STRYKER CORPSYK
STRYKER CORP Income Taxes Disclosure
INCOME TAXES
On January 1, 2025 we prospectively adopted ASU 2023-09
(Topic 740): Income Taxes: Improvements to Income Tax
Disclosures which expands the existing rules on income tax
disclosures. This update requires entities to disclose specific
categories in the tax rate reconciliation, provide additional
information for reconciling items that meet a quantitative
threshold and disclose additional information about income taxes
paid on an annual basis. In determining the reconciling items we
considered the effect of tax rulings as part of the statutory tax
rate.
Our effective tax rate was 28.1%, 14.3% and 13.8% for 2025,
2024 and 2023. The effective income tax rate for 2025 increased
from 2024 due to the 2025 tax effect of transfers of intellectual
property between tax jurisdictions and the 2024 tax effect of the
sale of the Spinal Implants business. The effective income tax
rate for 2024 increased from 2023 due to the 2023 tax effect of
transfers of intellectual property between tax jurisdictions offset
by the 2024 tax effect of the sale of the Spinal Implants business.
Effective Income Tax Rate Reconciliation | |||
2025 | |||
Amount | Percent | ||
United States federal statutory rate | $948 | 21.0% | |
State and Local Income Taxes, Net of Federal Income Tax Effect(1) | 173 | 3.8 | |
Foreign Tax Effects | |||
Ireland | |||
Statutory tax rate difference | (177) | (3.9) | |
Other | 17 | 0.4 | |
Puerto Rico | |||
Statutory tax rate difference | (49) | (1.1) | |
Withholding Tax | 60 | 1.3 | |
Expiration of credits carryforward | 78 | 1.7 | |
Change in valuation allowance | (78) | (1.7) | |
Other | (4) | (0.1) | |
Other foreign jurisdictions | 20 | 0.4 | |
Effect of changes in tax laws or rates enacted in the current period | — | — | |
Effect of Cross-Border Tax Laws | |||
Direct foreign tax credits | (90) | (2.0) | |
Global intangible low-taxed income | 70 | 1.6 | |
Tax Credits | |||
Research and development tax credits | (53) | (1.2) | |
Changes in Valuation Allowances | — | — | |
Nontaxable or Nondeductible Items | |||
Spinal Implants divestiture | (51) | (1.1) | |
Transfers of intellectual property | 405 | 9.0 | |
Changes in unrecognized Tax Benefits | 17 | 0.4 | |
Other Adjustments | (18) | (0.4) | |
Effective Tax Rate | $1,268 | 28.1% | |
(1) State taxes in Pennsylvania, New York, Illinois, Florida, California, Michigan,
Indiana, and Tennessee accounted for the majority (greater than 50%) of the tax
effect in this category.
Effective Income Tax Rate Reconciliation | |||
2024 | 2023 | ||
United States federal statutory rate | 21.0% | 21.0% | |
United States state and local income taxes, less federal deduction | 1.1 | 1.1 | |
Foreign income tax at rates other than 21% | (4.1) | (6.8) | |
Tax related to repatriation of foreign earnings | 0.3 | 1.2 | |
United States research and development credits | (1.4) | (1.2) | |
Intellectual property transfers | — | (3.3) | |
Goodwill impairment | 2.8 | — | |
Outside basis difference related to the anticipated sale of the Spinal Implants business | (4.9) | — | |
Other | (0.5) | 1.8 | |
Effective income tax rate | 14.3% | 13.8% | |
Cash paid for income taxes (net of refunds received) | |
2025 | |
United States - Federal | 533 |
United States - State | 71 |
Foreign | |
Ireland | 175 |
Other | 223 |
Subtotal | 398 |
Total | $1,002 |
Earnings Before Income Taxes | |||||
2025 | 2024 | 2023 | |||
United States | $1,434 | $523 | $701 | ||
International | 3,080 | 2,969 | 2,972 | ||
Total | $4,514 | $3,492 | $3,673 | ||
Components of Income Tax Expense (Benefit) | |||||
Current income tax expense (benefit): | 2025 | 2024 | 2023 | ||
United States federal | $414 | $490 | $236 | ||
United States state and local | 149 | 90 | 48 | ||
International | 313 | 289 | 430 | ||
Total current income tax expense | $876 | $869 | $714 | ||
Deferred income tax expense (benefit): | |||||
United States federal | $186 | $(462) | $(212) | ||
United States state and local | 78 | (76) | (20) | ||
International | 128 | 168 | 26 | ||
Total deferred income tax expense (benefit) | $392 | $(370) | $(206) | ||
Total income tax expense | $1,268 | $499 | $508 | ||
Interest included in interest expense was $18, $13, and $1 in
2025, 2024 and 2023. The United States federal deferred income
tax expense (benefit) includes the utilization of net operating loss
carryforwards of $32, $9 and $189 in 2025, 2024 and 2023.
Deferred Income Tax Assets and Liabilities | |||
Deferred income tax assets: | 2025 | 2024 | |
Inventories | $553 | $551 | |
Other accrued expenses | 401 | 207 | |
Depreciation and amortization | 546 | 715 | |
State income taxes | 90 | 167 | |
Share-based compensation | 117 | 100 | |
Research and development capitalization | 40 | 408 | |
International interest expense carryforwards | 56 | 52 | |
Net operating loss and credit carryforwards | 315 | 410 | |
Outside basis difference related to the anticipated sale of the Spinal Implants business | — | 170 | |
Other | 352 | 310 | |
Total deferred income tax assets | $2,470 | $3,090 | |
Less valuation allowances | (148) | (228) | |
Net deferred income tax assets | $2,322 | $2,862 | |
Deferred income tax liabilities: | |||
Depreciation and amortization | $(1,222) | $(1,141) | |
Undistributed earnings | (139) | (61) | |
Total deferred income tax liabilities | $(1,361) | $(1,202) | |
Net deferred income tax assets | $961 | $1,660 | |
Reported as: | |||
Noncurrent deferred income tax assets | $1,098 | $1,742 | |
Noncurrent liabilities—Other liabilities | (137) | (82) | |
Total | $961 | $1,660 | |
Accrued interest was $96 and $71 on December 31, 2025 and
2024 which was reported in accrued expenses and other
liabilities and other noncurrent liabilities.
United States federal loss carryforwards of $271, with $57 of
associated deferred tax asset and with $2 being subject to a
valuation allowance, begin to expire in 2026. United States state
loss carryforwards of $1,606, with $64 associated deferred tax
asset and with $33 being subject to a valuation allowance, begin
to expire in 2026. International loss carryforwards of $309, with
$67 of associated deferred tax asset and with $61 being subject
to a valuation allowance, begin to expire in 2026; however, some
have no expiration. We also have tax credit carryforwards of
$141 with $4 being subject to a full valuation allowance. The
credits with a full valuation allowance begin to expire in 2026.
We recorded deferred income tax on undistributed earnings of
foreign subsidiaries not determined to be indefinitely reinvested.
The amount of undistributed earnings of foreign subsidiaries
determined to be indefinitely reinvested at December 31, 2025
was approximately $11.7 billion. Determination of the total
amount of unrecognized deferred income tax on undistributed
earnings of foreign subsidiaries is not practicable.
Uncertain Income Tax Positions | |||
2025 | 2024 | ||
Beginning uncertain tax positions | $349 | $371 | |
Increases related to current year income tax positions | 19 | 18 | |
Increases related to prior year income tax positions | 12 | — | |
Decreases related to prior year income tax positions | — | (4) | |
Settlements of income tax audits | — | (21) | |
Statute of limitations expirations and other | (4) | (3) | |
Foreign currency translation | 27 | (12) | |
Ending uncertain tax positions | $403 | $349 | |
Reported as: | |||
Noncurrent liabilities—Income taxes | $403 | $349 | |
Our income tax expense would have been reduced by $279 and
$224 in 2025 and 2024 had our uncertain income tax positions
been favorably resolved. It is reasonably possible that the
amount of unrecognized tax benefits will significantly change due
to one or more of the following events in the next 12 months:
expiring statutes, audit activity, tax payments, competent
authority proceedings related to transfer pricing or final decisions
in matters that are the subject of controversy in various taxing
jurisdictions in which we operate, including inventory transfer
pricing, cost sharing, product royalty and foreign branch
arrangements. We are not able to reasonably estimate the
amount or the future periods in which changes in unrecognized
tax benefits may be resolved. Interest incurred associated with
uncertain tax positions is included in interest expense.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 11, 2026 | Showing above |
| 2024 | Feb 12, 2025 | |
| 2023 | Feb 14, 2024 | |
| 2022 | Feb 10, 2023 | |
| 2021 | Feb 11, 2022 | |
| 2020 | Feb 11, 2021 | |
| 2019 | Feb 6, 2020 | |
| 2018 | Feb 7, 2019 | |
| 2017 | Feb 8, 2018 | |
| 2016 | Feb 9, 2017 | |
| 2015 | Feb 11, 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.