ALGN · 10-Q · 2026Q3 · Full report

Income Tax Rate Changes

ALIGN TECHNOLOGY INC · 2026-11-04 · Importance 40 · Surprise 56 · In source text

The effective tax rate declined to 20.6% in the third quarter of 2026 from 40.1% in the prior-year quarter, while income tax provision decreased $3.0 million to $35.0 million. For the first nine months, the effective rate fell to 23.9% from 32.8%, and tax provision declined $22.6 million to $111.5 million. Management attributed the quarterly rate decrease primarily to lower U.S. taxes on foreign earnings, partly offset by a change in jurisdictional income mix. The nine-month rate decrease primarily reflected changes in jurisdictional income mix.

Key facts

• On July 7, 2026, the UK Upper Tribunal ruled that clear aligners are not dental prostheses and are subject to UK VAT at the standard rate; Align recorded an estimated liability of approximately $43.1 million as of September 30, 2026. source
• Align intends to exhaust all available appeals and vigorously defend its UK VAT position; the matter’s ultimate resolution remains significantly uncertain. source
• Effective September 7, 2026, Align’s invoices due to UK customers for clear aligners and retainers include VAT at the applicable rate. source
• Align’s effective tax rate was 20.6% for Q3 2026, compared with 40.1% for Q3 2025; the decrease was primarily attributable to lower US taxes on foreign earnings, partly offset by a change in jurisdictional income mix. source
• Align’s effective tax rate was 23.9% for the first nine months of 2026, compared with 32.8% for the same period of 2025; the decrease was primarily attributable to a change in jurisdictional income mix. source

Impact estimates