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Income Taxes
 12 Months Ended
Oct. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The domestic and foreign components of our total income before provision for income taxes are as follows:
 Year Ended October 31,
 202520242023
 (in thousands)
United States$983,195 $1,333,132 $1,144,410 
Foreign409,947 180,726 161,060 
Total income before provision for income taxes
$1,393,142 $1,513,858 $1,305,470 
The components of the provision (benefit) for income taxes are as follows:
 Year Ended October 31,
 202520242023
 (in thousands)
Current:
Federal$376,014 $345,859 $252,186 
State25,041 19,808 23,042 
Foreign118,696 110,021 22,869 
519,751 475,688 298,097 
Deferred:
Federal(339,076)(312,677)(191,249)
State(109,078)(39,164)(219)
Foreign(15,606)(24,129)(16,441)
(463,760)(375,970)(207,909)
Provision (benefit) for income taxes$55,991 $99,718 $90,188 
The provision (benefit) for income taxes differs from the taxes computed with the statutory federal income tax rate as follows: 
 Year Ended October 31,
 202520242023
 (in thousands)
Statutory federal tax$292,560 $317,912 $274,149 
State tax (benefit), net of federal effect 26,897 48,393 438 
Federal tax credits(64,818)(70,119)(60,500)
Tax (benefit) on foreign earnings
28,008 3,316 (17,571)
Foreign-derived intangible income deduction(106,903)(104,835)(80,034)
Tax settlements— — (23,752)
Stock-based compensation20,583 (43,419)(39,995)
Changes in valuation allowance(148,006)(57,371)29,631 
Capital loss on the sale of investments(30,868)— — 
Acquisition costs17,877 — — 
Other20,661 5,841 7,822 
Provision (benefit) for income taxes$55,991 $99,718 $90,188 
On December 22, 2017, the Tax Cuts and Jobs Act (Tax Act) was enacted, which significantly changed prior U.S. tax law and includes numerous provisions that affect our business. Effective in our fiscal 2023 year, the Tax Act requires that research and development expenditures be capitalized and amortized instead of being deducted when incurred. Domestic research is capitalized over five years and foreign research is capitalized over fifteen years. Capitalization of research and development expenditures also results in a corresponding deferred tax benefit and decreased our effective tax rate due to increasing the foreign-derived intangible income deduction.
We have provided for foreign withholding taxes on undistributed earnings of certain of our foreign subsidiaries to the extent such earnings are no longer considered to be indefinitely reinvested in the operations of those subsidiaries. Where foreign subsidiaries are considered indefinitely reinvested, and if the tax effect of undistributed earnings and other outside basis differences were recognized, the nature of taxes expected would primarily be withholding, taxes in non-conforming states, and taxes on intermediate holding companies outside of the U.S., net of foreign tax credits where available. As of October 31, 2025, the taxes due, after allowable foreign tax credits, are not expected to be material.
The significant components of deferred tax assets and liabilities are as follows:
 
As of October 31,
 20252024
 (in thousands)
Net deferred tax assets:
Deferred tax assets:
Deferred revenue$164,953 $37,849 
Deferred compensation88,079 73,869 
Intangible and depreciable assets57,278 65,489 
Capitalized research and development costs1,352,914 978,085 
Stock-based compensation110,861 74,934 
Tax loss carryovers54,854 37,787 
Foreign tax credit carryovers43,342 42,534 
Research and other tax credit carryovers139,998 107,643 
Operating lease liabilities
127,570 108,235 
Accruals and reserves
117,113 49,935 
Gross deferred tax assets2,256,962 1,576,360 
Valuation allowance(38,900)(170,672)
Total deferred tax assets2,218,062 1,405,688 
Deferred tax liabilities:
Intangible assets
2,982,708 80,034 
Operating lease right-of-use-assets
104,486 84,512 
Undistributed earnings of foreign subsidiaries
24,074 8,800 
Other
269 21,641 
Total deferred tax liabilities3,111,537 194,987 
Net deferred tax assets (liabilities)
$(893,475)$1,210,701 
It is more likely than not that the results of future operations will be able to generate sufficient taxable income to realize the net deferred tax assets. The valuation allowance provided against our deferred tax assets as of October 31, 2025 is mainly attributable to foreign tax credits available to non-U.S. subsidiaries. The valuation allowance decreased by a net of $131.8 million in fiscal 2025, primarily related to realization of California research credits.
We have the following tax loss and credit carryforwards available to offset future income tax liabilities:
CarryforwardAmountExpiration
Date
 (in thousands) 
Federal net operating loss carryforward$11,531 2026-2042
Federal research credit carryforward1,636 2026-2035
Federal foreign tax credit carryforward35,780 2031
International foreign tax credit carryforward3,170 Indefinite
International net operating loss carryforward196,491 2027-Indefinite
California research credit carryforward171,267 Indefinite
Other state research credit carryforward29,849 2026-2045
State net operating loss carryforward37,840 2032-2045
The federal and state net operating loss carryforward is from acquired companies and the annual use of such loss is subject to significant limitations under Internal Revenue Code Section 382. Foreign tax credits may only be used to offset tax attributable to foreign source income.
The gross unrecognized tax benefits increased by approximately $111.9 million during fiscal 2025 resulting in gross unrecognized tax benefits of $173.7 million as of October 31, 2025. A reconciliation of the beginning and ending balance of gross unrecognized tax benefits is summarized as follows:
As of October 31,
20252024
 (in thousands)
Beginning balance$61,854 $64,880 
Increases in unrecognized tax benefits related to prior year tax positions22,568 1,106 
Decreases in unrecognized tax benefits related to prior year tax positions(11,686)(8,639)
Increases in unrecognized tax benefits related to current year tax positions25,664 8,036 
Reductions in unrecognized tax benefits due to lapse of applicable statute of limitations(4,089)(4,380)
Increases in unrecognized tax benefits acquired79,321 161 
Changes in unrecognized tax benefits due to foreign currency translation102 690 
Ending balance$173,734 $61,854 
As of October 31, 2025 and 2024, approximately $173.7 million and $61.9 million, respectively, of the unrecognized tax benefits would affect our effective tax rate if recognized upon resolution of the uncertain tax positions.
Interest and penalties related to estimated obligations for tax positions taken in our tax returns are recognized as a component of income tax expense (benefit) in the consolidated statements of income and totaled approximately $(0.2) million, $(1.0) million and $(10.6) million for fiscal years 2025, 2024 and 2023, respectively. As of October 31, 2025 and 2024, the combined amount of accrued interest and penalties related to tax positions taken on our tax returns were approximately $0.9 million and $1.1 million, respectively.
The timing of the resolution of income tax examinations, and the amounts and timing of various tax payments that are part of the settlement process, are highly uncertain. Variations in such amounts and/or timing could cause large fluctuations in the balance sheet classification of current and non-current assets and liabilities. During the next 12 months, it is reasonably possible that certain audits and ongoing tax litigation will be resolved, or that the statute of limitations on certain state and foreign income and withholding taxes will expire, or both. Given the uncertainty as to ultimate settlement terms, the timing of payment and the impact of such settlements on other uncertain tax positions, we estimate a potential decrease in underlying unrecognized tax benefits to be between $0.0 and $29.0 million.
We and/or our subsidiaries remain subject to tax examination in the following jurisdictions:
JurisdictionYear(s) Subject to Examination
United StatesFiscal years after 2021
CaliforniaFiscal years after 2020
IrelandFiscal years after 2020
JapanFiscal years after 2020
KoreaFiscal years after 2020
TaiwanFiscal years after 2023
ChinaFiscal years after 2015
IndiaFiscal years after 2018
In addition, we have made acquisitions with operations in several of our significant jurisdictions which may have years subject to examination different from the years indicated in the above table.
Non-U.S. Examinations
One of our Korean subsidiaries, Ansys Korea, is currently involved in various stages of Tax Tribunal and Korea's High Court appeals regarding Korea's National Tax Service assessments of withholding taxes against Ansys Korea
for calendar tax years 2017-2023. In connection with this matter, we have recorded the net impact of the unrecognized tax benefit and offsetting foreign tax credit.
We are under examinations by the tax authorities in certain jurisdictions. No material assessments have been proposed in these examinations.
Legislative Developments
On July 4, 2025, U.S. President Donald J. Trump signed H.R. 1, the One Big Beautiful Bill Act (OBBB) into law. The OBBB includes many changes to corporate income tax law, including expensing for domestic research expenditures commencing in fiscal 2026 and changes to foreign-derived intangible income deduction in fiscal 2027. We are currently evaluating the impacts of OBBB.
Effective our fiscal 2024, we are subject to the new 15% corporate alternative minimum tax (CAMT) enacted as part of the Inflation Reduction Act of 2022 (the IR Act). As of October 31, 2025, this has not had an impact on our consolidated financial statements. We will monitor regulatory developments and will continue to evaluate the impact, if any, of the CAMT.
The IR Act imposes a 1% excise tax on the fair market value of stock repurchases made by covered corporations after December 31, 2022. In general, the total taxable value of shares repurchased is reduced by the fair market value of any newly issued shares during the taxable year. As of October 31, 2025, this has not had an impact on our consolidated financial statements.
On June 27, 2024, California enacted SB-167, which suspends the use of California net operating loss and limits the use of California research tax credits to $5 million for our fiscal 2025-2027. On June 29, 2024, California enacted SB-175, which provides a refund mechanism effective beginning in our fiscal 2025 for the incremental tax that was paid as a result of SB-167.
The Organisation for Economic Co-operation and Development (the OECD) has model rules for a global minimum tax framework, which is a two-pillar solution to address tax challenges arising from digitalization of the economy. This two-pillar solution includes the Pillar Two Model Rules (Pillar 2) which define global minimum tax rules and imposes a 15% minimum tax rate. Various countries have started to enact new laws related to Pillar 2, including certain new laws effective beginning in fiscal 2025. As of fiscal 2025, the impact of Pillar 2 is not material.