v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
Income before provision for income taxes, classified by source of income, was as follows:
In millions202520242023
U.S.$3,291 $3,282 $3,665 
Outside the U.S.7,606 7,062 6,857 
Income before provision for income taxes $10,897 $10,345 $10,522 
The provision for income taxes, classified by the timing and location of payment, was as follows:
In millions202520242023
U.S. federal$1,085 $1,412 $1,340 
U.S. state198 269 263 
Outside the U.S.1,177 1,014 1,137 
Current tax provision2,460 2,695 2,740 
U.S. federal(349)(76)(146)
U.S. state(84)(20)(30)
Outside the U.S.307 (478)(511)
Deferred tax (benefit) provision(126)(574)(686)
Provision for income taxes$2,334 $2,121 $2,053 
Income taxes paid (net of refunds), classified by location of payment, were as follows:
In millions2025
Federal(1)
$1,326 
State252 
Foreign
United Kingdom 357 
France156 
Other foreign jurisdictions597 
Total income taxes paid, net$2,688 
(1)Included in the income taxes paid amount is $429 million related to the purchase of Federal transferrable energy credits.
Income taxes paid, net, was $3.0 billion for the years ended December 31, 2024 and 2023.
Net deferred tax (assets) liabilities consisted of:
In millions
'December 31, 2025
2024
Lease right-of-use asset$3,533 $3,213 
Property and equipment1,588 1,568 
Intangible assets91 187 
Other25 437 
Total deferred tax liabilities5,237 5,405 
Lease liability(3,615)(3,292)
Intangible assets(3,582)(3,495)
Property and equipment(488)(469)
Deferred foreign tax credits(69)(50)
Employee benefit plans(168)(168)
Deferred revenue(141)(113)
Operating loss carryforwards(197)(195)
Other(155)(170)
Total deferred tax assets before valuation allowance(8,415)(7,951)
Valuation allowance960 917 
Net deferred tax (assets) liabilities$(2,218)$(1,629)
Balance sheet presentation:
Deferred income taxes$1,038 $1,914 
Other assets-miscellaneous(3,256)(3,543)
Net deferred tax (assets) liabilities$(2,218)$(1,629)
At December 31, 2025, the Company had net operating loss carryforwards of $878 million, of which $764 million has an indefinite carryforward. The remainder will expire at various dates from 2026 to 2046.
The statutory U.S. federal income tax rate reconciles to the effective income tax rates as follows:
2025
Dollars in millionsAmountPercent
Statutory U.S. federal income tax rate$2,288 21.0 %
State income taxes, net of related federal income tax benefit(1)
149 1.4 
Foreign tax effects226 2.1 
Effect of changes in tax laws or rates enacted in the current period— — 
Effect of cross-border tax laws
Global intangible low-tax income ("GILTI") 103 0.9 
Foreign-derived intangible income ("FDII")(131)(1.2)
       Other33 0.3 
Tax credits(43)(0.4)
Changes in valuation allowances64 0.6 
Nontaxable or nondeductible items— — 
Changes in unrecognized tax benefits(1)— 
Other adjustments
       Tax impact of intercompany transactions(314)(2.9)
       Other(40)(0.4)
Effective income tax rate$2,334 21.4 %
(1)State income taxes in California and Illinois make up the majority (greater than 50%) of the tax effect in this category.

20242023
Statutory U.S. federal income tax rate21.0 %21.0 %
State income taxes, net of related federal income tax benefit1.9 1.8 
Foreign income taxed at different rates2.4 1.9 
Tax impact of intercompany transactions(1.1)(0.7)
Global intangible low-tax income ("GILTI") 0.5 0.5 
Foreign-derived intangible income ("FDII")(3.4)(2.7)
Other, net(0.8)(2.3)
Effective income tax rates20.5 %19.5 %
Results for 2023 reflected income tax benefits primarily related to global audit progression and deferred tax adjustments.
As of December 31, 2025 and 2024, the Company’s gross unrecognized tax benefits totaled $414 million and $461 million, respectively. After considering the deferred tax accounting impact, it is expected that about $402 million of the total as of December 31, 2025 would favorably affect the effective tax rate if resolved in the Company’s favor.
The following table presents a reconciliation of the beginning and ending amounts of unrecognized tax benefits:
In millions20252024
Balance at January 1$461 $588 
Decreases for positions taken in prior years(67)(133)
Increases for positions taken in prior years19 131 
Increases for positions related to the current year46 47 
Settlements with taxing authorities(31)(172)
Lapsing of statutes of limitations(14)— 
Balance at December 31(1)
$414 $461 
(1)Of this amount, $353 million and $421 million are included in Long-term income taxes for 2025 and 2024, respectively, and $62 million and $40 million are included in Income taxes for 2025 and 2024, respectively, on the Consolidated Balance Sheet.
The Company is currently under audit with the U.S. Internal Revenue Service (the "IRS") for tax years 2011 through 2012 and 2016 through 2021. As of December 31, 2025, the IRS examination for tax years 2011 and 2012 are awaiting final resolution with the IRS appeals team. Examination years 2016 through 2021 remain open as of the end of the period.
The Company is also under audit in multiple foreign tax jurisdictions, primarily related to transfer pricing, as well as multiple state tax jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations for years before 2009.
During 2025, the Company finalized and settled certain tax examinations and remeasured other income tax reserves based on audit progression. It is reasonably possible that, as a result of audit progression in both the U.S. and foreign tax audits within the next 12 months, there may be new information that causes the Company to reassess the total amount of unrecognized tax benefits recorded. While the Company cannot estimate the impact that new information may have on the unrecognized tax benefits balance, it believes that the liabilities recorded are appropriate and adequate.
The Company accrued $18 million and $17 million for interest and penalties related to tax matters at December 31, 2025 and 2024, respectively. Costs recognized for interest and penalties related to tax matters in 2025, 2024 and 2023 were immaterial. These amounts are included in the provision for income taxes.
As of December 31, 2025, the Company has accumulated undistributed earnings generated by its foreign subsidiaries, which were predominantly taxed in the U.S. as a result of the transition tax provisions enacted under the Tax Cuts and Jobs Act of 2017. Management does not assert that these previously-taxed unremitted earnings are indefinitely reinvested in operations outside the U.S. Accordingly, the Company has provided deferred taxes for the tax effects incremental to the transition tax. The Company has not provided for deferred taxes on outside basis differences in its investments in its foreign subsidiaries that are unrelated to these accumulated undistributed earnings, as these outside basis differences are indefinitely reinvested. A determination of the unrecognized deferred taxes related to these other components of the outside basis differences is not practicable.