EW · 10-Q · 2026Q3 · Full report
Income Tax Rate Changes
Edwards Lifesciences Corp · 2026-11-04 · Importance 89 · Surprise 82 · Matches filing data
The effective income tax rate for the nine months ended September 30, 2026 rose to 31.2% from 16.1% in 2025, an increase of 15.1 percentage points. A $174.4 million valuation allowance against deferred tax assets was recorded in the second and third quarters after California legislation enacted June 29, 2026 limited utilization of business tax credits, including R&D credit carryovers. The company said the 2026 rate exceeded the 21.0% federal statutory rate primarily because of that valuation allowance, partly offset by benefits from foreign earnings taxed at lower rates and employee share-based compensation. Edwards expected approximately $45.0 million of additional 2026 Pillar Two tax expense before offsets under current law.
Key facts
- A $174.4 million valuation allowance against certain deferred tax assets was recorded in the second and third quarters of 2026 after California legislation enacted June 29, 2026 permanently limited use of most business tax credits, including R&D credit carryovers. source
- Edwards Lifesciences’ effective income tax rate for continuing operations was 17.0% for the three months ended September 30, 2026 and 16.1% for the comparable 2025 period; for the nine months ended, the rates were 31.2% in 2026 and 16.1% in 2025. source
- Edwards Lifesciences concluded that its California R&D credit carryforward is no longer realizable and established a valuation allowance because the annual utilization limit is lower than newly generated credits. source
- Edwards Lifesciences expects Pillar Two provisions to result in approximately $45.0 million of additional tax expense in 2026 before offsets under current law; Pillar Two UTPR expense will decline as countries enact the Side-by-Side Safe Harbour. source
- The OBBBA was signed into law on July 4, 2025, and Edwards Lifesciences does not expect it to materially affect 2026 or future periods. source
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| net_income | negative | realized | -10.2% | A $174.4 million valuation allowance against certain deferred tax assets was recorded in the second and third quarters of 2026 after… |
| assets | negative | realized | -1.2% | A $174.4 million valuation allowance against certain deferred tax assets was recorded in the second and third quarters of 2026 after… |