VERISIGN INC/CAVRSN
VERISIGN INC/CA Income Taxes Disclosure
Income Taxes
Income before income taxes is categorized geographically as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (In millions) | |||||||||||||||||
| United States | $ | 674.2 | $ | 655.4 | $ | 607.1 | |||||||||||
| Foreign | 394.3 | 366.5 | 369.4 | ||||||||||||||
| Total income before income taxes | $ | 1,068.5 | $ | 1,021.9 | $ | 976.5 | |||||||||||
The provision for income taxes consisted of the following:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (In millions) | |||||||||||||||||
Current expense: | |||||||||||||||||
| Federal | $ | 118.5 | $ | 147.9 | $ | 159.1 | |||||||||||
| State | 29.2 | 31.3 | 28.0 | ||||||||||||||
| Foreign, including withholding tax | 47.8 | 43.3 | 24.4 | ||||||||||||||
| 195.5 | 222.5 | 211.5 | |||||||||||||||
| Deferred expense (benefit): | |||||||||||||||||
| Federal | 24.0 | (3.3) | (25.6) | ||||||||||||||
| State | 3.3 | (3.3) | 11.2 | ||||||||||||||
| Foreign | 20.0 | 20.3 | (38.2) | ||||||||||||||
| 47.3 | 13.7 | (52.6) | |||||||||||||||
Total income tax expense | $ | 242.8 | $ | 236.2 | $ | 158.9 | |||||||||||
The One Big Beautiful Bill Act (“the Act”), signed into law on July 4, 2025, restored the immediate deduction of research and development expenditures for U.S. federal income tax purposes. This change resulted in a decrease to the Company’s current federal expense, and an increase to deferred federal expense in 2025. The increased foreign current expense in 2024 was primarily driven by the Organization for Economic Cooperation and Development (“OECD”) Pillar 2 minimum tax adopted by Switzerland, partially offset by related foreign tax credits in the U.S.
The difference between income tax expense and effective tax rate and the amounts resulting from applying the federal statutory rate of 21% to Income before income taxes in 2025 is attributable to the following:
| Year Ended December 31, 2025 | |||||||||||
| Balance | Percent | ||||||||||
| (Balance in millions) | |||||||||||
| U.S. federal statutory tax rate | $ | 224.4 | 21.0 | % | |||||||
| Domestic federal: | |||||||||||
| Effect of cross-border tax laws | |||||||||||
| Global intangible low-taxed income | 5.8 | 0.5 | % | ||||||||
| Other | 0.1 | — | % | ||||||||
| Other adjustments | 1.7 | 0.2 | % | ||||||||
| Domestic state and local income taxes, net of federal income tax effect | 25.7 | 2.4 | % | ||||||||
| Foreign tax effects: | |||||||||||
| Switzerland | |||||||||||
| Effect of rates different than statutory | (49.0) | (4.6) | % | ||||||||
| Canton of Fribourg, Switzerland | 15.9 | 1.5 | % | ||||||||
| Minimum taxes | 13.5 | 1.3 | % | ||||||||
| Other | 4.8 | 0.4 | % | ||||||||
| Other foreign jurisdictions | (0.1) | — | % | ||||||||
| Total | $ | 242.8 | 22.7 | % | |||||||
The majority of domestic state and local income taxes, net of federal income tax effect, in the table above relates to state taxes in Virginia and New York.
The difference between income tax expense and the amount resulting from applying the federal statutory rate of 21% to Income before income taxes in 2024 and 2023 is attributable to the following:
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Income tax expense at federal statutory rate | $ | 214.6 | $ | 205.1 | |||||||
| State taxes, net of federal benefit | 20.4 | 28.5 | |||||||||
| Change in valuation allowance | (6.5) | 66.1 | |||||||||
| Remeasurement of unrecognized tax benefits | 2.4 | (8.3) | |||||||||
| Effect of non-U.S. operations | 2.3 | (15.5) | |||||||||
| Non-U.S. intellectual property | — | (118.0) | |||||||||
| Other | 3.0 | 1.0 | |||||||||
Total income tax expense | $ | 236.2 | $ | 158.9 | |||||||
During the fourth quarter of 2023, due to a change in local tax systems, the Company recognized amortizable tax basis related to a portion of its non-U.S. intellectual property based on a fair value of approximately $1.80 billion. This intellectual property had no book value, resulting in the recognition of a $118.0 million deferred tax asset and a corresponding income tax benefit in 2023.
Due to the change in the tax systems mentioned above, the Company determined that it is more likely than not that a portion of the deferred tax asset related to certain non-U.S. intellectual property previously transferred as part of a legal entity reorganization, will not be realized, and as a result, recognized a valuation allowance of $64.7 million in 2023.
The tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets and liabilities are as follows:
| As of December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (In millions) | |||||||||||
| Deferred tax assets: | |||||||||||
| Intellectual property | $ | 199.7 | $ | 227.4 | |||||||
| Deferred revenue, accruals and reserves | 78.5 | 72.4 | |||||||||
| Research and development costs | — | 32.5 | |||||||||
| Other | 11.2 | 11.7 | |||||||||
| Total deferred tax assets | 289.4 | 344.0 | |||||||||
| Valuation allowance | (55.2) | (61.8) | |||||||||
| Net deferred tax assets | 234.2 | 282.2 | |||||||||
Deferred tax liabilities | (1.0) | (0.9) | |||||||||
| Total net deferred tax assets | $ | 233.2 | $ | 281.3 | |||||||
The decrease in the deferred tax assets related to research and development costs in 2025 was due to the passage of the Act which changed the timing of deductibility of these expenses as discussed above.
With the exception of a portion of deferred tax assets related to intellectual property and certain state and foreign net operating loss and foreign tax credit carryforwards, management believes it is more likely than not that the tax effects of the deferred tax liabilities together with future taxable income, will be sufficient to fully recover the remaining deferred tax assets.
As of December 31, 2025, the Company’s deferred tax assets included $23.1 million of state net operating loss carryforwards, before applying tax rates for the respective jurisdictions. The tax credit carryforwards as of December 31, 2025 consisted primarily of foreign tax credit carryforwards. The state net operating loss carryforwards expire in various years from 2026 through 2034. The foreign tax credits will expire between 2028 and 2035.
The following table presents income taxes paid to United States, state, and foreign jurisdictions, net of refunds received in 2025:
| Year Ended December 31, | |||||
| 2025 | |||||
| (in millions) | |||||
| United States | |||||
| Federal | $ | 140.8 | |||
| State | |||||
| Virginia | 12.5 | ||||
| Other | 20.3 | ||||
| Foreign | |||||
| Switzerland - federal | 17.9 | ||||
| Other | 10.9 | ||||
| Total | $ | 202.4 | |||
The Company paid $230.5 million and $239.7 million for income taxes, net of refunds received, in 2024 and 2023, respectively.
A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:
| As of December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (In millions) | |||||||||||
| Beginning balance | $ | 6.5 | $ | 9.6 | |||||||
| Increases in tax positions for prior years | 0.1 | 0.3 | |||||||||
| Decreases in tax positions for prior years | — | (2.8) | |||||||||
| Increases in tax positions for current year | 0.4 | 0.4 | |||||||||
| Lapse in statute of limitations | (1.2) | (1.0) | |||||||||
| Ending balance | $ | 5.8 | $ | 6.5 | |||||||
As of December 31, 2025, approximately $3.9 million of unrecognized tax benefits, including penalties and interest, could affect the Company’s tax provision and effective tax rate.
In accordance with its accounting policy, the Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of tax expense. These accruals were not material in any period presented.
The Company’s major taxing jurisdictions are the U.S., the Commonwealth of Virginia, and Switzerland. The Company’s U.S. federal income tax returns are not currently under examination by the IRS and only the Company’s tax returns for 2021 and years thereafter are subject to examination. The Company’s other material tax returns are not currently under examination by their respective taxing jurisdictions. Because the Company has previously used net operating loss carryforwards and other tax attributes to offset its taxable income in income tax returns for the U.S. and Virginia, such attributes can be adjusted by these taxing authorities until the statute of limitations closes on the year in which such attributes were utilized. The open years for examination in Switzerland are the 2021 tax year and forward.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 5, 2026 | Showing above |
| 2024 | Feb 13, 2025 | |
| 2023 | Feb 15, 2024 | |
| 2022 | Feb 17, 2023 | |
| 2021 | Feb 18, 2022 | |
| 2020 | Feb 19, 2021 | |
| 2019 | Feb 14, 2020 | |
| 2018 | Feb 15, 2019 | |
| 2017 | Feb 16, 2018 | |
| 2016 | Feb 17, 2017 | |
| 2015 | 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.