ZBH · 8-K · 20260805PR335108
Income Tax Rate Changes
ZIMMER BIOMET HOLDINGS, INC. · 2026-08-05 · Importance 30 · Surprise 40 · Contradicted
The effective income tax rate increased to 15.1% in 2025 from 12.7% in 2024 and 4.0% in 2023, while income tax provision declined to $125.7 million from $131.4 million in 2024. The 2025 tax-rate reconciliation included a $95.7 million valuation allowance increase, a $47.0 million GILTI expense, a $105.5 million capital-loss tax benefit, and a $48.4 million benefit from investments in partnerships. Deferred tax asset valuation allowances increased to $573.0 million at December 31, 2025 from $449.4 million, including a full allowance against $123.7 million of capital-loss carryforwards. IRS proposed adjustments for 2016–2019 could increase U.S. federal taxable income and produce approximately $312 million of additional tax expense, subject to interest, if Zimmer Biomet does not prevail.
Key facts
- Under the Tax Cuts and Jobs Act of 2017, the company has an $85.9 million current liability remaining from the transition tax for deemed repatriation; the 2026 payment will be the last. source
- Balance of unrecognized tax benefits at December 31, 2025: $247.4 million (compared with $241.4 million at December 31, 2024 and $391.9 million at December 31, 2023). source
- Amounts impacting effective tax rate, if recognized balance at December 31, 2025: $213.2 million (compared with $204.1 million at December 31, 2024 and $251.6 million at December 31, 2023). source
- Change in valuation allowance contributed $95.7 million (11.5 percentage points) to the 2025 effective tax rate reconciliation. source
- Capital loss item in the 2025 tax reconciliation: ($105.5) million, representing (12.7) percentage points. source
- At December 31, 2025, net operating loss carryover total $459.3 million; tax credit carryover $121.2 million; capital loss carryover $123.7 million, with valuation allowances of $391.0 million (NOL), $47.8 million (tax credits) and $123.7 million (capital losses). source
- Reconciliation of U.S. statutory rate to effective tax rate for year ended December 31, 2025: U.S. federal statutory income tax rate amount $174.5 million (21.0%); total provision $125.7 million (15.1% effective rate). source
- Earnings (loss) before income taxes: United States operations (2025) $(127.5) million; (2024) $251.8 million; (2023) $57.0 million. source
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| net_income | negative | realized | -9.4% | Total earnings before income taxes (2025) $830.8 million; (2024) $1,036.6 million; (2023) $1,067.3 million. |
| net_income | positive | realized | +4.8% | Capital loss item in the 2025 tax reconciliation: ($105.5) million, representing (12.7) percentage points. |
| net_income | negative | realized | -4.4% | Change in valuation allowance contributed $95.7 million (11.5 percentage points) to the 2025 effective tax rate reconciliation. |
| liability | negative | realized | -2.3% | Total deferred tax liabilities as of December 31, 2025: $799.2 million; total net deferred income taxes $17.8 million as of December 31,… |
| liability | negative | realized | -0.4% | Under the Tax Cuts and Jobs Act of 2017, the company has an $85.9 million current liability remaining from the transition tax for deemed… |
| cash | negative | committed | -0.3% | Under the Tax Cuts and Jobs Act of 2017, the company has an $85.9 million current liability remaining from the transition tax for deemed… |
| net_income | positive | contingent | +0.1% | Amounts impacting effective tax rate, if recognized balance at December 31, 2025: $213.2 million (compared with $204.1 million at December… |
| liability | negative | realized | — | Balance of unrecognized tax benefits at December 31, 2025: $247.4 million (compared with $241.4 million at December 31, 2024 and $391.9… |
| assets | negative | realized | — | At December 31, 2025, net operating loss carryover total $459.3 million; tax credit carryover $121.2 million; capital loss carryover… |
| net_income | negative | realized | — | Reconciliation of U.S. statutory rate to effective tax rate for year ended December 31, 2025: U.S. federal statutory income tax rate… |
| net_income | negative | realized | — | Current provision for income taxes (total) for 2025: Federal $62.9 million; State $21.5 million; Foreign $128.5 million; total current… |
| cash | negative | realized | — | Components of income taxes paid, net of refunds, for year ended December 31, 2025: US income tax paid $221.0 million (US federal $196.9… |