v3.25.4
Employee Benefit Plans
 12 Months Ended
Dec. 31, 2025
Retirement Benefits [Abstract]  
Employee Benefit Plans
Note 16. Employee Benefit Plans
Defined Contribution Plans
We have a defined contribution plan qualified under Section 401(k) of the Internal Revenue Code covering all U.S. employees and defined contribution plans for other Incyte employees in Europe and Japan. Employees may contribute a portion of their compensation, which is then matched by us, subject to certain limitations. Defined contribution expense was $22.4 million, $20.6 million and $18.9 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Defined Benefit Pension Plans
We have defined benefit pension plans for our employees in Europe which provide benefits to employees upon retirement, death or disability. The assets of the pension plans are held in collective investment accounts represented by the cash surrender value of an insurance policy and are classified as Level 2 within the fair value hierarchy.
The pension plans assumptions reflect the expected investment return and discount rate on plan assets and disability rate probabilities. The benefit obligation at December 31, 2025 for the plans was determined using a discount rate of 1.20% and rate of compensation increase of 2.00%. The 2025 net periodic benefit cost for the plans was determined using discount rates of 0.90%, rates of compensation increase of 2.25% and long term expected return on plan assets of 4.30%. The benefit obligation at December 31, 2024 for the plans was determined using a discount rate of 0.90% and rate of compensation increase of 2.25%. The 2024 net periodic benefit cost for the plans was determined using discount rates of 1.30%, rates of compensation increase of 2.25% and long term expected return on plan assets of 5.50%.
Summarized information regarding changes in the obligations and plan assets, the funded status and the amounts recorded were as follows (in thousands):
Year Ended December 31,
20252024
Benefit obligation, beginning of year$195,487 $169,667 
Employer service cost16,428 12,121 
Interest cost1,973 2,010 
Plan participants’ contributions6,614 5,067 
Actuarial (gain) loss(5,251)17,443 
Transfer of benefits net of payments from fund(4,294)1,382 
Expenses paid from assets(121)(101)
Translation loss (gain)27,680 (12,102)
Benefit obligation, end of year238,516 195,487 
Fair value of plan assets, beginning of year149,636 128,482 
Actual return on plan assets11,990 13,562 
Employer contributions12,344 10,278 
Plan participants’ contributions6,614 5,067 
Transfer of benefits net of payments from fund(4,294)1,382 
Expenses paid from assets(121)(101)
Translation gain (loss)21,188 (9,034)
Fair value of plan assets, end of year197,357 149,636 
Unfunded liability, end of year$41,159 $45,851 
The unfunded liability is reported in other liabilities on the consolidated balance sheets as of December 31, 2025 and 2024. The accumulated benefit obligation is $225.2 million and $182.4 million as of December 31, 2025 and 2024, respectively.
The net periodic benefit cost was as follows (in thousands):
Year Ended December 31,
202520242023
Service cost$16,428 $12,121 $7,711 
Interest cost1,973 2,010 2,280 
Expected return on plan assets(7,970)(6,764)(5,688)
Amortization of prior service cost878 801 771 
Amortization of actuarial losses1,389 673 — 
Net periodic benefit cost$12,698 $8,841 $5,074 
The components of net periodic benefit cost other than the service cost component are included in Other, net on the consolidated statements of operations.
We expect to contribute a total of $12.6 million to the pension plans in 2026. The following payments are expected to be paid from the fund (in thousands):
2026$9,200 
202710,365 
202810,944 
202913,968 
203011,684 
2031-203573,326 
Total$129,487