WORLD KINECT CORPWKC
WORLD KINECT CORP Income Taxes Disclosure
14. Income Taxes
Income Tax Expense (Benefit)
U.S. and foreign income before income taxes consist of the following (in millions):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| United States | $ | (609.9) | $ | (20.5) | $ | (34.8) | |||||||||||
| Foreign | (129.8) | 116.1 | 101.5 | ||||||||||||||
| Income (loss) before income taxes | $ | (739.7) | $ | 95.5 | $ | 66.7 | |||||||||||
Our total income tax expense (benefit) related to income before income taxes consists of the following components (in millions):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| U.S. federal statutory tax | $ | 13.4 | $ | 8.4 | $ | 8.9 | |||||||||||
| State | 1.3 | 1.8 | 2.4 | ||||||||||||||
| Foreign | 32.8 | 40.1 | 23.4 | ||||||||||||||
| Current income tax expense (benefit) | 47.4 | 50.2 | 34.8 | ||||||||||||||
| Deferred: | |||||||||||||||||
| U.S. federal statutory tax | (136.9) | (3.3) | (12.7) | ||||||||||||||
| State | (44.6) | (1.3) | (1.1) | ||||||||||||||
| Foreign | 5.1 | (10.6) | (16.9) | ||||||||||||||
| Deferred income tax expense (benefit) | (176.4) | (15.3) | (30.7) | ||||||||||||||
Non-current tax expense (benefit) (1) | 1.0 | (7.4) | 8.9 | ||||||||||||||
| Total income tax expense (benefit) | $ | (127.9) | $ | 27.6 | $ | 13.0 | |||||||||||
(1)Non-current tax expense (benefit) is primarily related to income tax associated with the reserve for uncertain tax positions, including associated interest and penalties.
Cash Paid for Income Taxes
Cash paid for income taxes, net of refunds received, consists of the following (in millions):
Year Ended December 31, 2025 | |||||
Federal | $ | 36.9 | |||
State | 2.3 | ||||
Foreign | 57.8 | ||||
Total cash paid for income taxes, net of refunds received (1) | $ | 97.0 | |||
(1)Total cash paid for income taxes, net of refunds received, was $51.6 million and $42.0 million for the years ended December 31, 2024 and 2023, respectively.
Cash paid for income taxes, net of refunds received, to individual jurisdictions in excess of 5% of total income taxes paid, net of refunds received, is as follows (in millions):
Year Ended December 31, 2025 | |||||
Foreign: | |||||
Denmark | $ | 7.6 | |||
Netherlands | 5.2 | ||||
Singapore | 9.6 | ||||
United Kingdom | 23.8 | ||||
Other foreign jurisdictions | 11.6 | ||||
Income Tax Rate Reconciliation
A reconciliation of our tax provision and effective tax rate to the tax provision calculated using the U.S. federal statutory income tax rate is as follows (in millions):
Year Ended December 31, 2025 | |||||||||||
| Tax provision based on U.S. federal statutory tax rate | $ | (155.3) | 21.0 | % | |||||||
State and local income tax, net of federal (national) income tax effect (1) | (29.3) | 4.0 | % | ||||||||
Foreign tax effects: | |||||||||||
Norway: | |||||||||||
Changes in valuation allowances | 20.5 | (2.8) | % | ||||||||
Other | 1.0 | (0.1) | % | ||||||||
United Kingdom: | |||||||||||
Changes in valuation allowances | 9.6 | (1.3) | % | ||||||||
Goodwill impairment | 20.5 | (2.8) | % | ||||||||
Sale of business | 19.7 | (2.7) | % | ||||||||
Other | (8.2) | 1.1 | % | ||||||||
Foreign tax effects - all other | 17.5 | (2.4) | % | ||||||||
Effect of cross-border tax laws: | |||||||||||
GILTI | 8.6 | (1.2) | % | ||||||||
U.S. tax on branch income (loss) | (43.5) | 5.9 | % | ||||||||
Other | 9.5 | (1.3) | % | ||||||||
Tax credits: | |||||||||||
Foreign tax credits | (19.3) | 2.6 | % | ||||||||
Changes in valuation allowances | 0.9 | (0.1) | % | ||||||||
Nontaxable or nondeductible items | 0.1 | — | % | ||||||||
Changes in unrecognized tax benefits | 1.0 | (0.1) | % | ||||||||
Other adjustments: | |||||||||||
Sale of business | 15.3 | (2.1) | % | ||||||||
Other | 3.4 | (0.5) | % | ||||||||
Effective tax rate | $ | (127.9) | 17.3 | % | |||||||
(1)State taxes in Florida, California, Illinois, and New York made up the majority (greater than 50 percent) of the tax effect for this category.
For the year ended December 31, 2025, our income tax benefit was $127.9 million and our effective income tax rate was 17.3%. Our income tax benefit for the year ended December 31, 2025 includes a net discrete income tax expense of $18.1 million, of which $39.6 million related to the recognition of valuation allowances, primarily related to exit activities and the Falmouth disposal group, and $2.6 million, net, related to the change in the tax accounting status of certain foreign earnings as well as return-to-provision and other adjustments, partially offset by a tax benefit of $24.1 million related to the Watson Fuels sale and related asset impairment charges.
A reconciliation of the income tax expense (benefit) calculated using the U.S. federal statutory income tax rate to our tax provision is as follows (in millions):
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Tax provision based on U.S. federal statutory tax rate | $ | 20.1 | $ | 14.0 | |||||||
| Foreign rates varying from federal statutory tax rate | (0.2) | (1.5) | |||||||||
| State income taxes, net of U.S. federal income tax benefit | 2.2 | 7.5 | |||||||||
| U.S. taxes on foreign earnings and other tax reform impacts | 10.3 | 9.4 | |||||||||
| Uncertain tax positions | (7.4) | 8.9 | |||||||||
Statutory adjustments, including foreign currency and tax rate changes | 4.9 | (9.2) | |||||||||
| Non-taxable interest income & non-deductible interest expense | 0.5 | (3.3) | |||||||||
| Valuation allowances | 4.0 | (10.9) | |||||||||
| Non-deductible officer compensation | 1.2 | 1.8 | |||||||||
Withholding tax | 10.0 | 8.0 | |||||||||
| Foreign tax credit | (18.6) | (13.2) | |||||||||
Sale of Avinode business | 12.4 | — | |||||||||
Sale of Brazil business | (6.0) | — | |||||||||
Worthless stock deduction | (6.2) | — | |||||||||
| Other | 0.6 | 1.5 | |||||||||
Total income tax expense (benefit) | $ | 27.6 | $ | 13.0 | |||||||
For the year ended December 31, 2024, our income tax provision was $27.6 million and our effective income tax rate was 28.9%. Our income tax provision for the year ended December 31, 2024 included a net discrete income tax expense of $3.2 million, of which a tax expense of $12.4 million related to the tax on gain from the Avinode sale and a net tax expense of $3.0 million related to worldwide return-to-provision adjustments, partially offset by a net tax benefit of $8.4 million related to the remeasurement of uncertain tax positions as well as a net tax benefit of $4.4 million related to the tax loss from the Brazil sale.
We have analyzed our global working capital and cash requirements and the potential tax liabilities attributable to repatriation and have determined that we intend to continue our assertion that the earnings of certain of our non-U.S. subsidiaries are indefinitely reinvested. At December 31, 2025, $48.7 million of our foreign earnings were permanently reinvested in non-US business operations. For these investments, if not reinvested indefinitely, we could potentially owe approximately $6.8 million in foreign withholding tax. We also have $1.7 billion of accumulated foreign earnings that are actually or deemed repatriated, for which we have estimated the associated foreign withholding and state income tax effects to be $15.9 million for the year ended December 31, 2025.
Deferred Tax Assets and Liabilities
The temporary differences which comprise our net deferred tax liabilities are as follows (in millions):
| As of December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Gross Deferred Tax Assets: | |||||||||||
| Bad debt reserve and accrued expenses | $ | 13.5 | $ | 10.1 | |||||||
| Net operating loss | 79.9 | 62.5 | |||||||||
| Accrued and other share-based compensation | 26.3 | 22.7 | |||||||||
Goodwill and intangible assets | 29.8 | — | |||||||||
| U.S. foreign income tax credits | 49.5 | 29.3 | |||||||||
| Unrealized foreign exchange, derivatives, and cash flow hedges | 3.2 | — | |||||||||
| Interest expense limitations | 82.6 | 75.2 | |||||||||
| Other | 9.3 | 9.0 | |||||||||
| Total gross deferred tax assets | 294.2 | 208.9 | |||||||||
Less: Valuation allowance (1) | 46.2 | 16.8 | |||||||||
| Gross deferred tax assets, net of valuation allowance | 247.9 | 192.0 | |||||||||
Gross Deferred Tax Liabilities: | |||||||||||
| Depreciation | (28.6) | (33.6) | |||||||||
| Goodwill and intangible assets | — | (108.1) | |||||||||
| Unrealized foreign exchange, derivatives, and cash flow hedges | — | (1.8) | |||||||||
| Deferred tax costs on foreign unrepatriated earnings | (15.9) | (10.1) | |||||||||
| Other | (3.0) | (5.2) | |||||||||
| Total gross deferred tax liabilities | (47.6) | (158.8) | |||||||||
| Net deferred tax liability | $ | — | $ | — | |||||||
| Net deferred tax asset | $ | 200.4 | $ | 33.2 | |||||||
| Reported on the Consolidated Balance Sheets as: | |||||||||||
| Other non-current assets for deferred tax assets, non-current | $ | 214.2 | $ | 78.8 | |||||||
Other long-term liabilities, net for deferred tax liabilities, non-current | $ | 13.8 | $ | 45.6 | |||||||
(1)During the year ended December 31, 2025, we recognized additional valuation allowances of $36.6 million relating primarily to the establishment of a valuation allowance on foreign subsidiaries and the 2025 results of certain of our worldwide entities, and released valuation allowances totaling $7.2 million.
As of December 31, 2025 and 2024, we had gross net operating losses ("NOLs") of approximately $500.2 million and $417.6 million, respectively. The NOLs as of December 31, 2025 originated in various U.S. states and non-U.S. countries. We have recorded a deferred tax asset of $79.9 million reflecting the benefit of the NOL carryforward as of December 31, 2025. This deferred tax asset expires as follows (in millions):
| Net Operating Loss | Expiration Date | Deferred Tax Asset | ||||||
| US Federal | Indefinite | $ | 5.5 | |||||
| US States | 2026-2045 | 11.3 | ||||||
| US States | Indefinite | 6.2 | ||||||
| Foreign | 2025-2044 | 6.6 | ||||||
| Foreign | Indefinite | 50.4 | ||||||
| Total | $ | 79.9 | ||||||
We assessed the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. On the basis of this evaluation, as of December 31, 2025, a valuation allowance of $46.2 million exists on the deferred tax assets that are not expected to be realized, $37.5 million of which relates to the deferred tax asset for NOLs. The amount of the deferred tax asset considered realizable could be adjusted if estimates of future taxable income during the carryforward period change or if
objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as growth projections.
Singapore Tax Concession
We have operated under a special income tax concession in Singapore since 2008, which is subject to renewal. Our current five-year income tax concession period began January 1, 2023. It remains conditional upon our meeting certain employment and investment thresholds which, if not met in accordance with our agreement, may eliminate the benefit beginning with the first year in which the conditions are not satisfied. The income tax concession reduces the income tax rate on qualified sales and derivative gains and losses.
The decrease to our foreign income taxes from the Singapore tax concession was as follows (in millions, except per share amounts):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Singapore tax concession impact on foreign income tax | $ | (1.0) | $ | (2.5) | $ | (2.1) | |||||||||||
| Impact on basic earnings per share | $ | (0.02) | $ | (0.04) | $ | (0.03) | |||||||||||
| Impact on diluted earnings per share | $ | (0.02) | $ | (0.04) | $ | (0.03) | |||||||||||
Income Tax Contingencies
We record gross assets and liabilities for unrecognized income tax benefits ("Unrecognized Tax Assets" and "Unrecognized Tax Liabilities", respectively) in our Consolidated Balance Sheets.
During the year ended December 31, 2025, we recorded a net increase of Unrecognized Tax Liabilities of $3.6 million and a net decrease to Unrecognized Tax Assets of $0.7 million. In addition, during the year ended December 31, 2025, we recorded a decrease of $6.5 million to our Unrecognized Tax Liabilities related to a foreign currency translation loss, which is included in Other income (expense), net in the accompanying Consolidated Statements of Income and Comprehensive Income. As of December 31, 2025, our Unrecognized Tax Liabilities, including penalties and interest, were $95.9 million and our Unrecognized Tax Assets were $16.6 million.
During the year ended December 31, 2024, we recorded a net decrease of Unrecognized Tax Liabilities of $11.2 million and a net decrease to Unrecognized Tax Assets of $3.8 million. In addition, during the year ended December 31, 2024, we recorded a decrease of $3.7 million to our Unrecognized Tax Liabilities related to a foreign currency translation loss, which is included in Other income (expense), net in the accompanying Consolidated Statements of Income and Comprehensive Income. As of December 31, 2024, our Unrecognized Tax Liabilities, including penalties and interest, were $90.8 million and our Unrecognized Tax Assets were $17.2 million.
The following is a tabular reconciliation of the total amounts of gross Unrecognized Tax Liabilities for the year (in millions):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Gross Unrecognized Tax Liabilities – opening balance | $ | 61.8 | $ | 73.1 | $ | 68.1 | |||||||||||
| Gross increases – tax positions in prior period | 8.9 | 1.5 | 7.7 | ||||||||||||||
| Gross decreases – tax positions in prior period | (1.1) | (8.8) | (0.4) | ||||||||||||||
| Gross increases – tax positions in current period | 2.4 | 2.2 | 1.4 | ||||||||||||||
| Gross decreases – tax positions in current period | (0.3) | — | — | ||||||||||||||
| Settlements | (2.0) | (3.0) | (0.5) | ||||||||||||||
| Lapse of statute of limitations | (4.4) | (3.1) | (3.2) | ||||||||||||||
| Gross Unrecognized Tax Liabilities – ending balance | $ | 65.4 | $ | 61.8 | $ | 73.1 | |||||||||||
If our gross Unrecognized Tax Liabilities, net of our Unrecognized Tax Assets of $16.6 million, as of December 31, 2025, are settled by the taxing authorities in our favor or otherwise resolved, our income tax expense would be reduced by $48.9 million (exclusive of interest and penalties) in the period the matter is considered settled or resolved in accordance with ASC 740. This would have the impact of reducing our 2025 effective income tax rate by 6.7%.
We record accrued interest and penalties related to unrecognized income tax benefits as income tax expense. Related to the uncertain income tax benefits noted above, for interest we recorded expense of $2.1 million, income of $1.3 million and expense of $5.1 million during the years ended December 31, 2025, 2024, and 2023, respectively. For penalties, we recorded income of $0.5 million, income of $3.1 million, and expense of $2.8 million during the years ended December 31, 2025, 2024, and 2023, respectively. As of December 31, 2025 and 2024, we had recognized liabilities of $26.6 million and $24.5 million for interest and $3.9 million and $4.4 million for penalties, respectively.
We have various tax returns under examination both in the U.S. and foreign jurisdictions. The most material of these is in Denmark, where one of our subsidiaries has been under audit since 2018. Through December 31, 2025, we have received final tax assessments for the 2013 through 2019 tax years of approximately $123.6 million (DKK 785.7 million), and proposed tax assessments for the 2020 and 2021 tax years of approximately $27.0 million (DKK 171.5 million), excluding interest, which would be material. We believe we have substantial defenses to these assessments and expect to continue to pursue available administrative and judicial remedies to resolve this matter.
An unfavorable resolution of one or more of the above matters could have a material adverse effect on our operating results or cash flows in the quarter or year in which the adjustments are recorded, or the tax is due or paid. As examinations are still in process or have not yet reached the final stages of the appeals process, the timing of the ultimate resolution or payments that may be required cannot be determined at this time.
In many cases, our uncertain tax positions are related to tax years that remain subject to examination by the relevant taxing authorities. The following table summarizes open tax years by major jurisdiction:
| Open Tax Year | |||||||||||
| Jurisdiction | Examination in progress | Examination not yet initiated | |||||||||
| Denmark | 2013-2021 | 2022-2025 | |||||||||
| United States | 2020 | 2022-2025 | |||||||||
| United Kingdom | None | 2024-2025 | |||||||||
| Singapore | None | 2022-2025 | |||||||||
| Other non-U.S. | None | 2015-2025 | |||||||||
The Organization for Economic Co-operation and Development ("OECD") issued Pillar Two model rules which have been enacted or substantively enacted in several jurisdictions in which the Company operates. The legislation was effective for the Company’s financial year beginning January 1, 2024. The rules provide a framework for a coordinated multi-country system of taxation intended to ensure large multinational groups pay a minimum level of tax of 15% on the income arising in the jurisdictions where they operate. The estimated Pillar Two taxes do not have a material impact on the annual effective tax rate or the income tax provision for the years ended December 31, 2025 or 2024. On January 5, 2026, the OECD released Pillar Two guidance related to a "side-by-side arrangement" beginning in 2026, which will largely exclude U.S. parented companies from the impact of certain Pillar Two provisions. We will continue to monitor new legislation and assess any potential impact to the Company.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Feb 21, 2017 | |
| 2015 | Feb 16, 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.