9 Income Taxes

Income tax data for the years ended December 31, 2025, 2024 and 2023 is as follows (in thousands):


	Year Ended December 31,
	2025		2024		2023
The components of income before income taxes are as follows:
Domestic	$	57,267	$	121,630	$	74,119
Foreign		697,611		633,238		662,124

Total	$	754,878	$	754,868	$	736,243


	Year Ended December 31,
	2025			2024			2023
The components of the income tax provision were as follows:
Federal	$	8,997		$	20,609		$	178
State		4,838			6,395			6,427

Foreign		113,071			90,907			88,601

Total current tax provision	$	126,906		$	117,911		$	95,206

Federal	$	(18,553	)	$	(383	)	$	(2,457	)
State		(564	)		303			(3,029	)
Foreign		4,460			(797	)		4,289

Total deferred tax provision		(14,657	)		(877	)		(1,197	)

Total provision	$	112,249		$	117,034		$	94,009


	Year Ended December 31,
	2025
Income tax payments (net of refunds received):
U.S. Federal		138,007
U.S. State and Local		6,376
Non-U.S.
Ireland		59,221
Other Non-U.S.		40,632

Total income taxes paid, (net of refunds received)	$	244,236

A reconciliation of the federal statutory income tax rate to the Company’s effective income tax rate for the year ended December 31, 2025 was as follows:


	Year Ended December 31,
	2025			%
U.S. federal statutory tax rate	$	158,524			21.0	%
State and local income taxes, net of federal income tax effect (a)		1,043			0.1	%
Foreign tax effects
Ireland
Statutory tax rate difference between Ireland and United States		(36,662	)		(4.9	%)
Nondeductible interest expense		9,861			1.3	%
Other		(499	)		(0.1	%)
Singapore
Statutory tax rate difference between Singapore and United States		(7,459	)		(1.0	%)
Local taxes at a rate different than the statutory rate (b)		(3,380	)		(0.4	%)
Other		3,448			0.5	%
Other foreign jurisdictions		13,416			1.8	%
Effect of cross-border tax laws
Global intangible low-taxed income, net of foreign tax credits		3,470			0.5	%
Other, net of foreign tax credits		(1,368	)		(0.2	%)
Tax credits
Foreign tax credits		(29,952	)		(4.0	%)
Other		(6,659	)		(0.9	%)
Nontaxable or nondeductible items
Other		9,578			1.3	%

Changes in unrecognized tax benefits		(2,306	)		(0.3	%)
Other adjustments		1, 1 9 4			0. 2	%

Effective income tax rate	$	112,249			14.9	%

(a)	State taxes in California, Pennsylvania , Minnesota, New Jersey and New York made up the majority (greater than 50 percent) of the tax effect in this category.

(b)	The tax expense (benefit) related to the concessionary tax rate in Singapore was reduced by $14 million due to the global minimum tax under Pillar Two.

The differences between income taxes computed at the United States statutory rate and the provision for income taxes are summarized as follows for the years ended December 31, 2024 and December 31, 2023 (in thousands):


	Year Ended December 31,
	2024			2023
Federal tax computed at U.S. statutory income tax rate	$	158,522		$	154,611
GILTI, net of foreign tax credits		4,820			15,103
Uncertain tax positions		5,024			(16,211	)
State income tax, net of federal income tax benefit		6,078			2,880
Net effect of foreign operations		(47,732	)		(48,587	)
Effect of stock-based compensation		(2,155	)		(2,262	)
Other, net		(7,523	)		(11,525	)

Provision for income taxes	$	117,034		$	94,009

The Company’s effective tax rate was

14.9

15.5

% and

12.8

% for the years ended December 31, 2025, 2024 and 2023

, respectively.

The decrease in the Company’s effective tax in 2025 can primarily be attributed to the jurisdictional mix of earnings.

The Company’s effective income tax rate differs from the U.S. federal statutory rate each year due to differences in the proportionate amounts of

pre-tax

income recognized in jurisdictions with different effective tax rates and the items discussed below.

The four principal jurisdictions in which the Company manufactures are the U.S., Ireland, the U.K. and Singapore, where the statutory tax rates were 21%, 12.5%, 25% and 17%, respectively, as of December 31, 2025. The Company has a Development and Expansion Incentive in Singapore that provides a concessionary income tax rate of 5% on certain types of income for the period April 1, 2021 through March 31, 2026. The effect of applying these concessionary income tax rates rather than the statutory tax rate to income arising from qualifying activities in Singapore increased the Company’s net income by

$4 million, $14 million and $16 million and increased the Company’s net income per diluted share by $0.06, $0.24 and $0.27 for the years ended December 31, 2025, 2024 and 2023,

respectively. The Singapore 2025 benefit of $4 million and $0.06 per diluted share is reduced by $14 million and $0.24 per diluted share due to the global minimum tax under Pillar Two, respectively.

During

2025, the Company’s effective tax rate differed from the 21% U.S. statutory tax rate primarily due to the jurisdictional mix of earnings

, a discrete benefit of $14 million related to the enactment of OBBBA

, a $3 million provision related to the GILTI tax, including the impact of capitalizing research and development expenditures pursuant to IRC Section 174, and a tax benefit of $3 million on stock-based compensation.

During 2024, the Company’s effective tax rate differed from

the

% U.S. statutory tax rate primarily due to the jurisdictional

mix of earnings, a $5 million provision related to the GILTI tax, including the impact of capitalizing research and development expenditures pursuant to IRC Section 174, and a tax benefit of $3 million on stock-based compensation.

The 2023 effective tax rate differed from the 21% U.S. statutory tax rate primarily due to the jurisdictional mix of earnings,

$18 million recognition of a previously unrecognized tax benefit as a result of the completion of a tax examination, a $15 million provision related to the GILTI tax, including the impact of capitalizing research and development expenditures pursuant to IRC Section 174 and a tax benefit of $3 million

on stock-based compensation.

The tax effects of temporary differences and carryforwards which give rise to deferred tax assets and deferred tax liabilities are summarized as follows (in thousands):


	December 31,
	2025			2024
Deferred tax assets:
Net operating losses and credits	$	146,742		$	118,854
Operating leases		17,971			16,573
Amortization		12,047			9,006
Stock-based compensation		6,913			6,343
Deferred compensation		18,931			20,515
Deferred revenue		14,516			15,707
Capitalized Section 174 Expenditures		63,535			51,514
Other		15,120			20,295

Total deferred tax assets		295,775			258,807
Valuation allowance		(140,377	)		(119,464	)

Deferred tax assets, net of valuation allowance		155,398			139,343
Deferred tax liabilities:
Capitalized software		(30,942	)		(29,309	)
Operating leases		(17,775	)		(16,312	)
Indefinite-lived intangibles		(43,883	)		(29,924	)
Deferred tax liability on foreign earnings		(5,608	)		(20,278	)

Total deferred tax liabilities		(98,208	)		(95,823	)

Net deferred tax assets	$	57,190		$	43,520

The

Company has gross foreign net operating losses of $595 million, of which $200 million do not expire under current laws

and

$395 million start expiring in 2026. As of December 31, 2025, the Company has provided a deferred tax valuation allowance of $140 million, of which $134 million relates to certain foreign net operating losses. The Company’s net deferred tax assets associated with net operating losses and tax credit carryforwards are approximately $12

million as of December 31, 2025, which represent the future tax benefit of foreign net operating loss carryforwards and tax credit carryforwards.

The Company accounts for its uncertain tax return positions in accordance with the accounting standards for income taxes, which require financial statement reporting of the expected future tax consequences of uncertain tax reporting positions on the presumption that all concerned tax authorities possess full knowledge of those tax reporting positions, as well as all of the pertinent facts and circumstances, but prohibit any discounting of unrecognized tax benefits associated with those reporting positions for the time value of money. The Company continues to classify interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes.

The following is a summary of the activity of the Company’s gross unrecognized tax benefits, excluding interest and penalties, for the year ended December 31, 2025, 2024 and 2023 (in thousands):


	2025			2024			2023
Balance at the beginning of the period	$	17,657		$	14,323		$	29,019
Net reductions for settlement of tax audits		(892	)		—			(17,651	)
Net reductions for lapse of statutes taken during the period		(790	)		(616	)		(512	)
Net (reductions) additions for tax positions taken during the prior period		(1,832	)		3,407			2,473
Net additions for tax positions taken during the current period		1,068			543			994

Balance at the end of the period	$	15,211		$	17,657		$	14,323

As of 2025, the total amount of gross unrecognized tax benefits was $15 million, all of which, if recognized, would impact the Company’s effective tax rate. The Company is subject to various foreign audits and inquiries, and we currently do not expect any material adjustments.

With limited exceptions, the Company is no longer subject to tax audit examinations in significant jurisdictions for the years ended on or before December 31, 2020. The Company continuously monitors the lapsing of statutes of limitations on potential tax assessments for related changes in the measurement of unrecognized tax benefits, related net interest and penalties and deferred tax assets and liabilities.


	Balance at Beginning of Period		Charged to Provision for Income Taxes*		Other**			Balance at End of Period
Valuation allowance for deferred tax assets:
2025	$	119,464	$	5,897	$	15,016		$	140,377
2024	$	57,873	$	64,310	$	(2,719	)	$	119,464
2023	$	54,300	$	1,467	$	2,106		$	57,873

These amounts have been recorded as part of the income statement provision for income taxes. The income statement effects of these amounts have largely been offset by amounts related to changes in other deferred tax balance sheet accounts. The increase in the 2024 charge to the provision for income taxes can be attributed to an increase in foreign net operating losses.

**	The changes in the valuation allowance during the years ended December 31, 2025, 2024 and 2023 are primarily due to the effect of foreign currency translation on a valuation allowance related to a net operating loss carryforward.

Historical Timeline

Fiscal Year	Filed
2025	Feb 23, 2026	Showing above
2024	Feb 25, 2025

2023	Feb 27, 2024

2022	Feb 27, 2023

2021	Feb 24, 2022

2020	Feb 24, 2021

2019	Feb 25, 2020

2018	Feb 26, 2019

2017	Feb 27, 2018

2016	Feb 24, 2017

2015	Feb 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.

WATERS CORP /DE/ Income Taxes Disclosure

Historical Timeline

About Income Taxes Disclosures

Other Available Disclosures