LLY · 10-Q · 2026Q2 · Full report

Income Tax Rate Changes

ELI LILLY & Co · 2026-08-05 · Importance 71 · Surprise 82

The effective tax rate increased to 23.3% in the second quarter of 2026 from 16.5% in the second quarter of 2025, while income taxes increased to $2,152 million from $1,116 million. For the first six months, the effective tax rate rose to 19.9% from 17.7%, and income taxes increased to $3,606 million from $1,813 million. The quarterly increase was primarily driven by nondeductible acquired IPR&D, higher-tax jurisdictions, and asset impairment, restructuring, and special charges. The year-to-date increase primarily reflected earnings mix, special charges, and nondeductible acquired IPR&D.

Key facts

• Effective tax rate for the three months ended June 30, 2026: 23.3%, compared with 16.5% for the three months ended June 30, 2025. source
• The higher effective tax rate for the three months ended June 30, 2026 was primarily driven by the unfavorable tax impact of nondeductible acquired IPR&D charges and, to a lesser extent, a mix of earnings in higher tax jurisdictions and the unfavorable tax impact of asset impairment, restructuring, and other special charges. source
• Effective tax rate for the six months ended June 30, 2026: 19.9%, compared with 17.7% for the six months ended June 30, 2025. source