MRK · 10-Q · 2026Q2 · Full report

Income Tax Rate Changes

Merck & Co., Inc. · 2026-08-07 · Importance 65 · Surprise 82

Merck reported a $654 million income tax provision on a $683 million pretax loss in the second quarter of 2026, producing a negative 95.9% effective tax rate. The Terns acquisition charge created a 108.9 percentage-point unfavorable tax-rate impact because it generated no tax benefit. For the first six months of 2026, the $1.4 billion tax provision on a $4.2 billion pretax loss produced a negative 32.3% effective rate, with Cidara and Terns charges causing a combined 45.3 percentage-point unfavorable impact. IRS proposed adjustments could increase Merck’s transition tax by approximately $1.3 billion plus approximately $260 million of penalties, excluding interest.