UL Solutions Inc.ULS
UL Solutions Inc. Income Taxes Disclosure
Income Taxes
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Components of income (loss) before income taxes:
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Domestic | $ | 11 | $ | (20) | $ | (1) | |||||||||||
| Foreign | 459 | 435 | 347 | ||||||||||||||
| Total income before income taxes | $ | 470 | $ | 415 | $ | 346 | |||||||||||
Components of the provision (benefit) for income taxes:
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Current tax provision | |||||||||||||||||
| U.S. Federal | $ | 2 | $ | (3) | $ | 1 | |||||||||||
| U.S. State | 3 | 5 | 1 | ||||||||||||||
| Foreign | 118 | 73 | 54 | ||||||||||||||
| Deferred tax provision | |||||||||||||||||
| U.S. Federal | 10 | (6) | 9 | ||||||||||||||
| U.S. State | 2 | 6 | 3 | ||||||||||||||
| Foreign | (10) | (5) | 2 | ||||||||||||||
| Total income tax provision | $ | 125 | $ | 70 | $ | 70 | |||||||||||
Reconciliation of the U.S. federal statutory rate to UL Solutions’ effective tax rate for the year ended December 31, 2025 is as follows:
| (in millions) | Amount | Percent | |||||||||
| Income before income taxes | $ | 470 | |||||||||
| U.S. federal statutory tax rate | 99 | 21.0 | % | ||||||||
State and local income taxes, net of federal income tax effect(a) | 4 | 0.9 | % | ||||||||
| Foreign tax effects | |||||||||||
| Mainland China | |||||||||||
| Withholding tax | 8 | 1.7 | % | ||||||||
| Other | 5 | 1.1 | % | ||||||||
| Germany | |||||||||||
| Valuation allowance | 8 | 1.7 | % | ||||||||
| Other | (3) | (0.6) | % | ||||||||
| Singapore | |||||||||||
| Tax rate difference between foreign and U.S. | (13) | (2.8) | % | ||||||||
Local taxes at a rate different than the statutory rate(b) | (7) | (1.5) | % | ||||||||
| Other | (3) | (0.6) | % | ||||||||
| Other foreign jurisdictions | 14 | 3.0 | % | ||||||||
| U.S. changes in valuation allowances | 6 | 1.2 | % | ||||||||
| U.S. nontaxable or nondeductible items | |||||||||||
| U.S. nondeductible compensation | 5 | 1.1 | % | ||||||||
| Other | 2 | 0.4 | % | ||||||||
| Effective tax rate | $ | 125 | 26.6 | % | |||||||
(a)State taxes in California and Illinois made up the majority (greater than 50 percent) of the tax effect in this category.
(b)The tax benefit related to the negotiated tax rate in Singapore was reduced by $28 million due to the global minimum tax under Pillar Two.
The effective tax rate for the year ended December 31, 2025 of 26.6% was higher than the effective tax rate for the year ended December 31, 2024 of 16.9% primarily due to the impact of the Qualified Domestic Minimum Top-up Tax, a subset of the Pillar Two rules that became effective on January 1, 2025, as well as a reduction to uncertain tax positions in the year ended December 31, 2024.
Reconciliation of the U.S. federal statutory rate to UL Solutions’ effective tax rate for the years ended December 31 are as follows:
| 2024 | 2023 | ||||||||||
| U.S. federal statutory rate | 21.0 | % | 21.0 | % | |||||||
| Effect of: | |||||||||||
| Foreign income taxed at different rates | (4.2 | %) | (5.0 | %) | |||||||
| U.S. tax on foreign activities | 0.6 | % | 2.0 | % | |||||||
| State and local income taxes, net of federal benefit | 2.0 | % | 0.9 | % | |||||||
| Goodwill impairment | — | % | 1.8 | % | |||||||
| U.S. nondeductible compensation | 1.9 | % | — | % | |||||||
| Release of uncertain tax positions for lapse of statutes | (4.7 | %) | (0.1 | %) | |||||||
| Other reconciling items, net | 0.3 | % | (0.4 | %) | |||||||
| Effective tax rate | 16.9 | % | 20.2 | % | |||||||
Of the 1.9% U.S. nondeductible compensation in 2024, 1.0% is for the reduction to previously established deferred tax assets due to the Company becoming subject to Section 162(m) of the U.S. Internal Revenue Code, which limits U.S. public company compensation expenses of certain executive officers that were previously deductible as a private company. The remainder is related to current year compensation expense limitations.
Other reconciling items consist of non-deductible expenses such as meals and entertainment, transaction costs related to merger and acquisition activities, movement in valuation allowances, and general business credits such as research and development tax credits.
Components of the deferred income tax assets and liabilities:
| (in millions) | 2025 | 2024 | |||||||||
| Deferred tax assets | |||||||||||
| Accrued pension and postretirement liabilities | $ | 23 | $ | 38 | |||||||
| Accrued employee benefits | 43 | 41 | |||||||||
| Other accrued expenses | 15 | 7 | |||||||||
| Net operating loss carryforward | 64 | 44 | |||||||||
| Advance payments | 37 | 39 | |||||||||
| Operating lease liabilities | 44 | 46 | |||||||||
| Capitalized research and development | 10 | 18 | |||||||||
| Foreign tax credit | 15 | 12 | |||||||||
| Other | 18 | 12 | |||||||||
| Subtotal (before valuation allowances) | 269 | 257 | |||||||||
| Valuation allowances | (80) | (53) | |||||||||
| Total deferred tax assets | 189 | 204 | |||||||||
| Deferred tax liabilities | |||||||||||
| Basis difference for intangible assets | (42) | (38) | |||||||||
| Basis difference for fixed assets | (10) | (20) | |||||||||
| Operating lease right-of-use assets | (41) | (45) | |||||||||
| Tax on unrepatriated earnings | (7) | (6) | |||||||||
| Other | (14) | (10) | |||||||||
| Total deferred tax liabilities | (114) | (119) | |||||||||
| Net deferred income tax assets | $ | 75 | $ | 85 | |||||||
Deferred income taxes are recorded on the Consolidated Balance Sheets on a net basis by taxing jurisdiction. As of December 31, 2025, the Company had a net deferred income tax asset of $75 million, which consisted of $94 million classified as deferred income taxes and $19 million included within other liabilities. As of December 31, 2024, the Company had a net deferred income tax asset of $85 million, which consisted of $108 million classified as deferred income taxes and $23 million included within other liabilities.
As of December 31, 2025, the Company has approximately $64 million of deferred tax assets related to net operating loss (“NOL”) carryforwards primarily attributable to foreign affiliates. If not used, $9 million of deferred tax assets will be written off to reflect the reduction of the NOL carryforwards that will expire between 2026 and 2045, while the remaining carryforward is indefinite. The use of certain NOL carryforwards is limited due to rules regarding acquired tax attributes, loss sharing between group members, and business continuity. The valuation allowances represent a reduction to deferred tax assets, including certain NOLs, for which the realization is unlikely.
The Company has not recognized deferred tax liabilities in the U.S. with respect to its outside basis differences in most foreign affiliates. It is not practicable to determine the amount of unrecognized deferred tax liabilities on these earnings.
Movements in valuation allowance:
| Deferred Tax Valuation Allowance | Balance at Beginning of Year | Charged to Costs and Expenses | Deductions | Balance at End of Year | ||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| Year Ended December 31, 2025 | $ | 53 | $ | 28 | $ | (1) | $ | 80 | ||||||||||||||||||
| Year Ended December 31, 2024 | $ | 56 | $ | 7 | $ | (10) | $ | 53 | ||||||||||||||||||
| Year Ended December 31, 2023 | $ | 47 | $ | 14 | $ | (5) | $ | 56 | ||||||||||||||||||
Income Taxes Paid
Income taxes paid net of refunds received for the year ended December 31:
| (in millions) | 2025 | ||||
| U.S. state and local | $ | 5 | |||
| Mainland China | 34 | ||||
| Singapore | 15 | ||||
| Japan | 8 | ||||
| Netherlands | 6 | ||||
| Taiwan | 5 | ||||
| Other | 19 | ||||
| Total | $ | 92 | |||
Uncertain Tax Positions
Movements in reserve for uncertain tax positions:
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Balance at January 1, | $ | 7 | $ | 30 | $ | 26 | |||||||||||
| Increases related to prior period tax positions | 2 | 2 | 3 | ||||||||||||||
| Decreases related to prior period tax positions | (1) | (5) | — | ||||||||||||||
| Increases related to current period tax positions | 1 | — | 2 | ||||||||||||||
| Lapse of statute of limitation | — | (19) | (1) | ||||||||||||||
| Settlement with taxing authorities | (2) | (1) | — | ||||||||||||||
| Balance at December 31, | $ | 7 | $ | 7 | $ | 30 | |||||||||||
The total unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate were $7 million, $6 million and $30 million as of December 31, 2025, 2024 and 2023, respectively. The Company had accrued for interest and penalties of $2 million, $3 million and $12 million, as of December 31, 2025, 2024 and 2023, respectively, which are included within other liabilities in the Company’s Consolidated Balance Sheets.
The Company is under audit in multiple state and foreign tax jurisdictions. The timing of the resolution of income tax examinations is uncertain as are the amounts and timing of tax payments that are part of any audit settlement process. These events could cause fluctuations in the balance sheet classification of our tax assets and liabilities.
In the United States, the Company has open years ranging from 2016 to 2025 and significant foreign jurisdictions still open for audit between 2010 and 2025. The Company believes sufficient provision has been made for potential adjustments for all years that are not closed by the statute in all major tax jurisdictions and that any such adjustments would not have a material adverse effect on the Company’s financial position, liquidity, or results of operations.
On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted in the U.S. The OBBBA includes several corporate tax provisions that apply to the Company, such as the permanent extension of certain expiring provisions of the U.S. Tax Cuts and Jobs Act and modifications to the international tax framework and business interest expense limitations. The Company has assessed the impact of the OBBBA and has determined that there is no material impact to its consolidated financial statements.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
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.