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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes
Note 17:
Income Taxes
Income Tax Expense
Income before income tax (benefit) expense and the income tax (benefit) expense consist of the following:
 For the Years Ended December 31,
(In millions)202420232022
Income before income tax (benefit) expense:
Domestic$853.4 $192.4 $1,842.0 
Foreign1,052.6 1,104.4 1,749.8 
Total income before income tax (benefit) expense$1,906.0 $1,296.8 $3,591.8 
Income tax (benefit) expense:
Current:
Federal$448.9 $377.6 $694.5 
State50.5 15.1 39.0 
Foreign(67.5)48.4 67.9 
Total current431.9 441.1 801.4 
Deferred:
Federal(154.5)(587.4)(328.3)
State(17.3)(12.7)2.5 
Foreign13.7 294.3 157.2 
Total deferred(158.1)(305.8)(168.6)
Total income tax (benefit) expense$273.8 $135.3 $632.8 
Transition Toll Tax
The Tax Cuts and Jobs Act of 2017 eliminated the deferral of U.S. income tax on the historical unrepatriated earnings by imposing the one-time mandatory deemed repatriation tax on accumulated foreign subsidiaries' previously untaxed foreign earnings. The Transition Toll Tax was assessed on our share of our foreign corporations' accumulated foreign earnings that were not previously taxed. Earnings in the form of cash and cash equivalents were taxed at a rate of 15.5% and all other earnings were taxed at a rate of 8.0%.
As of December 31, 2024 and 2023, we have accrued income tax liabilities of $234.0 million and $419.5 million, respectively, under the Transition Toll Tax. The amount accrued as of December 31, 2024, is expected to be paid within one year. The Transition Toll Tax is being paid in installments over an eight--year period, which started in 2018, and will not accrue interest.
Unremitted Earnings
At December 31, 2024, we considered our earnings not to be permanently reinvested outside the U.S. and therefore recorded deferred tax liabilities associated with an estimate of the total withholding taxes expected as a result of our repatriation of earnings. Other than for earnings, we are permanently reinvested for book/tax basis differences of approximately $1.5 billion as of December 31, 2024, primarily arising through the impacts of purchase accounting. These permanently reinvested basis differences could reverse through sales of the foreign subsidiaries, as well as various other events, none of which were considered probable as of December 31, 2024. The residual U.S. tax liability, if these differences reverse, would be between $300.0 million and $400.0 million as of December 31, 2024.
Deferred Tax Assets and Liabilities
Significant components of our deferred tax assets and liabilities are summarized as follows:
 As of December 31,
(In millions)20242023
Deferred tax assets:
Tax credits$294.0 $252.8 
Inventory, other reserves and accruals219.2 203.7 
Intangibles, net989.6 1,153.9 
IRC Section 174 capitalized research and development733.9 570.8 
Net operating loss1,357.2 1,700.4 
Share-based compensation34.4 36.1 
Other318.4 293.3 
Valuation allowance(1,013.7)(1,278.7)
Total deferred tax assets$2,933.0 $2,932.3 
Deferred tax liabilities:
Purchased inventory valuation step-up and intangible assets
$(1,529.6)$(1,257.4)
Samsung Bioepis investment installments— (35.5)
GILTI(1,054.8)(1,136.9)
Depreciation, amortization and other(214.9)(215.7)
Total deferred tax liabilities$(2,799.3)$(2,645.5)
As of December 31, 2024, 2023, 2022 and 2021, we had a valuation allowance of $1,013.7 million, $1,278.7 million, $2,003.3 million and $1,961.3 million, respectively, related to net operating losses in Switzerland and Neurimmune's tax basis in ADUHELM.
The change in the valuation allowance between December 31, 2024 and 2023, was primarily driven by movements in net operating loss deferred tax assets in Switzerland. The net income tax impact of the changes in the valuation allowance was a benefit of approximately $56.8 million for the year ended December 31, 2024.
The change in the valuation allowance between December 31, 2023 and 2022, was primarily driven by a reduction of approximately $470.3 million related to the elimination of Neurimmune's tax basis in ADUHELM as a result of its deconsolidation and reduction of approximately $230.3 million due to movements in net operating loss deferred tax assets in Switzerland. The net income tax impact of the changes in the valuation allowance was an expense of approximately $7.4 million for the year ended December 31, 2023.
The change in the valuation allowance between December 31, 2022 and 2021, was primarily driven by an addition of $85.0 million related to Neurimmune's tax basis in ADUHELM. For additional information on the deconsolidation and our collaboration arrangement with Neurimmune, please read Note 20, Investments in Variable Interest Entities, to these consolidated financial statements.
In addition to deferred tax assets and liabilities, we have recorded deferred charges related to intra-entity sales of inventory. As of December 31, 2024 and 2023, the total deferred charges were $273.1 million and $69.3 million, respectively.
Inflation Reduction Act
In August 2022 the IRA was signed into law in the U.S. The IRA introduced new tax provisions, including a 15.0% corporate alternative minimum tax and a 1.0% excise tax on stock repurchases. The provisions of the IRA are effective for periods after December 31, 2022. The IRA did not result in any material adjustments to our income tax provision or income tax balances as of December 31, 2024 and 2023. Preliminary guidance has been issued by the IRS and we expect additional guidance and regulations to be issued in future periods. We will continue to assess its potential impact on our business and results of operations as further information becomes available.
Pillar Two
The OECD has issued model rules, which generally provide for a jurisdictional minimum effective tax rate of 15.0% as defined in those rules. Various countries have or are in the process of enacting legislation intended to implement the principles effective January 1, 2024. Our income tax provision for the year ended December 31, 2024, reflects currently enacted legislation and guidance related to the OECD model rules. This enacted legislation and guidance related to the OECD model rules did not result in any material adjustments to our income tax provision or income tax balances as of December 31, 2024.
Tax Rate
A reconciliation between the U.S. federal statutory tax rate and our effective tax rate is summarized as follows:
 For the Years Ended December 31,
 202420232022
Statutory rate21.0 %21.0 %21.0 %
State taxes1.8 1.1 1.1 
Taxes on foreign earnings, including valuation allowances(7.6)(5.9)(4.9)
Tax credits(2.2)(7.3)(1.7)
Purchased inventory valuation step-up and intangible assets
2.1 0.7 0.3 
GILTI(1.6)(0.6)0.7 
Sale of Samsung Bioepis— — (1.6)
Litigation settlement agreement— — 2.6 
Neurimmune tax impacts— — 2.3 
Internal reorganization— (0.1)(1.4)
Other, including permanent items0.9 1.5 (0.8)
Effective tax rate14.4 %10.4 %17.6 %
Changes in Tax Rate
For the year ended December 31, 2024, compared to 2023, the increase in our effective tax rate was partially driven by the relative deferred tax effects of the changes in the value of our equity investments and amortization of purchased intangible assets and inventory. Further, 2023 benefited from the combined impacts of Reata acquisition-related expenses and the resolution of an uncertain tax matter related to tax credits. This was partially offset by a 2024 benefit related to a decrease in our valuation allowance related to projected future foreign taxable income, as discussed in the Deferred Tax Assets and Liabilities section above.
For the year ended December 31, 2023, compared to 2022, the decrease in our effective tax rate was driven by the impact of the non-cash changes in the value of our equity investments, the impact of Fit for Growth related expenses and Reata acquisition-related expenses, as well as the combined net unfavorable tax rate impacts in 2022 related to a litigation settlement agreement, the sale of our equity interest in Samsung Bioepis, the impact of a Neurimmune valuation allowance, as discussed below, and an international reorganization to align with global tax developments. The change also benefits from the resolution of an uncertain tax matter during the first quarter of 2023 related to tax credits.
For additional information on our acquisition of Reata, please read Note 2, Acquisitions, to these consolidated financial statements.
For additional information on the litigation settlement agreement, please read Note 18, Other Consolidated Financial Statement Detail, to these consolidated financial statements.
Neurimmune Deferred Tax Asset
During the first quarter of 2022, upon issuance of the final NCD related to ADUHELM, we recorded an increase in a valuation allowance of approximately $85.0 million to reduce the net value of a previously recorded deferred tax asset in Switzerland on Neurimmune's tax basis in ADUHELM, the realization of which was dependent on future sales of ADUHELM, to zero.
This adjustment to our net deferred tax asset was recorded with an equal and offsetting amount assigned to net income (loss) attributable to noncontrolling interests, net of tax in our consolidated statements of income, resulting in a zero net impact to net income attributable to Biogen Inc.
During the fourth quarter of 2023 Neurimmune was deconsolidated from our consolidated financial statements. For additional information on the deconsolidation and our collaboration arrangement with Neurimmune, please read Note 20, Investments in Variable Interest Entities, to these consolidated financial statements.
Tax Attributes
As of December 31, 2024, we had credit carry forwards for U.S. federal income tax purposes of approximately $163.0 million that begin to expire in 2030 and net operating losses of approximately $513.4 million that do not expire. For U.S. state income tax purposes, we had research and investment credit carry forwards of approximately $165.5 million that begin to expire in 2027 and net operating losses of approximately $220.9 million that begin to expire in 2028. For foreign income tax purposes, we had $10.7 billion of federal net operating loss carryforwards that begin to expire in 2027 and $10.1 billion of Swiss cantonal net operating loss carryforwards that begin to expire in 2027.
In assessing the realizability of our deferred tax assets, we have considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. In making this determination, under the applicable financial reporting standards, we are allowed to consider the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies. Based upon the level of historical taxable income and income tax liability and projections for future taxable income over the periods in which the deferred tax assets are utilizable, we believe it is more likely than not that we will realize the net benefits of the deferred tax assets of our wholly owned subsidiaries, net of the recorded valuation allowance. In the event that actual results differ from our estimates or we adjust our estimates in future periods, we may need to adjust or establish a valuation allowance, which could materially impact our consolidated financial position and results of operations.
Accounting for Uncertainty in Income Taxes
A reconciliation of the beginning and ending amount of our unrecognized tax benefits is summarized as follows:
For the Years Ended December 31,
(In millions)202420232022
Beginning balance$173.4 $606.4 $563.4 
Additions based on tax positions related to the current period1.2 5.2 36.3 
Additions for tax positions of prior periods31.5 60.2 23.4 
Reductions for tax positions of prior periods(3.1)(485.0)(14.9)
Statute expirations(12.7)(2.1)(1.6)
Settlement refund (payment)(4.0)(11.3)(0.2)
Ending balance$186.3 $173.4 $606.4 
As of December 31, 2022, the unrecognized tax benefits related to a deferred tax asset for Swiss tax purposes for Neurimmune's tax basis in ADUHELM was approximately $450.0 million. This unrecognized tax benefit was recorded as a reduction to the gross deferred tax asset, resulting in the net deferred tax asset, as discussed above, and not as a separate liability on our consolidated balance sheets. During the year ended December 31, 2023, we decreased our gross unrecognized tax benefits by approximately $450.0 million related to this item as a result of the deconsolidation of Neurimmune.
We file income tax returns in various U.S. states and in U.S. federal and other foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal tax examination for years before 2021 or state, local or non-U.S. income tax examinations for years before 2013.
The U.S. Internal Revenue Service and other national tax authorities routinely examine our intercompany transfer pricing with respect to intellectual property related transactions and it is possible that they may disagree with one or more positions we have taken with respect to such valuations.
Included in the balance of unrecognized tax benefits as of December 31, 2024, 2023 and 2022, are $139.3 million, $147.6 million and $134.0 million (net of the federal benefit on state issues), respectively, of unrecognized tax benefits that, if recognized, would affect the effective income tax rate in future periods.
We recognize potential interest and penalties related to unrecognized tax benefits in income tax (benefit) expense within our consolidated statements of income. During the years ended December 31, 2024, 2023 and 2022, we recognized total interest and penalty expense of $13.8 million, $5.1 million and $0.7 million, respectively. We have accrued $40.7 million and $30.2 million for the payment of interest and penalties as of December 31, 2024 and 2023, respectively.
It is reasonably possible that we will adjust the value of our uncertain tax positions related to certain transfer pricing, collaboration matters, withholding taxes and other issues as we receive additional information from various taxing authorities, including reaching settlements with such authorities.
We estimate that it is reasonably possible that our gross unrecognized tax benefits, exclusive of interest, could decrease by up to approximately $45.0 million in the next 12 months as a result of various audit closures, settlements and expiration of the statute of limitations.