v3.25.4
Income taxes (Tables)
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Reconciliation of the U.S. federal statutory rate to effective rate The following table is a reconciliation of the U.S. federal statutory tax rate of 21 percent to our effective tax rate for the year ended December 31, 2025 in accordance with the guidance in ASU 2023-09.
Reconciliation of the U.S. federal statutory tax rate to effective tax rate:

Year ended December 31,
(Millions of dollars)2025
Taxes at U.S. statutory tax rate$2,424 21.0 %
(Decreases)/increases resulting from:
Non-U.S. tax effects
Switzerland
Federal statutory tax rate difference(310)(2.7)%
State and local income taxes, net of federal160 1.4 %
Other(27)(0.2)%
Other Non-U.S. jurisdictions342 3.0 %
Other179 1.5 %
Provision (benefit) for income taxes$2,768 24.0 %
The following table is a reconciliation of the U.S. federal statutory tax rate of 21 percent to our effective tax rate for the years ended December 31, 2024 and December 31, 2023 prior to the adoption of the guidance in ASU 2023-09.

Reconciliation of the U.S. federal statutory tax rate to effective tax rate:

Years ended December 31,
(Millions of dollars)20242023
Taxes at U.S. statutory rate$2,809 21.0 %$2,740 21.0 %
(Decreases) increases resulting from:    
Non-U.S. subsidiaries taxed at other than the U.S. rate186 1.4 %129 1.0 %
U.S. tax incentives(245)(1.8)%(170)(1.3)%
Tax law change related to currency translation(224)(1.7)%— — %
Other—net103 0.8 %82 0.6 %
Provision (benefit) for income taxes$2,629 19.7 %$2,781 21.3 %
Components of profit (loss) before taxes
The components of profit (loss) before taxes were: 
 Years ended December 31,
(Millions of dollars)202520242023
U.S.$5,407 $6,219 $6,463 
Non-U.S.6,134 7,154 6,587 
 $11,541 $13,373 $13,050 
Components of the provision (benefit) for income taxes
The components of the provision (benefit) for income taxes were:
 Years ended December 31,
(Millions of dollars)202520242023
Current tax provision (benefit):   
U.S. Federal1
$804 $1,584 $1,627 
Non-U.S.1,390 1,531 1,592 
U.S. State and local109 135 154 
 2,303 3,250 3,373 
Deferred tax provision (benefit):   
U.S. Federal1
393 (553)(391)
Non-U.S.56 (69)(164)
U.S. State and local16 1 (37)
 465 (621)(592)
Total provision (benefit) for income taxes$2,768 $2,629 $2,781 
1 Includes U.S. taxes related to non-U.S. earnings. We account for U.S. taxes on global intangible low-taxed income as a period cost.
Schedule of net income tax and related interest paid
In accordance with the guidance in ASU 2023-09, net income tax and related interest paid in 2025 to the following jurisdictions were:

Income tax and related interest paid (net of refunds received) to:
 December 31,
(Millions of dollars)2025
U.S. Federal$605 
U.S. State and local138 
Non-U.S.1
Switzerland500 
China264 
Brazil135 
India128 
Other436 
Net income tax and related interest paid$2,206 
1 Includes federal, state and local jurisdictions within each country.
Deferred income tax assets and liabilities The amount of deferred income taxes at December 31, included on the following lines in Statement 3, were as follows:
 
 December 31,
(Millions of dollars)20252024
Assets:  
Noncurrent deferred and refundable income taxes$2,757 $3,191 
Liabilities:  
Other liabilities494 432 
Deferred income taxes—net$2,263 $2,759 
 
The components of deferred tax assets and liabilities were:
 December 31,
(Millions of dollars)20252024
Deferred income tax assets:  
Research expenditures$1,399 $1,735 
Tax carryforwards1,298 1,346 
Employee compensation and benefits607 531 
Postemployment benefits425 560 
Post sale discounts303 260 
Warranty reserves287 303 
Other—net579 622 
 4,898 5,357 
Deferred income tax liabilities:  
Capital and intangible assets, including lease basis differences(1,366)(1,270)
Outside basis differences(429)(454)
 (1,795)(1,724)
Valuation allowance for deferred tax assets(840)(874)
Deferred income taxes—net$2,263 $2,759 
Schedule of unrecognized tax benefits roll forward
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits for uncertain tax positions, including positions impacting only the timing of tax benefits, follows.

 
Reconciliation of unrecognized tax benefits: 1
 Years ended December 31,
(Millions of dollars)202520242023
Beginning balance$1,289 $1,223 $1,140 
Additions for tax positions related to current year68 118 94 
Additions for tax positions related to prior years35 49 42 
Reductions for tax positions related to prior years(6)(30)(19)
Reductions for settlements 2 
(29)(60)(27)
Reductions for expiration of statute of limitations(10)(11)(7)
Ending balance$1,347 $1,289 $1,223 
Amount that, if recognized, would impact the effective tax rate$1,199 $1,137 $997 

1Foreign currency impacts are included within each line as applicable.
2Includes cash payment or other reduction of assets to settle liability.