Company: DLX
Filing Date: 2025-02-21
Form Type: 10-K
Source: 0000027996-25-000051
Chunk: 121

Company: DELUXE CORP
Filing Date: 2025-02-21
Form: 10-K
Item: Item 8
Chunk 121
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 income tax expense, net of federal income tax benefit0.7 %2.0 %2.7 %Tax impact of share-based compensation0.6 %6.7 %3.2 %Return to provision adjustments(5.3 %)2.0 %(1.9 %)Research and development tax credit(1.8 %)(3.0 %)(1.2 %)Change in state deferred income tax rates(0.2 %)1.7 %0.3 %Business exits (Note 6)— (30.2 %)(15.8 %)Other2.0 %0.4 %0.5 %Effective tax rate30.8 %34.1 %22.3 %In June 2023, we completed the sale of our North American web hosting business, and in May 2022, we completed the sale of our Australian web hosting business. We recognized capital losses on these transactions for tax purposes and recorded valuation allowances for the portion of the capital loss carryovers that we did not expect to realize. In December 2023, we executed an agreement to transition our Canadian payroll and human resources services customers to another service provider. We recognized a capital gain on this transaction for tax purposes, which we were able to partially offset with capital loss carryforwards. These capital loss carryforwards had previously been offset with a valuation allowance, and as a result, we reversed the previously recognized valuation allowance.

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DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

We repatriated foreign earnings held in cash by our Canadian subsidiaries of $52,707 during 2024, $32,931 during 2023, and $25,526 during 2022. The associated tax expense included in the income tax provision was $3,038 in 2024, $2,168 in 2023, and $1,818 in 2022. We believe the accumulated and remaining cash of our Canadian subsidiaries is sufficient to meet their working capital needs. The historical unremitted Canadian earnings as of December 31, 2021 will continue to be reinvested indefinitely in the operations of those subsidiaries. Deferred income taxes have not been recognized on those earnings as of December 31, 2024. If we were to repatriate our foreign cash and cash equivalents into the U.S. at one