INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2025

Schedule of Income (Loss) from Continuing Operations, Before Income Taxes

Income (loss) from continuing operations, before income taxes consists of the following:


(In millions)	2025		2024		2023
Domestic	$	(112.9)	$	(25.3)	$	(2.7)
International	224.6		250.1		90.0
Income from continuing operations, before income taxes	$	111.7	$	224.8	$	87.3

Schedule of Income Tax Expense (Benefit) from Continuing Operations

A summary of income tax expense (benefit) from continuing operations is as follows:


(In millions)	2025		2024		2023
Current income tax expense:

Domestic	$	3.4	$	7.5	$	18.5
International	70.1		70.4		53.8
Total current income tax expense	$	73.5	$	77.9	$	72.3
Deferred income tax benefit:

Domestic	$	(31.9)	$	(11.4)	$	(35.8)
International	(13.5)		(12.4)		(25.5)
Total deferred income tax benefit	$	(45.4)	$	(23.8)	$	(61.3)
Total income tax expense	$	28.1	$	54.1	$	11.0

Schedule of Effective Income Tax Rate Reconciliation

A reconciliation of the applicable U.S. federal statutory tax rate to the consolidated effective income tax rate along with a description of significant reconciling items is included below for the year ended December 31, 2025.


	2025
(Dollars in millions)	Amount		Rate
U.S. federal income tax rate	$	23.5	21.0	%
Domestic:
Effects of cross border tax laws:
Global Intangible Low-taxed Income, net of credits	3.6		3.2
Subpart F income, net of credits	(1.6)		(1.4)
Withholding tax	3.8		3.4
Tax credits:
Research & development credits	(3.9)		(3.5)
Non-deductible executive compensation	2.0		1.8
Domestic state & local income taxes, net of federal benefit (a)	(4.5)		(4.0)

Foreign:
Luxembourg
Foreign rate differential	(1.8)		(1.6)
Statutory impairment	(28.9)		(25.9)
Intellectual property transfer	(18.1)		(16.2)
Valuation allowance	41.2		36.9
Withholding tax	1.3		1.2
Other	0.8		0.7
Cyprus
Foreign rate differential	(1.5)		(1.4)
Intellectual property transfer	6.0		5.4
Tax incentives	(2.0)		(1.8)
Other	1.0		0.9
Netherlands
Foreign rate differential	2.9		2.6
Tax incentives	(5.5)		(4.9)
Other	0.7		0.6
Switzerland
Withholding tax	4.1		3.6
Other	(0.8)		(0.7)
China
Foreign rate differential	1.6		1.4
Valuation allowance	(2.2)		(2.0)
Other	0.9		0.9
Germany
Valuation allowance	3.0		2.6
Other	0.3		0.4
Other foreign jurisdictions	6.7		6.0

Worldwide changes in unrecognized tax benefits	(4.5)		(4.0)

Total income tax expense	$	28.1	25.2	%

(a)California, Wisconsin, and Georgia make up the majority of the state & local income tax benefit.

As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective tax rate differs from the statutory tax rate as follows:



	2024		2023
U.S. federal income tax rate	21.0	%	21.0	%

International tax rate differential:
Asia	0.4		0.9
Europe	(0.8)		(5.2)
North and South America	2.1		4.5
Total international tax rate differential	1.7		0.2

Net tax on GILTI and Subpart F Income	(0.5)		2.2
International tax on certain current and prior year earnings	1.6		3.9

Non-deductible interest	0.4		5.3


Research and development credit	(1.7)		(3.7)


Capital losses	—		(5.4)
State and local tax, net	(0.7)		(2.3)
International permanent items	0.7		(7.5)
U.S. permanent items	2.1		2.5
Net impact of uncertain tax positions	(1.1)		(5.3)
Changes in valuation allowances	—		3.6
Other	0.6		(1.9)
Effective income tax rate	24.1	%	12.6	%

Schedule of Components of Deferred Tax Assets (Liabilities)

Components of our deferred tax assets (liabilities) as of December 31, 2025 and 2024 were as follows:


(In millions)	2025		2024
Deferred tax assets:

Employment costs	21.3		22.0
Environmental accruals	34.1		35.5
Net operating loss carryforwards	96.9		60.8
Operating leases	8.9		9.5
Research and development	62.7		53.0
Capitalized and carryforward interest	105.2		78.5
Financial derivatives	73.7		4.5
Other	26.5		32.7
Gross deferred tax assets	$	429.3	$	296.5
Valuation allowances	(76.3)		(30.3)
Total deferred tax assets, net of valuation allowances	$	353.0	$	266.2

Deferred tax liabilities:
Property, plant and equipment	$	(100.4)	$	(100.4)
Goodwill and intangibles	(325.7)		(318.5)
Operating leases	(9.0)		(9.7)

Other	(8.9)		(16.7)
Total deferred tax liabilities	$	(444.0)	$	(445.3)

Net deferred tax liabilities	$	(91.0)	$	(179.1)

Consolidated Balance Sheets:
Non-current deferred income tax assets	$	194.7	$	81.3
Non-current deferred income tax liabilities	$	(285.7)	$	(260.4)

Schedule of Cash Paid for Income Taxes

In accordance with the updated requirements of ASU 2023-09 for the year ended December 31, 2025, cash paid for income taxes was as follows:


(In millions)	2025
Income taxes paid, net of refunds:
U.S. Federal	$	4.2
U.S. State	(0.7)
Brazil	4.6
China	8.8
Italy	4.3
Mexico	7.5
Netherlands	5.5
Switzerland	4.2
Other International	27.4
Total income taxes paid, net of refunds	$	65.8

Schedule of Reconciliation of Unrecognized Tax Benefits

A reconciliation of unrecognized tax benefits is as follows:


	Unrecognized Tax Benefits
(In millions)	2025		2024		2023
Balance as of January 1,	$	13.6	$	16.9	$	25.4
Increases as a result of positions taken during current year	0.9		0.3		1.9
Increases as a result of positions taken for prior years	0.6		0.7		0.4

Reductions for tax positions of prior years	—		(0.6)		(10.7)
Decreases as a result of lapse of statute of limitations	(5.8)		(3.2)		(0.6)

Other, net	0.5		(0.5)		0.5
Balance as of December 31,	$	9.8	$	13.6	$	16.9

AVIENT CORP 10-K