TRIMBLE INC.TRMB
TRIMBLE INC. Income Taxes Disclosure
NOTE 14: INCOME TAXES
Income before taxes and the provision (benefit) for taxes consisted of the following:
| 2025 | 2024 | 2023 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Income before taxes: | |||||||||||||||||
| United States | $ | 308.8 | $ | 216.4 | $ | 26.9 | |||||||||||
| Foreign | 200.6 | 1,789.5 | 330.1 | ||||||||||||||
| Total | $ | 509.4 | $ | 2,005.9 | $ | 357.0 | |||||||||||
| Provision (benefit) for taxes: | |||||||||||||||||
| U.S. Federal: | |||||||||||||||||
| Current | $ | 2.9 | $ | 94.1 | $ | 57.1 | |||||||||||
| Deferred | 35.6 | (71.2) | (92.5) | ||||||||||||||
| 38.5 | 22.9 | (35.4) | |||||||||||||||
| U.S. State: | |||||||||||||||||
| Current | 11.4 | 15.6 | 12.8 | ||||||||||||||
| Deferred | 3.9 | 2.1 | (6.6) | ||||||||||||||
| 15.3 | 17.7 | 6.2 | |||||||||||||||
| Foreign: | |||||||||||||||||
| Current | 68.8 | 364.8 | 80.4 | ||||||||||||||
| Deferred | (37.2) | 96.1 | (5.5) | ||||||||||||||
| 31.6 | 460.9 | 74.9 | |||||||||||||||
| Income tax provision | $ | 85.4 | $ | 501.5 | $ | 45.7 | |||||||||||
| Effective tax rate | 16.8 | % | 25.0 | % | 12.8 | % | |||||||||||
The table below provides the updated requirements of ASU 2023-09 for 2025. See Note 1 “Description Of Business And Accounting Policies” for additional details on the adoption of ASU 2023-09.
The difference between the tax provision at the statutory federal income tax rate and the tax provision as a percentage of income before taxes (“effective tax rate”) was as follows:
| 2025 | |||||||||||
| (In millions) | Amount | Percent | |||||||||
| U.S. Federal statutory income tax rate | $ | 107.0 | 21.0 | % | |||||||
| Domestic federal reconciling items | |||||||||||
| Cross-border taxes | |||||||||||
| Global intangible low-taxed income | (12.4) | (2.4) | % | ||||||||
| Other | (4.5) | (0.9) | % | ||||||||
| Tax credits | (14.1) | (2.8) | % | ||||||||
| Nontaxable and nondeductible items, net | |||||||||||
| Stock-based compensation | 7.0 | 1.4 | % | ||||||||
| Other | 0.4 | 0.1 | % | ||||||||
| Change in valuation allowances | 0.5 | 0.1 | % | ||||||||
| Others | (1.9) | (0.4) | % | ||||||||
| Subtotal domestic federal reconciling items | (25.0) | (4.9) | % | ||||||||
Domestic state and local income taxes, net of federal effect (1) | 12.7 | 2.5 | % | ||||||||
| Foreign tax effects | |||||||||||
| Netherlands | |||||||||||
| Nondeductible foreign exchange loss | 6.1 | 1.2 | % | ||||||||
| Other | 1.9 | 0.4 | % | ||||||||
| Germany | |||||||||||
| Change in tax rate or law enacted in current period | (11.0) | (2.2) | % | ||||||||
| Intercompany intellectual property transfer | (6.7) | (1.3) | % | ||||||||
| Other | (0.5) | (0.1) | % | ||||||||
| Other foreign jurisdictions | 6.1 | 1.2 | % | ||||||||
| Subtotal foreign tax effects | (4.1) | (0.8) | % | ||||||||
| Changes in unrecognized tax benefits | (5.2) | (1.0) | % | ||||||||
| Income tax provision and effective tax rate | $ | 85.4 | 16.8 | % | |||||||
(1) State taxes in Florida, Illinois, Michigan, Minnesota, Pennsylvania, and Texas made up the majority (greater than 50%) of the tax effect in this category.
Our effective income tax rates for 2025 and 2024 were 16.8% and 25.0%. The decrease in the tax rate was primarily due to gains from the Ag divestiture in 2024.
In periods prior to the adoption of ASU 2023-09, the reconciliation of the federal statutory income tax rate to our effective tax rate for 2024 and 2023 was as follows:
| 2024 | 2023 | ||||||||||
| Statutory federal income tax rate | 21.0 | % | 21.0 | % | |||||||
| Increase (reduction) in tax rate resulting from: | |||||||||||
| Foreign income taxed at different rates | 3.4 | % | 0.8 | % | |||||||
| U.S. State income taxes | 0.8 | % | 1.0 | % | |||||||
| Stock-based compensation | 0.9 | % | 4.8 | % | |||||||
| Other U.S. taxes on foreign operations | (2.8) | % | (4.4) | % | |||||||
Foreign-derived intangible income | — | % | (3.9) | % | |||||||
| U.S. Federal research and development credits | (0.8) | % | (5.4) | % | |||||||
| Tax reserve releases | (1.0) | % | (2.5) | % | |||||||
Tax on Ag divestiture | 2.1 | % | — | % | |||||||
| Other | 1.4 | % | 1.4 | % | |||||||
| Effective tax rate | 25.0 | % | 12.8 | % | |||||||
The following table presents the disclosure required by ASU 2023-09 regarding cash paid for income taxes in 2025. In periods prior to the adoption of ASU 2023-09, total cash paid for income taxes was $228.1 million and $168.0 million in 2024 and 2023.
| 2025 | |||||
| (In millions) | |||||
| US Federal | $ | 10.2 | |||
| Domestic state and local | 10.4 | ||||
| Subtotal domestic state and local | 20.6 | ||||
| Foreign | |||||
| Netherlands | 289.3 | ||||
| Finland | 35.9 | ||||
| Germany | 26.7 | ||||
| Other | 55.0 | ||||
| Subtotal foreign | 406.9 | ||||
| Total cash paid during the period for income taxes | $ | 427.5 | |||
The total tax payments made in Netherlands included $277.4 million of remaining tax payable related to the Ag divestiture transaction.
Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of deferred tax assets and liabilities were as follows:
| At the End of Year | 2025 | 2024 | |||||||||
| (In millions) | |||||||||||
| Deferred tax liabilities: | |||||||||||
| Purchased intangibles | $ | 288.9 | $ | 311.3 | |||||||
| Global intangible low-taxed income | — | 17.6 | |||||||||
| Operating lease right-of-use assets | 35.0 | 29.7 | |||||||||
| Other | 34.5 | 26.9 | |||||||||
| Total deferred tax liabilities | $ | 358.4 | $ | 385.5 | |||||||
| Deferred tax assets: | |||||||||||
| Depreciation and amortization | $ | 195.2 | $ | 217.6 | |||||||
| Capitalized research and development | 68.7 | 118.2 | |||||||||
Operating lease liabilities | 39.6 | 34.7 | |||||||||
| U.S. tax credit carryforwards | 20.7 | 23.1 | |||||||||
| Expenses not currently deductible | 48.6 | 26.3 | |||||||||
Net operating loss carryforwards | 17.3 | 24.3 | |||||||||
Stock-based compensation | 16.3 | 17.2 | |||||||||
| Global intangible low-taxed income | 3.1 | — | |||||||||
| Other | 68.7 | 74.6 | |||||||||
| Total deferred tax assets | 478.2 | 536.0 | |||||||||
| Valuation allowance | (50.3) | (56.0) | |||||||||
| Total deferred tax assets | 427.9 | 480.0 | |||||||||
| Total net deferred tax assets | $ | 69.5 | $ | 94.5 | |||||||
| Reported as: | |||||||||||
| Non-current deferred income tax assets | $ | 260.0 | $ | 294.4 | |||||||
| Non-current deferred income tax liabilities | (190.5) | (199.9) | |||||||||
| Net deferred tax assets | $ | 69.5 | $ | 94.5 | |||||||
At the end of 2025, we have U.S. federal net operating loss carryforwards, or federal NOLs, of approximately $12.3 million, which will begin to expire in 2037. At the end of 2025, we have foreign net operating and capital loss carryforwards, or foreign losses, of approximately $86.5 million, which generally have no expiration. Utilization of our U.S. federal NOLs is subject to annual limitations in accordance with the applicable tax code. We have determined that it is more likely than not that a portion of the foreign losses will not be realized and, accordingly, a valuation allowance has been established for such amount.
We have U.S. federal research and development credit carryforwards of approximately $2.0 million, which will expire beginning 2042, and California research and development credit carryforwards of approximately $32.5 million, which have an indefinite carryforward period. We believe that it is more likely than not that a significant portion of the California research and development credit carryforwards will not be realized and, accordingly, a valuation allowance has been established for such amount.
We have net deferred tax assets of $17.3 million primarily relating to our investment in PTx Trimble. We believe that it is more likely than not that a significant portion of the net deferred tax assets will not be realized and, accordingly, a valuation allowance has been established for such amount.
As a result of the Tax Act, we can repatriate foreign earnings back to the U.S. when needed with minimal U.S. income tax consequences. We reinvested a large portion of our undistributed foreign earnings in acquisitions and other investments and have continuously distributed foreign cash that was subject to the transition tax and the global intangible low-taxed income tax.
The total amount of unrecognized tax benefits at the end of 2025 was $79.7 million. A reconciliation of gross unrecognized tax benefits was as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Beginning balance | $ | 78.2 | $ | 88.3 | $ | 76.5 | |||||||||||
| Increase related to current year tax positions | 12.4 | 11.3 | 12.4 | ||||||||||||||
Increase (decrease) related to prior years’ tax positions | 0.9 | (1.5) | 7.6 | ||||||||||||||
| Lapse of statute of limitations | (11.8) | (19.9) | (8.2) | ||||||||||||||
| Ending balance | $ | 79.7 | $ | 78.2 | $ | 88.3 | |||||||||||
Total unrecognized tax benefits that, if recognized, would affect our effective tax rate were $40.0 million and $45.8 million at the end of 2025 and 2024.
The OBBBA, signed into law on July 4, 2025, includes changes to U.S. federal tax regulations. We have accounted for its tax implications during 2025 based on our current interpretation of the legislation, and the impact to our 2025 tax rate is immaterial.
We and our subsidiaries are subject to U.S. federal, state, and foreign income taxes. Our U.S. federal income tax years through 2021 are closed, including the 2021 audit which was concluded in the third quarter of 2025 without adjustment. Our tax years are substantially closed for all state income taxes for audit purposes through 2015. Non-U.S. income tax matters have been concluded for years through 2008. We are currently in various stages of multiple year examinations from state and foreign (multiple jurisdictions) taxing authorities. While we generally believe it is more likely than not that our tax positions will be sustained, it is reasonably possible that future obligations related to these matters could arise. We believe that our reserves are adequate to cover any potential assessments that may result from the examinations and negotiations.
Our practice is to recognize interest and/or penalties related to income tax matters in income tax expense. Our liability for unrecognized tax benefits including interest and penalties was recorded in Other non-current liabilities on our Consolidated Balance Sheets. At the end of 2025 and 2024, we accrued $9.3 million and $8.8 million for interest and penalties.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Feb 25, 2026 | Showing above |
| 2025 | Apr 25, 2025 | |
| 2023 | Feb 26, 2024 | |
| 2022 | Feb 17, 2023 | |
| 2021 | Feb 26, 2021 | |
| 2020 | Feb 28, 2020 | |
| 2018 | Feb 22, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 24, 2017 | |
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.