Annual report [Section 13 and 15(d), not S-K Item 405]

INCOME TAXES

v3.25.4
INCOME TAXES
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
 
The provision for income taxes consisted of the following:
  
  Twelve Months Ended December 31,
  2025 2024 2023
  (In millions)
Current:      
Federal $ 94.3  $ 169.9  $ 155.5 
State 37.1  38.3  24.2 
Foreign 69.0  61.9  56.7 
  200.4  270.1  236.4 
Deferred:      
Federal 36.3  (47.7) (50.2)
State 0.9  (0.3) 12.4 
Foreign (7.0) (18.9) (32.4)
  30.2  (66.9) (70.2)
Provision for income taxes $ 230.6  $ 203.2  $ 166.2 
 
The components of consolidated income before income taxes were as follows:
  Twelve Months Ended December 31,
  2025 2024 2023
  (In millions)
U.S. $ 732.9  $ 651.9  $ 573.2 
Foreign 162.0  158.6  144.7 
Consolidated income before income taxes
 $ 894.9  $ 810.5  $ 717.9 

Beginning in the fiscal year ended December 31, 2025, we adopted ASU 2023-09 prospectively. See Note 1ーSummary of Significant Accounting PoliciesーAdoption of New Accounting Standards for additional details on the adoption of ASU 2023-09. A reconciliation of the U.S. federal statutory income tax rate to our effective income tax rate pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025 is as follows:
  Twelve Months Ended December 31,
  2025
Amount %
(In millions)
U.S. federal statutory income tax rate
 $ 187.9  21.0  %
State and local income taxes, net of federal income tax effect (1)
30.8  3.4  %
Foreign tax effects
 28.0  3.1  %
Effect of cross-border tax laws
 (7.7) (0.9) %
Tax credits
Research and development tax credits
 (19.2) (2.1) %
Other (0.1) —  %
Non-taxable or non-deductible items
Excess officer's compensation
 11.2  1.3  %
Other 1.0  0.2  %
Changes in unrecognized tax benefits
 (1.3) (0.2) %
Effective income tax rate
 $ 230.6  25.8  %
(1) The states that contribute to the majority of the tax effect in this category are California, Maryland, Tennessee, New York, Pennsylvania, Illinois and Connecticut.

A reconciliation of the U.S. federal statutory income tax rate to our effective income tax rate for the years ended December 31, 2024 and 2023 is as follows:

  Twelve Months Ended December 31,
  2024 2023
  (In millions)
Federal statutory rate 21.0  % 21.0  %
Provision computed at federal statutory rate $ 170.2  $ 150.8 
State and local taxes, net of federal tax benefit 30.1  30.0 
Foreign differential 27.1  20.5 
Federal research & development credit (17.6) (24.2)
Equity compensation (8.2) (3.2)
Tax reserves (5.7) 5.8 
Reversal of BVS deferred tax liability —  (27.3)
Excess officer’s compensation 9.2  8.4 
Valuation allowance (7.2) 1.9 
Other 5.3  3.5 
Provision for income taxes $ 203.2  $ 166.2 
Effective income tax rate 25.1  % 23.2  %

Cash paid for income taxes, net of refunds received, by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025 is as follows:

  Twelve Months Ended December 31,
2025
(In millions)
Federal
 $ 97.2 
State
 34.8 
Foreign
Canada 24.9 
Other
 40.8 
Cash paid for income taxes, net of refunds received
 $ 197.7 

Cash paid for income taxes, net of amounts refunded, was $268.1 million and $203.2 million during the twelve months ended December 31, 2024 and 2023, respectively.
Our deferred income tax assets (liabilities) are as follows:
  December 31,
  2025 2024
  (In millions)
Deferred income tax assets:  
Net operating and capital loss carryforwards $ 85.0  $ 83.9 
Goodwill and intangible assets 114.5  106.2 
Employee compensation programs 99.9  71.2 
Foreign tax credits 8.1  17.2 
Employee pension benefits 26.6  27.7 
Reserves and accrued expenses 9.2  8.1 
Accrued legal expense 21.5  8.6 
Research and development costs 30.5  27.2 
Operating lease asset 30.1  29.8 
Other 23.1  30.8 
Gross deferred income tax assets 448.5  410.7 
Valuation allowance (175.4) (170.8)
Total deferred income tax assets, net 273.1  239.9 
Deferred income tax liabilities:  
Goodwill and intangible assets (539.1) (471.1)
Undistributed earnings of foreign subsidiaries (9.2) (8.3)
Depreciation (26.9) (27.4)
Operating lease liability (30.1) (29.8)
Prepaid expenses (16.3) (16.0)
Other (3.2) (5.1)
Total deferred income tax liability (624.8) (557.7)
Net deferred income tax liability $ (351.7) $ (317.8)

Our deferred income tax assets and deferred income tax liabilities are included in the accompanying Consolidated Balance Sheets as follows:
  December 31,
  2025 2024
  (In millions)
Long-term deferred income tax assets, included in other assets $ 39.1  $ 33.8 
Long-term deferred income tax liabilities (390.8) (351.6)
Net deferred income tax liability $ (351.7) $ (317.8)

At December 31, 2025, we had U.S. federal and state net operating loss carryforwards of $12.0 million and $228.4 million, respectively, which expire at various times between 2028 and 2047. Foreign net operating loss carryforwards totaled $243.5 million, of which $11.4 million expire between 2026 and 2045, and the remaining $232.1 million may be carried forward indefinitely. We also had foreign capital loss carryforwards of $17.9 million which do not expire and foreign tax credit carryforwards of $8.1 million that expire between 2026 and 2028.

Additionally, we had state and foreign research and development credit carryforwards of $30.5 million; the state credits expire between 2027 and 2034, while the foreign credits carry forward indefinitely. Regarding interest expense, we had state §163(j) interest limitation carryforwards of $586.0 million (tax-effected at $4.5 million) with an indefinite expiration period, and foreign interest expense carryforwards of $12.4 million (tax effected at $3.7 million) which expire between 2039 and 2040.
The total deferred tax asset related to these net operating losses, capital losses, credits, and interest limitations is $131.8 million, of which $56.4 million is offset by a valuation allowance.

We record deferred income taxes on temporary differences of our foreign subsidiaries, except for those related to undistributed earnings that we consider indefinitely reinvested. As of December 31, 2025, this assertion applies to certain earnings of our Canadian and Chilean subsidiaries. If these earnings were repatriated, we estimate the associated income and foreign withholding taxes would be approximately $25.8 million.

Additionally, we are indefinitely reinvested in the outside basis of our foreign subsidiaries, as we have no intent to sell or liquidate these entities. Accordingly, no deferred tax assets or liabilities have been recognized for these basis differences, except for local country withholding taxes which we have accrued as we expect those specific amounts to be incurred upon eventual realization of certain components of that basis.
 
We recognize interest and penalties accrued related to unrecognized tax benefits in the provision for income taxes on our Consolidated Statements of Income.
 
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
  2025 2024
  (In millions)
Beginning balance (January 1) $ 44.7  $ 55.5 
Increases related to prior year tax positions 3.3  1.7 
Decreases related to prior year tax positions (2.9) (0.7)
Increases related to current year tax positions 8.0  8.5 
Decreases related to settlements (3.3) — 
Expiration of the statute of limitations for the assessment of taxes (10.7) (20.1)
Currency translation adjustment 0.1  (0.2)
Ending balance (December 31) $ 39.2  $ 44.7 
 
We recorded liabilities of $36.1 million and $42.9 million for unrecognized tax benefits as of December 31, 2025 and 2024, respectively, which included interest and penalties of $4.1 million and $6.0 million, respectively. As of December 31, 2025 and 2024, the total amount of unrecognized benefits that, if recognized, would have affected the effective tax rate was $34.6 million and $41.3 million, respectively, which included interest and penalties of $3.4 million and $5.1 million, respectively. During 2025 and 2024, gross interest and penalties of $2.2 million and $2.4 million, respectively, were accrued.

As of December 31, 2025 and 2024, the gross amount of unrecognized tax benefits was $39.2 million and $44.7 million, respectively. Of the total, $7.2 million in 2025 and $7.8 million in 2024 relate to unrecognized tax benefits for which no liability has been recorded associated with the carryforward of certain state and foreign attributes. If we were to prevail on all uncertain tax positions, the net effect would be a benefit of $32.0 million and $36.8 million in 2025 and 2024, respectively, exclusive of any benefits related to interest and penalties.
 
Equifax and its subsidiaries are subject to U.S. federal, state and international income taxes. We are generally no longer subject to federal, state or international income tax examinations by tax authorities for years before 2017 with a few exceptions.