MRK · 8-K · 20260804PR090045

Income Tax Rate Changes

Merck & Co., Inc. · 2026-08-04 · Importance 65 · Surprise 82 · In source text

The second-quarter 2026 income tax provision was $654 million despite a pretax loss of $683 million, producing a negative 95.9% effective tax rate versus 11.4% in the second quarter of 2025. The Terns acquisition charge caused a 108.9-percentage-point unfavorable impact because no tax benefit was recorded for the charge. The non-GAAP tax provision was $882 million on pretax income of $550 million, resulting in a 160.3% effective tax rate. Merck raised its full-year 2026 non-GAAP effective tax-rate outlook to 35.0%-36.0% from 23.5%-24.5%, including the non-tax-deductible Cidara and Terns acquisition charges.

Key facts

• Full-year 2026 updated non-GAAP effective income tax rate is expected to be 35.0% to 36.0% (prior 23.5% to 24.5%), including impact of non-tax deductible one-time charges for Cidara and Terns source
• The income tax provision for Q2 2026 was $654 million on a pretax loss of $683 million, resulting in an effective income tax rate of (95.9)%; this includes a 108.9 percentage point unfavorable impact of the Terns acquisition charge for which no tax benefit was recorded source
• Non-GAAP income tax provision for Q2 2026 was $882 million on pretax income of $550 million, resulting in a non-GAAP effective income tax rate of 160.3%; includes a 146.2 percentage point unfavorable impact of the Terns acquisition charge source

Impact estimates