APTV · 10-Q · 2026Q2 · Full report

Income Tax Rate Changes

Aptiv PLC · 2026-08-04 · Importance 71 · Surprise 82

Aptiv’s effective tax rate for the three and six months ended June 30, 2026 included discrete tax benefits of approximately $5 million and $7 million, primarily from prior-year true-ups. By comparison, the first six months of 2025 included a $241 million discrete tax expense, primarily from changes in valuation allowances, while the second quarter of 2025 included a $40 million discrete tax benefit. The OBBBA’s favorable changes to U.S. deductions for interest, qualified property and research and development expenditures are not expected to materially affect Aptiv’s consolidated financial statements.

Key facts

• As a result of the Guidance, the Company recognized an increase to valuation allowances of $294 million to reduce the related deferred tax asset during the year ended December 31, 2025. source
• The Company’s effective tax rate for the three and six months ended June 30, 2025 included net discrete tax benefits of approximately $40 million and net discrete tax expense of approximately $241 million, respectively. source
• Aptiv recorded net discrete tax benefits of approximately $5 million and $7 million for the three and six months ended June 30, 2026, respectively, primarily related to prior year true-ups. source
• On December 18, 2025 the Swiss Council of States passed a motion preventing the retroactive application of the OECD’s 2025 Guidance on the Model Rules, and Aptiv stated this has no immediate impact on its tax position though it will monitor implications for Swiss deferred tax assets associated with its Swiss tax incentive. source
• The One Big Beautiful Bill Act (OBBBA) was enacted into law on July 4, 2025 and includes changes to U.S. tax law applicable to Aptiv beginning in 2025; Aptiv stated the OBBBA will not have a material impact on the Company’s consolidated financial statements. source
• On January 15, 2025, the OECD released Administrative Guidance on Article 9.1 of the Model Rules which amends the Pillar Two Framework. source
• The Guidance generally provides for a minimum effective tax rate of 15% as established by the OECD. source
• The Guidance eliminates the tax basis in certain deferred tax assets including tax credit carryforwards for purposes of the global minimum tax. source