Tax Matters (Tables)

12 Months Ended

Dec. 31, 2025

Schedule of Income before Income Tax, Domestic and Foreign


Components of Income from continuing operations before provision/(benefit) for taxes on income include:
	Year Ended December 31,
(MILLIONS)	2025		2024		2023
United States	$	776	$	(637)	$	(4,411)
International	6,744		8,660		5,469
Income from continuing operations before provision/(benefit) for taxes on income(a), (b)	$	7,520	$	8,023	$	1,058

(a)2025 v. 2024––The domestic income in 2025 versus the domestic loss in 2024 is primarily attributable to a reduction in operating expenses and restructuring charges, partially offset by higher asset impairment and legal charges. The decrease in the international income in 2025 versus international income in 2024 is primarily attributable to higher asset impairment charges. For 2025, the data in this table conforms to the updated income tax disclosure guidance in accordance with ASU 2023-09.

(b)2024 v. 2023––The reduction in the domestic loss in 2024 versus the domestic loss in 2023 is primarily attributable to increased revenues offset by higher restructuring charges and asset impairment charges. The increase in the international income is primarily attributable to lower: Cost of Sales, Restructuring charges and certain acquisition-related costs and asset impairment charges.

Schedule of Provision for Taxes on Income


Components of Provision/(benefit) for taxes on income based on the location of the taxing authorities include:
	Year Ended December 31,
(MILLIONS)	2025		2024		2023
Current tax expense (benefit):
U.S. Federal	$	384	$	453	$	1,321
U.S. State and local	172		32		(135)
Foreign	1,310		1,588		1,142
Total current tax expense (benefit)	$	1,866	$	2,074	$	2,328

Deferred tax expense (benefit):
U.S. Federal	$	(1,826)	$	(1,909)	$	(2,606)
U.S. State and local	(61)		(293)		(184)
Foreign	(246)		100		(652)
Total deferred tax expense (benefit)	$	(2,133)	$	(2,102)	$	(3,442)

Total income tax expense (benefit)
U.S. Federal	$	(1,442)	$	(1,456)	$	(1,285)
U.S. State and local	112		(261)		(319)
Foreign	1,064		1,689		490
Provision/(benefit) for taxes on income	$	(266)	$	(28)	$	(1,115)

Schedule of Cash Paid for Income Taxes, Net of Refunds


Consistent with the disclosure requirements of ASU 2023-09, the table below summarizes income taxes paid (net of refunds received):
	Year Ended December 31,
(MILLIONS)	2025
U.S. Federal taxes	$	2,729
U.S. State and local taxes	101
Foreign taxes
Ireland	1,016
Other foreign jurisdictions	842
Total income taxes paid	$	4,688


Consistent with our previous cash tax disclosures, the table below summarizes, cash taxes paid, net of refunds:
	Year Ended December 31,
(MILLIONS)	2024		2023
United States	$	2,593	$	1,923
International	1,012		1,224
Total	$	3,605	$	3,147

Schedule of Effective Income Tax Rate Reconciliation


The reconciliation of the U.S. statutory income tax rate to our effective tax rate for Income from continuing operations reflecting the requirements of ASU 2023-09, as adopted prospectively, follows:
	2025
	Millions		Percentage
U.S. federal statutory income tax	$	1,579	21.0	%
Domestic federal
Changes in tax laws or rates enacted in the current period	(153)		(2.0)
Cross border tax laws
Branches	(432)		(5.7)
Foreign-derived deduction-eligible income (FDDEI)	(172)		(2.3)
GILTI (NCTI)	187		2.5
Other(a)	(71)		(0.9)
Non-taxable or non-deductible items
Charitable contributions	(99)		(1.3)
Compensation	109		1.4
Other(a)	79		1.1
Tax credits
GILTI (NCTI)	(868)		(11.5)
Subpart-F income	(369)		(4.9)
R&D	(109)		(1.5)
Other(a)	(16)		(0.2)
Other reconciling items
Intercompany license agreement(s)	(221)		(2.9)
Other(a)	(10)		(0.1)
State income taxes, net of federal effects(b)	(4)		(0.1)
Foreign
India
Change in valuation allowance	(91)		(1.2)
Other(a)	(3)		—
Ireland
Statutory income tax rate differential	(268)		(3.6)
Intercompany license agreement(s)	118		1.6
Other(a)	57		0.8
Puerto Rico(c)	(81)		(1.1)
Singapore(d)
Varied income tax rates	(315)		(4.2)
Non-deductible interest expense	345		4.6
Other(a)	89		1.2
Other foreign jurisdictions	276		3.7
Worldwide changes in unrecognized tax benefits	177		2.4
Total	$	(266)	(3.5)	%

(a)Primarily comprises items which, individually, do not require separate disclosure pursuant to guidance provided in ASU 2023-09.

(b)State taxes in California, Kentucky and Tennessee make up the majority of the tax effect in this category.

(c)We have tax incentives pursuant to a grant that expires during 2053. Under such grant, we are partially exempt from income, property and municipal taxes.

(d)We have grants and incentive tax rates effective through 2048 on income from manufacturing and other operations.


The reconciliation of the U.S. statutory income tax rate to our effective tax rate for Income from continuing operations, prior to the adoption of ASU 2023-09 and as previously disclosed, follows:
	2024		2023^
U.S. statutory income tax rate	21.0	%	21.0	%

Taxation of non-U.S. operations(a), (b)	(7.9)		(21.1)
Transition tax liability(c)	(6.0)		—
Tax settlements and resolution of certain tax positions(c)	(2.4)		(40.3)
Foreign-derived intangible income deduction	(1.2)		(33.1)
State & local taxes(d)	(2.5)		(22.4)
Charitable contributions	(1.7)		(7.3)

U.S. R&D tax credit	(1.8)		(15.8)
Interest(e)	2.2		13.5
All other, net(f)	0.1		0.2
Effective tax rate for income from continuing operations	(0.4)	%	(105.4)	%

^ The higher rate percentages for the 2023 reconciling items are significantly impacted by the lower domestic and international Income from continuing operations before provision/(benefit) for taxes on income (see Note 5A).

(a)For taxation of non-U.S. operations, this rate impact reflects the income tax rates and relative earnings in the locations where we do business outside the U.S., together with the U.S. tax cost on our international operations, changes in uncertain tax positions not included in the reconciling item called “Tax settlements and resolution of certain tax positions,” as well as changes in valuation allowances. Specifically: (i) the jurisdictional location of earnings is a significant component of our effective tax rate each year, and the rate impact of this component is influenced by the specific location of non-U.S. earnings and the level of such earnings as compared to our total earnings; (ii) the U.S. tax implications of our foreign operations is a significant component of our effective tax rate each year and generally offsets some of the reduction to our effective tax rate each year resulting from the jurisdictional location of earnings; (iii) the impact of certain tax initiatives; and (iv) the impact of changes in uncertain tax positions not included in the reconciling item called “Tax settlements and resolution of certain tax positions” is a component of our effective tax rate each year that can result in either an increase or decrease to our effective tax rate. The jurisdictional mix of earnings, which includes the impact of the location of earnings as well as the U.S. tax cost on our international operations, can vary as a result of operating fluctuations in the normal course of business and as a result of the extent and location of other income and expense items, such as restructuring charges, asset impairments and gains and losses on strategic business decisions. See also Note 5A for the components of pre-tax income and Provision/(benefit) for taxes on income, which is based on the location of the taxing authorities, and for information about settlements and other items impacting Provision/(benefit) for taxes on income.

(b)In both years, the reduction in our effective tax rate is a result of the jurisdictional location of earnings and is largely due to lower tax rates in certain jurisdictions, as well as manufacturing and other incentives for our subsidiaries in Singapore and, to a lesser extent, in Puerto Rico. We have Puerto Rican tax incentives pursuant to a grant that expires during 2053. Under such grant, we are partially exempt from income, property and municipal taxes. In Singapore, we have incentive tax rates effective through 2048 on income from manufacturing and other operations.

(c)See Note 5A.

(d)Includes the impact of U.S. state and local taxes and changes in the state valuation allowances including those related to the acquisition of Seagen.

(e)Includes changes in interest related to our uncertain tax positions not included in the reconciling item called “Tax settlements and resolution of certain tax positions”.

(f)All other, net is primarily due to routine business operations.

Schedule of Deferred Tax Assets and Liabilities


Components of our deferred tax assets and liabilities, shown before jurisdictional netting, follows:
	2025 Deferred Tax^				2024 Deferred Tax^
(MILLIONS)	Assets		(Liabilities)		Assets		(Liabilities)
Prepaid/deferred items	$	3,516	$	(635)	$	3,288	$	(847)
Accrued/deferred royalties	1,051		—		1,306		—
Inventories	864		(372)		992		(702)
Intangible assets(a)	1,821		(8,810)		1,435		(9,066)
Property, plant and equipment	249		(1,771)		265		(1,751)
Employee benefits	842		(255)		1,002		(274)
Restructurings and other charges	388		—		462		—
Legal and product liability reserves	428		—		378		—
Research and development	7,235		—		7,635		—
Net operating loss/tax credit carryforwards(b)	1,763		—		2,028		—
Unremitted earnings	—		(76)		—		(69)
State and local tax adjustments	134		—		161		—
Investments(c)	234		(36)		73		(248)
All other	23		(12)		87		(66)
	18,547		(11,968)		19,112		(13,023)
Valuation allowances	(1,546)		—		(1,638)		—
Total deferred taxes	$	17,001	$	(11,968)	$	17,474	$	(13,023)
Net deferred tax asset/(liability)(d), (e)	$	5,033			$	4,451

^ The deferred tax assets and liabilities associated with GILTI (NCTI) are included in the relevant categories. See Note 1Q.

(a)The decrease in net deferred tax liabilities in 2025 is primarily due to the amortization of intangible assets and certain impairment charges, partially offset by the acquisition of intangible assets related to Metsera. See Note 2A.

(b)The amounts in 2025 and 2024 are reduced for unrecognized tax benefits of $636 million and $575 million, respectively, where we have net operating loss carryforwards, similar tax losses, and/or tax credit carryforwards that are available, under the tax law of the applicable jurisdiction, to settle any additional income taxes that would result from the disallowance of a tax position.

(c)The increase in net deferred tax assets in 2025 is primarily due to the sale of our remaining investment in Haleon. See Note 2C.

(d)In 2025, Noncurrent deferred tax assets and other noncurrent tax assets ($7.4 billion), and Noncurrent deferred tax liabilities ($2.4 billion). In 2024, Noncurrent deferred tax assets and other noncurrent tax assets ($6.6 billion), and Noncurrent deferred tax liabilities ($2.1 billion).

(e)Excludes indefinite- and definite-lived deferred tax assets for certain non-U.S. tax losses and interest carryforwards and U.S. state general business credits, totaling $9.9 billion and $11.3 billion for 2025 and 2024 respectively, given that management has determined based on applicable accounting rules that it is remote that these tax attributes will be utilized. In 2025, the elimination of certain legal entities resulted in the loss of attributes.

Schedule of Unrecognized Tax Benefits Roll Forward


The reconciliation of the beginning and ending amounts of gross unrecognized tax benefits follows:
(MILLIONS)	2025		2024		2023
Balance, beginning	$	(4,530)	$	(4,802)	$	(4,494)
Acquisitions	(4)		8		(46)

Increases based on tax positions taken during a prior period(a), (b)	(298)		(934)		(158)
Decreases based on tax positions taken during a prior period(a), (c)	197		599		310
Decreases based on settlements for a prior period(c), (d)	112		911		85
Increases based on tax positions taken during the current period(a)	(375)		(433)		(515)
Impact of foreign exchange	(54)		52		(44)
Other, net(a), (e)	206		70		58
Balance, ending(f)	$	(4,746)	$	(4,530)	$	(4,802)

(a)Primarily included in Provision/(benefit) for taxes on income.

(b)In 2024, the amount includes a gross unrecognized tax benefit associated with the filing of an amended income tax return related to the Transition Tax liability under the TCJA.

(c)In 2024, the amount primarily related to effectively settling certain issues with the U.S. and foreign tax authorities. See Not e 5A.

(d)Primarily related to cash payments and reductions of tax attributes.

(e)Primarily related to decreases as a result of a lapse of applicable statutes of limitations.

(f)In 2025, included in Income taxes payable ($5 million), Other current assets ($5 million), Noncurrent deferred tax assets and other noncurrent tax assets ($1.6 billion), Noncurrent deferred tax liabilities ($58 million) and Other taxes payable ($3.0 billion). In 2024, included in Income taxes payable ($103 million), Other current assets ($0.4 million), Noncurrent deferred tax assets and other noncurrent tax assets ($1.5 billion), Noncurrent deferred tax liabilities ($3 million) and Other taxes payable ($2.9 billion).

Schedule of Other Comprehensive Income (Loss), Components of Income Tax Expense (Benefit)


Components of the Tax provision/(benefit) on other comprehensive income/(loss) include:
	Year Ended December 31,
(MILLIONS)		2025		2024		2023
Foreign currency translation adjustments, net(a)		$	(357)	$	156	$	(33)

Unrealized holding gains/(losses) on derivative financial instruments, net		(46)		96		111
Reclassification adjustments for (gains)/losses included in net income		(58)		(29)		(93)

		(104)		67		18
Unrealized holding gains/(losses) on available-for-sale securities, net		12		(19)		(15)
Reclassification adjustments for (gains)/losses included in net income		(1)		5		(18)

		11		(14)		(33)
Benefit plans: prior service (costs)/credits and other, net		(4)		45		(5)
Reclassification adjustments related to amortization of prior service costs and other, net		(20)		(26)		(28)
Reclassification adjustments related to curtailments of prior service costs and other, net		(12)		2		(4)


		(36)		22		(37)
Tax provision/(benefit) on other comprehensive income/(loss)		$	(486)	$	231	$	(85)

(a)Taxes are not provided for foreign currency translation adjustments relating to investments in international subsidiaries that are expected to be held indefinitely.