SYNAPTICS IncSYNA
SYNAPTICS Inc Income Taxes Disclosure
Income Taxes
(Loss)/income before provision for income taxes was as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| United States | $ | (64.3) | $ | (80.5) | $ | (69.5) | |||||||||||
| Foreign | (49.2) | (44.1) | 195.5 | ||||||||||||||
| (Loss)/income before provision for income taxes | $ | (113.5) | $ | (124.6) | $ | 126.0 | |||||||||||
The (benefit)/provision for income taxes consisted of the following:
| 2025 | 2024 | 2023 | |||||||||||||||
| Current tax (benefit)/expense | |||||||||||||||||
| Federal | $ | 2.4 | $ | (17.4) | $ | 15.8 | |||||||||||
| State | — | — | 0.1 | ||||||||||||||
| Foreign | 7.3 | 56.0 | 62.4 | ||||||||||||||
| 9.7 | 38.6 | 78.3 | |||||||||||||||
| Deferred tax (benefit)/expense | |||||||||||||||||
| Federal | (49.9) | (280.8) | (12.7) | ||||||||||||||
| State | — | — | — | ||||||||||||||
| Foreign | (25.5) | (8.0) | (13.2) | ||||||||||||||
| (75.4) | (288.8) | (25.9) | |||||||||||||||
| (Benefit)/provision for income taxes | $ | (65.7) | $ | (250.2) | $ | 52.4 | |||||||||||
The (benefit)/provision for income taxes differs from the federal statutory rate as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| (Benefit)/provision at U.S. federal statutory tax rate | $ | (23.8) | $ | (26.2) | $ | 26.4 | |||||||||||
| Non-deductible share-based compensation | 7.2 | 7.6 | 6.6 | ||||||||||||||
| Shortfall/(windfall) related to share-based compensation | 3.9 | 3.5 | (1.3) | ||||||||||||||
| Non-deductible officer compensation | 2.5 | 4.8 | 6.4 | ||||||||||||||
| Business credits | (4.4) | (5.2) | (5.2) | ||||||||||||||
| Foreign tax differential | (10.6) | 45.2 | (0.5) | ||||||||||||||
| U.S. inclusion of foreign income | (10.3) | (0.3) | 21.0 | ||||||||||||||
| Deferred taxes on unremitted foreign earnings | (14.2) | — | 0.3 | ||||||||||||||
| U.S. provision to return adjustment | 0.5 | (18.1) | 0.4 | ||||||||||||||
| Deferred tax benefit from domestication | (7.7) | (262.8) | — | ||||||||||||||
| Tax benefit from U.S. transition tax | (8.9) | — | — | ||||||||||||||
| Other differences | 0.1 | 1.3 | (1.7) | ||||||||||||||
| (Benefit)/provision for income taxes | $ | (65.7) | $ | (250.2) | $ | 52.4 | |||||||||||
Non-current deferred tax assets and non-current deferred tax liabilities are included in non-current other assets and other long-term liabilities, respectively, in the accompanying consolidated balance sheets.
Significant components of deferred tax assets (liabilities) consisted of the following:
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Capital loss carryforward | $ | 34.6 | $ | 34.1 | |||||||
| Inventory write downs | 5.7 | 1.6 | |||||||||
| Intangibles and capitalized research and development costs | 306.5 | 273.1 | |||||||||
| Property and equipment | 3.9 | 0.2 | |||||||||
| Share-based compensation | 22.6 | 9.4 | |||||||||
| Nondeductible interest | 22.6 | 23.7 | |||||||||
| Lease liabilities | 10.7 | 10.2 | |||||||||
| Business credit carryforward | 89.0 | 95.6 | |||||||||
| Net operating loss carryforward | 17.9 | 11.4 | |||||||||
| Other accruals | 18.0 | 5.6 | |||||||||
| 531.5 | 464.9 | ||||||||||
| Valuation allowance | (94.8) | (92.4) | |||||||||
| 436.7 | 372.5 | ||||||||||
| Deferred tax liabilities: | |||||||||||
| Right-of-use assets | (10.2) | (9.5) | |||||||||
| Unremitted foreign earnings | — | (14.3) | |||||||||
| Acquisition intangibles | (22.7) | (31.0) | |||||||||
| (32.9) | (54.8) | ||||||||||
| Net deferred tax assets | $ | 403.8 | $ | 317.7 | |||||||
Realization of deferred tax assets depends on our generating sufficient U.S. and certain foreign taxable income in future years to obtain a benefit from the utilization of those deferred tax assets on our tax returns. Accordingly, the amount of deferred tax assets considered realizable may increase or decrease when we reevaluate the underlying basis for our estimates of future U.S. and foreign taxable income. As of the end of fiscal 2025, a valuation allowance of $94.8 million was maintained to reduce the deferred tax assets related to capital loss carryovers in a foreign jurisdiction and all deferred tax assets in California to levels we believe are more likely than not to be realized through future taxable income. The net change in the valuation allowance during fiscal 2025 was an increase of $2.4 million.
We consider almost all earnings of our foreign subsidiaries as not indefinitely reinvested overseas and have made appropriate provisions for income or withholding taxes that may result from a future repatriation of those earnings. As a result, an immaterial deferred tax liability is associated with unremitted foreign earnings, the remittance of which would not result in a further provision for income taxes. We continue to indefinitely reinvest $200.0 million on certain accumulated earnings and outside basis differences primarily related to our DSPG acquisition. If the undistributed earnings and other outside basis differences were recognized in a taxable transaction, the associated foreign tax credits would be expected to reduce the U.S. income tax liability associated with the foreign distribution or the otherwise taxable transaction. As of our fiscal 2025, assuming full utilization of the associated foreign tax credits, the potential net deferred tax liability associated with these undistributed earnings and outside basis differences would be approximately $46.0 million.
As of the end of fiscal 2025, we had federal, California and foreign net operating loss carryforwards of $11.3 million, $31.0 million and $87.9 million, respectively. The federal net operating loss can be carried forward indefinitely and the California net operating loss will begin to expire in fiscal 2027, respectively if not utilized. Most of the foreign net operating loss carryforwards have no expiration date. Under current tax law, net operating loss and tax credit carryforwards are available to offset future income or income taxes, if utilized before expiration. However, the use of these carryforwards may be limited by statute or upon the occurrence of certain events, including significant changes in ownership.
We had $32.3 million and $69.7 million of federal and state research tax credit carryforwards, respectively, as of the end of fiscal 2025. The federal research tax credit carryforward will begin to expire in 2029 and the state research tax credit can be carried forward indefinitely.
The total liability for gross unrecognized tax benefits related to uncertain tax positions, included in other liabilities in the accompanying consolidated balance sheets, decreased by $1.9 million from $46.5 million in fiscal 2024 to $44.6 million in fiscal 2025. Of this ending balance, $36.6 million will reduce the effective tax rate on income from continuing operations, if recognized. A reconciliation of the beginning and ending balance of gross unrecognized tax benefits consisted of the following:
| 2025 | 2024 | 2023 | |||||||||||||||
| Beginning balance | $ | 46.5 | $ | 43.7 | $ | 29.8 | |||||||||||
| Increase in unrecognized tax benefits related to current year tax positions | 1.9 | 10.4 | 13.7 | ||||||||||||||
| (Decrease)/increase in unrecognized tax benefits related to prior year tax positions | (2.4) | (5.3) | 2.5 | ||||||||||||||
| Decrease due to effective settlement with tax authorities | (0.4) | — | (1.1) | ||||||||||||||
| Remeasurement of unrecognized tax benefits | 1.2 | (1.0) | (0.3) | ||||||||||||||
| Decrease due to statute expiration | (2.2) | (1.3) | (0.9) | ||||||||||||||
| Ending balance | $ | 44.6 | $ | 46.5 | $ | 43.7 | |||||||||||
Accrued interest and penalties increased by $0.6 million in fiscal 2025 as compared to fiscal 2024 and increased by $0.6 million in fiscal 2024 as compared to fiscal 2023. Accrued interest and penalties were $4.2 million and $3.6 million as of the end of fiscal 2025 and 2024, respectively. Our policy is to classify interest and penalties, if any, as components of income tax expense.
It is reasonably possible that the amount of liability for unrecognized tax benefits may change within the next 12 months; an estimate of the range of possible changes could result in a decrease of $3.3 million to an increase of $1.9 million. Any prospective adjustments to our unrecognized tax benefits will be recorded as an increase or decrease to income tax expense and cause a corresponding change to our effective tax rate. Accordingly, our effective tax rate could fluctuate materially from period to period.
Our major tax jurisdictions are the U.S., Hong Kong SAR, Japan, Israel and the U.K. From fiscal 2017 onward, we remain subject to examination by one or more of these jurisdictions.
On July 4, 2025, subsequent to the end of our fiscal year ended June 28, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. This legislation includes a permanent extension and modification of certain provisions under the Tax Cuts and Jobs Act of 2017 (“TCJA”) and contains multiple effective dates. As the enactment occurred subsequent to our fiscal 2025, the impacts of the provisions of the OBBBA are not reflected in our fiscal 2025 financial statements. Certain provisions are effective beginning in fiscal 2026, and we are currently evaluating the potential impact of the new legislation on our future financial statements.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Aug 21, 2025 | Showing above |
| 2024 | Aug 23, 2024 | |
| 2023 | Aug 18, 2023 | |
| 2022 | Aug 22, 2022 | |
| 2021 | Aug 23, 2021 | |
| 2020 | Aug 21, 2020 | |
| 2019 | Aug 23, 2019 | |
| 2018 | Aug 24, 2018 | |
| 2017 | Aug 18, 2017 | |
| 2016 | Aug 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.