STANLEY BLACK & DECKER, INC.SWK
STANLEY BLACK & DECKER, INC. Income Taxes Disclosure
INCOME TAXES
The components of earnings (loss) from continuing operations before income taxes consisted of the following:
| (Millions of Dollars) | 2025 | 2024 | 2023 | ||||||||||||||
| United States | $ | (597.2) | $ | (925.4) | $ | (1,385.0) | |||||||||||
| Foreign | 1,015.1 | 1,166.5 | 1,009.3 | ||||||||||||||
| Earnings (loss) from continuing operations before income taxes | $ | 417.9 | $ | 241.1 | $ | (375.7) | |||||||||||
Income taxes on continuing operations consisted of the following:
| (Millions of Dollars) | 2025 | 2024 | 2023 | ||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | (154.5) | $ | 4.3 | $ | 5.8 | |||||||||||
| Foreign | 233.4 | 174.9 | 307.4 | ||||||||||||||
| State | 1.5 | 2.8 | 17.1 | ||||||||||||||
| Total current | $ | 80.4 | $ | 182.0 | $ | 330.3 | |||||||||||
| Deferred: | |||||||||||||||||
| Federal | $ | (126.0) | $ | (181.5) | $ | (158.2) | |||||||||||
| Foreign | 78.6 | (17.5) | (218.3) | ||||||||||||||
| State | (17.0) | (28.2) | (47.8) | ||||||||||||||
| Total deferred | $ | (64.4) | $ | (227.2) | $ | (424.3) | |||||||||||
| Income taxes on continuing operations | $ | 16.0 | $ | (45.2) | $ | (94.0) | |||||||||||
The amount of income taxes paid (net of refunds) consisted of the following:
| (Millions of Dollars) | 2025 | ||||
| Federal | $ | 113.3 | |||
| State | 10.4 | ||||
| Foreign | 206.4 | ||||
| Total net income taxes paid | $ | 330.1 | |||
Income taxes paid (net of refunds) for the following jurisdictions exceeded five percent of total income taxes paid (net of refunds):
| (Millions of Dollars) | 2025 | ||||
| Foreign: | |||||
| China | $ | 27.9 | |||
| Mexico | 27.4 | ||||
| Canada | 17.3 | ||||
Net income taxes paid for continuing operations during 2024 and 2023 were $352.3 million and $415.2 million, respectively. The 2024 and 2023 amounts include refunds of $53.1 million and $25.3 million, respectively.
The reconciliation of the U.S. federal statutory income tax provision to Income taxes on continuing operations in the Consolidated Statements of Operations is as follows:
| 2025 | |||||||||||
| (Millions of Dollars) | Amount | Percent | |||||||||
| U.S. federal statutory tax rate | $ | 87.8 | 21.0 | % | |||||||
| State and local income taxes, net of federal income tax effect (a) | (11.1) | (2.7) | % | ||||||||
| Foreign tax effects | 50.2 | 12.0 | % | ||||||||
| China | |||||||||||
| Withholding taxes | 26.8 | 6.4 | % | ||||||||
| Other | 3.5 | 0.8 | % | ||||||||
| Cyprus | |||||||||||
| Tax base differential | (23.1) | (5.5) | % | ||||||||
| Other | (4.1) | (1.0) | % | ||||||||
| Germany | |||||||||||
| Enacted changes in tax laws or rates | 13.2 | 3.2 | % | ||||||||
| Other | 3.5 | 0.8 | % | ||||||||
| Mexico | |||||||||||
| Changes in valuation allowances | 15.3 | 3.7 | % | ||||||||
| Other | 6.4 | 1.5 | % | ||||||||
| Other foreign jurisdictions | 8.7 | 2.1 | % | ||||||||
| Effect of cross-border tax laws | 55.1 | 13.2 | % | ||||||||
| Deemed royalty income | 18.1 | 4.3 | % | ||||||||
| Global intangible low-taxed income | 17.1 | 4.1 | % | ||||||||
| Subpart F income | 16.1 | 3.9 | % | ||||||||
| Other | 3.8 | 0.9 | % | ||||||||
| Tax credits | (10.9) | (2.6) | % | ||||||||
| Nontaxable or nondeductible items | 38.7 | 9.3 | % | ||||||||
| Share-based payment awards | 11.8 | 2.8 | % | ||||||||
| Other | 26.9 | 6.4 | % | ||||||||
| Changes in unrecognized tax benefits | (101.1) | (24.2) | % | ||||||||
| Other adjustments | (92.7) | (22.2) | % | ||||||||
| Capital loss | (107.9) | (25.8) | % | ||||||||
| Other | 15.2 | 3.6 | % | ||||||||
| Effective tax rate | $ | 16.0 | 3.8 | % | |||||||
(a) State taxes in Illinois, Texas, Georgia, Indiana, Minnesota, and California made up the majority (greater than 50 percent) of the tax effect in this category.
| (Millions of Dollars) | 2024 | 2023 | ||||||||||||
| Tax at statutory rate | $ | 50.6 | $ | (78.9) | ||||||||||
| State income taxes, net of federal benefits | (21.2) | (23.6) | ||||||||||||
| Foreign tax rate differential | (0.9) | (48.0) | ||||||||||||
| Uncertain tax benefits | (8.6) | 30.5 | ||||||||||||
| Change in valuation allowance | (28.1) | 33.5 | ||||||||||||
| Change in deferred tax liabilities on undistributed foreign earnings | 1.2 | — | ||||||||||||
| Stock-based compensation | 8.0 | 8.2 | ||||||||||||
| Change in tax rates | 0.7 | 0.2 | ||||||||||||
| Tax credits | (20.2) | (17.8) | ||||||||||||
| U.S. federal tax expense on foreign earnings | 15.9 | 63.6 | ||||||||||||
| Intra-entity asset transfer of intellectual property | — | (131.3) | ||||||||||||
| Withholding taxes | 13.6 | 38.9 | ||||||||||||
| Impairment on assets held for sale | 4.0 | 30.4 | ||||||||||||
| Capital loss | (64.4) | — | ||||||||||||
| Global minimum taxes | 3.9 | — | ||||||||||||
| Other | 0.3 | 0.3 | ||||||||||||
| Income taxes on continuing operations | $ | (45.2) | $ | (94.0) | ||||||||||
Significant components of the Company’s deferred tax assets and liabilities, excluding 2025 amounts classified as held for sale, at the end of each fiscal year were as follows:
| (Millions of Dollars) | 2025 | 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Employee benefit plans | $ | 120.5 | $ | 137.9 | |||||||
| Basis differences in liabilities | 141.0 | 139.5 | |||||||||
| Operating loss, capital loss and tax credit carryforwards | 989.7 | 983.7 | |||||||||
| Lease liability | 114.2 | 123.3 | |||||||||
| Intangible assets | 711.2 | 636.2 | |||||||||
| Capitalized research and development costs | 155.6 | 205.3 | |||||||||
| Interest expense carryforward | 291.1 | 207.2 | |||||||||
| Inventory | 100.8 | 22.5 | |||||||||
| Other | 157.8 | 151.3 | |||||||||
| Total deferred tax assets | $ | 2,781.9 | $ | 2,606.9 | |||||||
| Less: Valuation allowance | $ | (1,086.0) | $ | (967.8) | |||||||
| Deferred tax asset, net of valuation allowance | $ | 1,695.9 | $ | 1,639.1 | |||||||
| Deferred tax liabilities: | |||||||||||
| Depreciation | $ | 61.2 | $ | 73.9 | |||||||
| Intangible assets | 737.2 | 799.6 | |||||||||
| Liability on undistributed foreign earnings | 36.0 | 11.8 | |||||||||
| Lease right-of-use asset | 110.5 | 118.1 | |||||||||
| Other | 42.9 | 37.4 | |||||||||
| Total deferred tax liabilities | $ | 987.8 | $ | 1,040.8 | |||||||
| Net deferred tax asset | $ | 708.1 | $ | 598.3 | |||||||
A valuation allowance is recorded on certain deferred tax assets if it has been determined it is more likely than not that all or a portion of these assets will not be realized. The Company recorded a valuation allowance of $1,086.0 million and $967.8 million on deferred tax assets existing as of January 3, 2026 and December 28, 2024, respectively. The valuation allowances in 2025 and 2024 are primarily attributable to foreign and state net operating loss carryforwards, certain intangible assets, foreign interest expense carryforwards, foreign tax credits, and state tax credits.
As of January 3, 2026, the Company has provided for deferred taxes of $36.0 million on approximately $1.3 billion of unremitted foreign earnings and profits, which are not indefinitely reinvested. The Company otherwise continues to consider the remaining undistributed earnings of its foreign subsidiaries to be permanently reinvested based on its current plans for use outside of the U.S. and accordingly no taxes have been provided on such earnings. The cash held by the Company’s non-U.S. subsidiaries for indefinite reinvestment is generally used to finance foreign operations and investments. The income taxes applicable to such earnings and other outside basis differences are not readily determinable or practicable to calculate.
As of January 3, 2026, the Company has approximately $1.6 billion and $3.8 billion of net operating loss carryforwards available to reduce future tax obligations in certain U.S. state and foreign jurisdictions, respectively. The Company’s foreign net operating loss carryforwards primarily relate to its subsidiaries’ operations in Luxembourg ($2.3 billion), United Kingdom ($905.1 million), France ($203.5 million), Germany ($126.0 million), Brazil ($78.2 million), and other foreign jurisdictions ($184.4 million). The net operating loss carryforwards have various expiration dates beginning in 2026 with certain jurisdictions having indefinite carryforward periods. The foreign capital loss carryforwards of $20.9 million as of January 3, 2026 have indefinite carryforward periods.
U.S. foreign tax credit carryforward balance as of January 3, 2026 totaled $24.1 million with various expiration dates beginning in 2027. State tax credit carryforward balance as of January 3, 2026 totaled $21.8 million. The carryforward balance is made up of various credit types spanning multiple state taxing jurisdictions and various expiration dates beginning in 2026.
The Company conducts business globally and, as a result, files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course, the Company is subject to examinations by taxing authorities throughout the world. The Internal Revenue Service is currently examining the Company's consolidated U.S. income tax returns for the 2020 through 2022 tax years. With few exceptions, as of January 3, 2026, the Company is no longer subject to U.S. federal, state, local, or foreign examinations by tax authorities for years before 2012.
The Company’s liabilities for unrecognized tax benefits relate to U.S. and various foreign jurisdictions. The following table summarizes the activity related to the unrecognized tax benefits:
| (Millions of Dollars) | 2025 | 2024 | 2023 | ||||||||||||||
| Balance at beginning of year | $ | 452.4 | $ | 481.3 | $ | 502.7 | |||||||||||
| Additions based on tax positions related to current year | 25.0 | 41.4 | 20.9 | ||||||||||||||
| Additions based on tax positions related to prior years | 36.1 | 10.2 | 20.4 | ||||||||||||||
| Reductions based on tax positions related to prior years | (142.8) | (41.6) | (8.2) | ||||||||||||||
| Settlements | (4.4) | (10.2) | (16.2) | ||||||||||||||
| Statute of limitations expirations | (1.0) | (28.7) | (16.8) | ||||||||||||||
| Reclassification to long-term liabilities held for sale | — | — | (21.5) | ||||||||||||||
| Balance at end of year | $ | 365.3 | $ | 452.4 | $ | 481.3 | |||||||||||
The gross unrecognized tax benefits at January 3, 2026 and December 28, 2024 include $360.5 million and $447.1 million, respectively, of tax benefits that, if recognized, would impact the effective tax rate. The liability for potential penalties and interest related to unrecognized tax benefits, excluding 2023 amounts reclassified to liabilities held for sale, decreased by $24.6 million in 2025, increased by $1.0 million in 2024, and increased by $15.5 million in 2023. The liability for potential penalties and interest totaled $40.7 million as of January 3, 2026, $65.3 million as of December 28, 2024, and $64.3 million as of December 30, 2023. The Company classifies all tax-related interest and penalties as income tax expense.
The Company considers many factors when evaluating and estimating its tax positions and the impact on income tax expense, which may require periodic adjustments, and which may not accurately anticipate actual outcomes. It is reasonably possible that the amount of the unrecognized benefit with respect to certain of the Company's unrecognized tax positions will significantly increase or decrease within the next twelve months. However, based on the uncertainties associated with finalizing audits with the relevant tax authorities including formal legal proceedings, it is not possible to reasonably estimate the impact of any such change.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Feb 24, 2026 | Showing above |
| 2024 | Feb 18, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Feb 22, 2022 | |
| 2021 | Feb 18, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 19, 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.