v3.25.4
Income Taxes (Tables)
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Components of pretax income
As required under the updated guidance, the components of pretax income for the year ended December 31, 2025 included in the Consolidated Statements of Income were as follows:
TABLE 19.1: COMPONENTS OF PRETAX INCOME
(Millions)2025
Income (loss) from continuing operations before income tax expense (benefit):
U.S.
$8,302 
Non-U.S.5,493 
Total
$13,795 
Components of income tax expense
The components of income tax expense for the years ended December 31 included in the Consolidated Statements of Income were as follows:
TABLE 19.2: COMPONENTS OF INCOME TAX EXPENSE
(Millions)202520242023
Current income tax expense:
U.S. federal$1,735 $2,368 $2,455 
U.S. state and local497 494 351 
Non-U.S.1,272 894 662 
Total current income tax expense3,504 3,756 3,468 
Deferred income tax (benefit) expense:
U.S. federal(328)(797)(952)
U.S. state and local(120)(146)(139)
Non-U.S.(95)(47)(238)
Total deferred income tax (benefit) expense(542)(990)(1,329)
Total income tax expense$2,962 $2,766 $2,139 
Effective income tax rate reconciliation
A reconciliation of the U.S. federal statutory rate of 21 percent to our actual income tax rate as of December 31, 2025, prepared under the updated guidance was as follows:
TABLE 19.3: RECONCILIATION OF ACTUAL INCOME TAX RATE FOR 2025
2025
(Millions, except percentages)
$
%
U.S. statutory federal income tax rate$2,897 21.0 %
(Decrease) increase in taxes resulting from:
State and local income taxes, net of federal benefit (a)
265 1.9 
Foreign tax effects:
Jersey – Statutory tax rate differential
(423)(3.1)
Jersey – Multinational corporate income tax & other
182 1.3 
Other foreign jurisdictions (b)
148 1.1 
Effect of cross-border tax laws(42)(0.3)
Tax credits
(146)(1.0)
Changes in valuation allowances
22 0.2 
Non-taxable or non-deductible items(9)(0.1)
Changes in unrecognized tax benefits69 0.5 
Actual tax rates$2,962 21.5 %
(a)State and local income taxes in California, New York, New York City and Florida comprise the majority of the state and local income taxes, net of federal benefit as of December 31, 2025.
(b)In certain jurisdictions outside the United States, we benefit from agreements that temporarily lower our income tax expense. The impact of these agreements was not material to our Consolidated Statements of Income.
A reconciliation of the U.S. federal statutory rate of 21 percent to our actual income tax rate as of December 31, 2024 and 2023 prepared under the prior guidance was as follows:
TABLE 19.4: RECONCILIATION OF ACTUAL INCOME TAX RATE FOR 2024 AND 2023
 20242023
U.S. statutory federal income tax rate21.0 %21.0 %
(Decrease) increase in taxes resulting from:
Tax credits and tax-exempt income
(0.7)(0.7)
State and local income taxes, net of federal benefit2.5 2.4 
Non-U.S. subsidiaries’ earnings (a)
(1.0)(0.8)
Tax settlements and lapse of statute of limitations
(0.5)(2.0)
Valuation allowances
— 0.1 
Other0.2 0.3 
Actual tax rates21.5 %20.3 %
(a)In certain jurisdictions outside the United States, we benefit from agreements that temporarily lower our income tax expense. The impact of these agreements was not material to our Consolidated Statements of Income.
Components of deferred tax assets and liabilities
The significant components of deferred tax assets and liabilities as of December 31, 2025 and 2024 are reflected in the following table:
TABLE 19.5: COMPONENTS OF DEFERRED TAX ASSETS AND LIABILITIES
(Millions)20252024
Deferred tax assets:
Reserves not yet deducted for tax purposes$5,529 $4,950 
Employee compensation and benefits443 343 
Net operating loss and tax credit carryforwards511 464 
Capitalized developed software
995 1,084 
Other952 853 
Gross deferred tax assets8,430 7,694 
Valuation allowance(718)(655)
Deferred tax assets after valuation allowance7,712 7,039 
Deferred tax liabilities:
Intangibles and fixed assets733 673 
Deferred interest112 113 
Other606 579 
Gross deferred tax liabilities1,451 1,365 
Net deferred tax assets$6,261 $5,674 
Schedule of Income Taxes Paid
As required under the updated guidance, the income taxes paid (net of refunds received) disaggregated by jurisdictional categories (U.S. federal, U.S. state and non-U.S.) for the year ended December 31, 2025 were as follows:
TABLE 19.6: INCOME TAXES PAID
(Millions)2025
Income taxes paid by jurisdiction:
U.S. federal
1,833 
U.S. state and local
452 
Non-U.S.
Mexico
226 
Other
685 
Total
3,195 
Changes in unrecognized tax benefits
The following table presents changes in unrecognized tax benefits:
TABLE 19.7: ROLLFORWARD OF UNRECOGNIZED TAX BENEFITS
(Millions)202520242023
Balance, January 1$1,006 $875 $962 
Increases:
Current year tax positions153 161 132 
Tax positions related to prior years46 47 40 
Effects of foreign currency translations13 — — 
Decreases:
Tax positions related to prior years
(12)(4)(50)
Settlements with tax authorities
(85)(39)(160)
Lapse of statute of limitations(18)(21)(49)
Effects of foreign currency translations— (13)— 
Balance, December 31$1,102 $1,006 $875