (0.1) | % | ||||||||
| Tax Credits | (1,399) | (0.3) | % | ||||||||
| Change in valuation allowance | (6) | 0.0 | % | ||||||||
| Nontaxable or Nondeductible items | 924 | 0.2 | % | ||||||||
| Changes in unrecognized tax benefits | (161) | 0.0 | % | ||||||||
| Other | (644) | (0.1) | % | ||||||||
| Effective income tax rate | $ | 117,390 | 25.4 | % | |||||||
(1)State and local taxes in California, Florida, Georgia, Massachusetts, New York, Oregon, and Pennsylvania made up greater than 50% of the tax effect in this category.
A reconciliation between the statutory federal income tax rate and the Company’s effective income tax rate as a percentage of income before income taxes prior to the adoption of ASU 2023-09 is as follows:
| Years Ended December 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Federal tax rate | 21.0 | % | 21.0 | % | ||||||||||
| State taxes, net of federal benefit | 4.1 | % | 3.8 | % | ||||||||||
| Change in U.S. tax rate applied to deferred taxes | 0.1 | % | 0.6 | % | ||||||||||
| Change in valuation allowance | 0.5 | % | — | % | ||||||||||
| True-up of prior year tax returns to tax provision | — | % | (0.1) | % | ||||||||||
| Difference between U.S. statutory and foreign local tax rates | 0.4 | % | 0.4 | % | ||||||||||
| Change in uncertain tax position | — | % | (0.6) | % | ||||||||||
| Other | (0.3) | % | 0.6 | % | ||||||||||
| Effective income tax rate | 25.8 | % | 25.7 | % | ||||||||||
The tax effects of the significant temporary differences that constitute the deferred tax assets and liabilities as of December 31, 2025, and 2024, respectively, were as follows:
| As of December 31, | |||||||||||
(in thousands) | 2025 | 2024 | |||||||||
| Deferred asset taxes | |||||||||||
| State tax | $ | 1,349 | $ | 1,388 | |||||||
| Health claims | 1,783 | 1,910 | |||||||||
| Inventories | 9,426 | 8,766 | |||||||||
| Sales incentive and advertising allowances | 1,292 | 1,751 | |||||||||
| Lease obligations | 29,191 | 23,493 | |||||||||
| Stock-based compensation | 5,371 | 4,235 | |||||||||
| Foreign tax credit carryforwards | 3,885 | 3,782 | |||||||||
| Non-United States tax loss carry forward | 9,165 | 8,128 | |||||||||
| Acquisition expense | 765 | 1,315 | |||||||||
| Capitalized research & development expenditures | 7,445 | 11,627 | |||||||||
| Hedging OCI | 10,840 | — | |||||||||
| Other | 5,543 | 6,282 | |||||||||
| Total deferred tax assets | 86,055 | 72,677 | |||||||||
| Less valuation allowances | (14,320) | (12,727) | |||||||||
| Total deferred asset taxes | 71,735 | 59,950 | |||||||||
| Deferred tax liabilities | |||||||||||
| Depreciation | (38,621) | (26,886) | |||||||||
| Goodwill and other intangibles amortization | (102,855) | (96,779) | |||||||||
| Right of use assets | (28,717) | (23,075) | |||||||||
| Hedging OCI | — | (2,190) | |||||||||
| Total deferred tax liabilities | (170,193) | (148,930) | |||||||||
| Total deferred tax asset/(liability) | $ | (98,458) | $ | (88,980) | |||||||
As of December 31, 2025, the Company had $51.9 million of net operating loss carryforwards in various foreign taxing jurisdictions. Most of the tax losses can be carried forward indefinitely.
As of December 31, 2025, and 2024, the Company has valuation allowances of $14.3 million and $12.7 million, respectively. The valuation allowances increased by $1.6 million and $2.3 million for the years ended December 31, 2025 and December 31, 2024, respectively. The increase in the 2025 and 2024 valuation allowances was primarily due to the increase in net operating losses in Europe.
As of December 31, 2025, the Company asserts that its accumulated undistributed earnings generated by the Company’s foreign subsidiaries are permanently reinvested and as such, has not recognized a US deferred tax liability on its investment in foreign subsidiaries. The Company will continue to assess its permanent reinvestment assertion on a quarterly basis.
Income taxes paid, net of refunds, during the periods presented were as follows (in thousands):
| 2025 | |||||
| Federal | $ | 75,400 | |||
| California | 7,249 | ||||
| Other States | 12,146 | ||||
| France | 5,664 | ||||
| Other Foreign | 12,136 | ||||
| Total income taxes paid, net of refunds | $ | 112,595 | |||
A reconciliation of the beginning and ending amounts of unrecognized tax benefits in 2025, 2024 and 2023, respectively, were as follows, including foreign translation amounts:
Reconciliation of Unrecognized Tax Benefits (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Balance as of January 1 | $ | 4,667 | $ | 4,641 | $ | 7,232 | |||||||||||
| Additions based on tax positions related to prior years | 458 | 585 | 39 | ||||||||||||||
| Reductions based on tax positions related to prior years | — | (49) | (103) | ||||||||||||||
| Additions for tax positions of the current year | 657 | 647 | 463 | ||||||||||||||
| Lapse of statute of limitations | (1,272) | (1,157) | (2,990) | ||||||||||||||
| Balance as of December 31 | $ | 4,510 | $ | 4,667 | $ | 4,641 | |||||||||||
During 2025, the Company’s uncertain tax positions decreased by $1.3 million, primarily due to positions for open years assumed in a prior acquisition. Tax positions of $1.1 million, $1.5 million, and $2.0 million are included in the balance of unrecognized tax benefits as of December 31, 2025, 2024, and 2023, respectively, which if recognized, would reduce our effective tax rate.
The Company accrues interest and penalties related to unrecognized tax benefits in income tax expense in accordance with the Company’s accounting policy. The Company accrued $1.9 million, $1.4 million and $0.7 million as of December 31, 2025, 2024 and 2023, respectively for the potential payment of interest and penalties before income tax benefits.
As of December 31, 2025, the Company is subject to federal income tax examinations in the U.S. for the tax years 2022 through 2025. In addition, tax years 2020 through 2025 remain open in various states, local and foreign jurisdictions.
On August 16, 2022, the IRA was signed into the law. The provisions included a new CAMT, an excise tax on stock buybacks, and significant tax incentives for energy and climate initiatives, all effective for tax year 2023 and onwards. The Company is not subject to the provisions of CAMT and does not expect the impact of the remaining provisions to be material.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the 2021 Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. Key provisions include modifications to depreciation allowances and the treatment of research and development expenditures. The legislation has multiple effective dates, with certain provisions effective for the 2025 tax year and others being implemented through 2027.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Feb 28, 2024 | |
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.