v3.25.4
Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Taxes
Note 12. Taxes
The components of income before provision for income taxes are as follows:
(dollars in millions)
Years Ended December 31,202520242023
Domestic$20,150 $21,253 $15,668 
Foreign2,522 1,726 1,319 
Total$22,672 $22,979 $16,987 

The components of the provision for income taxes are as follows:
(dollars in millions)
Years Ended December 31,202520242023
Current
Federal$1,735 $3,367 $2,070 
Foreign323 240 219 
State and local666 608 215 
Total2,724 4,215 2,504 
Deferred
Federal2,115 807 1,799 
Foreign19 (4)28 
State and local206 12 561 
Total2,340 815 2,388 
Total income tax provision$5,064 $5,030 $4,892 
The following table shows the principal reasons for the difference between the effective income tax rate and the statutory federal income tax rate:
(dollars in millions)
202520242023
Years Ended December 31,AmountPercentAmountPercentAmountPercent
U.S. federal statutory tax rate$4,761 21.0 %$4,825 21.0 %$3,567 21.0 %
State and local income taxes, net of federal income tax effect(1)
739 3.3 566 2.5 664 3.9 
Foreign tax effects(131)(0.6)(68)(0.3)(16)(0.1)
Effect of cross-border tax laws41 0.2 — — 18 0.1 
Tax credits(25)(0.1)(27)(0.1)(27)(0.2)
Changes in valuation allowances(34)(0.2)15 0.1 — — 
Nontaxable or nondeductible items
Goodwill impairment— — — — 1,149 6.8 
Other(69)(0.3)(116)(0.5)(133)(0.8)
Changes in unrecognized tax benefits19 0.1 40 0.2 (27)(0.2)
Other adjustments
Federal refund claims— — (17)(0.1)(245)(1.4)
Other(237)(1.1)(188)(0.9)(58)(0.3)
Effective income tax rate$5,064 22.3 %$5,030 21.9 %$4,892 28.8 %
(1) The states that contribute to the majority (greater than 50%) of the tax effect in this category include California, Illinois, Maryland, Pennsylvania and Virginia for 2025, California, Maryland and Pennsylvania for 2024, California, Georgia, Illinois, Maryland and Virginia for 2023.

The effective income tax rate for 2025 was 22.3% compared to 21.9% for 2024. The increase in the effective income tax rate and provision for income taxes was primarily due to higher tax benefits resulting from the favorable resolution of various income tax matters and a reduction in deferred income taxes due to changes in state apportionment during the prior period.

The effective income tax rate for 2024 was 21.9% compared to 28.8% for 2023. The decrease in the effective income tax rate was primarily due to the Verizon Business Group goodwill impairment charge of $5.8 billion in 2023 that substantially decreased income before income taxes and was not deductible. The increase in the provision for income taxes was primarily due to the increase in income before income taxes in the current period.

The amounts of cash taxes paid by Verizon are as follows:
(dollars in millions)
Years Ended December 31,202520242023
Federal$2,236 $4,745 $1,447 
State977 665 672 
Foreign
Ireland291 156 143 
All other foreign77 66 81 
Income taxes, net of amounts refunded3,581 5,632 2,343 
Employment taxes972 992 1,016 
Property and other taxes1,915 1,836 2,007 
Total$6,468 $8,460 $5,366 

In 2025 and 2023, the only jurisdiction with cash taxes paid that equaled or exceeded 5% of total income taxes paid was Ireland. In 2024, there were no individual jurisdictions with cash taxes paid that equaled or exceeded 5% of total income taxes paid.
Deferred Tax Assets and Liabilities
Deferred taxes arise because of differences in the book and tax bases of certain assets and liabilities. Significant components of deferred tax assets and liabilities are as follows:
(dollars in millions)
At December 31,20252024
Deferred tax assets
Employee benefits$3,366 $3,676 
Tax loss, credit, and other carry forwards1,423 1,719 
Lease liabilities4,909 5,138 
Other - assets1,847 1,735 
11,545 12,268 
Valuation allowances(1,161)(1,399)
Deferred tax assets10,384 10,869 
Deferred tax liabilities
Spectrum and other intangible amortization30,568 29,302 
Depreciation21,136 20,424 
Lease right-of-use assets4,568 4,822 
Other - liabilities2,694 2,904 
Deferred tax liabilities58,966 57,452 
Net deferred tax liability$48,582 $46,583 

Undistributed earnings of certain foreign subsidiaries continue to be indefinitely invested outside the U.S. The majority of Verizon's cash flow is generated from domestic operations and we are not dependent on foreign cash or earnings to meet our funding requirements, nor do we intend to repatriate these undistributed foreign earnings to fund U.S. operations. Furthermore, a portion of these undistributed earnings represents amounts that legally must be kept in reserve in accordance with certain foreign jurisdictional requirements and are unavailable for distribution or repatriation. As a result, we have not provided U.S. deferred taxes on these undistributed earnings because we intend that they will remain indefinitely reinvested outside of the U.S. and, therefore unavailable for use in funding U.S. operations. Determination of the amount of unrecognized deferred taxes related to these undistributed earnings is not practicable.

At December 31, 2025, we had net after-tax loss, credit, and other carry forwards for income tax purposes of approximately $1.4 billion that relate to federal, state and foreign taxes. Of these net after-tax loss, credit, and other carry forwards, approximately $854 million will expire between 2026 and 2045 and approximately $570 million may be carried forward indefinitely.

During 2025, the valuation allowance decreased by $238 million, primarily related to state income taxes. The $1.2 billion valuation allowance at December 31, 2025 is primarily related to state and foreign taxes.

Unrecognized Tax Benefits
A reconciliation of the beginning and ending balance of unrecognized tax benefits is as follows:
(dollars in millions)
202520242023
Balance at January 1,$2,635 $2,705 $2,812 
Additions based on tax positions related to the current year92 91 114 
Additions for tax positions of prior years68 203 185 
Reductions for tax positions of prior years(87)(229)(154)
Settlements(5)(70)(50)
Lapses of statutes of limitations(56)(65)(202)
Balance at December 31,$2,647 $2,635 $2,705 

At December 31, 2025, 2024, and 2023 the total unrecognized tax benefits included $2.3 billion, in each respective period, that if recognized, would favorably affect the effective income tax rate.
We recognized the following net after-tax expenses (benefit) related to interest and penalties in the provision for income taxes:

Years Ended December 31,(dollars in millions)
2025$72 
202455 
202386 

The after-tax accruals for the payment of interest and penalties in the consolidated balance sheets are as follows:

At December 31,(dollars in millions)
2025$751 
2024684 
Verizon and/or its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state, local and foreign jurisdictions. As a large taxpayer, we are under audit by the IRS and multiple state and foreign jurisdictions for various open tax years. The IRS is currently examining the Company’s U.S. income tax returns for tax years 2017 through 2019. Tax controversies are ongoing for tax years as early as 2011 in certain states and as early as 2000 outside the U.S.