v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes
NOTE 13. INCOME TAXES

Significant components of our deferred tax liabilities (assets) are as follows at December 31:
20252024
Depreciation and amortization$37,570 $36,531 
Licenses and nonamortizable intangibles21,742 20,660 
Lease right-of-use assets
5,494 5,103 
Lease liabilities(5,464)(5,107)
Employee benefits(2,585)(3,017)
Deferred fulfillment costs1,657 1,788 
Equity in partnership14 2,716 
Net operating loss and other carryforwards(5,567)(5,619)
Other – net1,401 1,466 
Subtotal54,262 54,521 
Deferred tax assets valuation allowance3,978 4,338 
Net deferred tax liabilities$58,240 $58,859 
Noncurrent deferred tax liabilities$58,312 $58,939 
Less: Noncurrent deferred tax assets(72)(80)
Net deferred tax liabilities$58,240 $58,859 

At December 31, 2025, we had combined net operating and capital loss carryforwards (tax effected) for federal income tax purposes of $695, state of $545 and foreign of $2,227, expiring through 2045. Additionally, we had federal credit carryforwards of $645 and state credit carryforwards of $1,454, expiring primarily through 2045.

We recognize a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion, or all, of a deferred tax asset will not be realized. Our valuation allowances at December 31, 2025 and 2024 related primarily to state and foreign net operating losses and state credit carryforwards.

We consider post-1986 unremitted foreign earnings subjected to the one-time transition tax not to be indefinitely reinvested as such earnings can be repatriated without any significant incremental tax costs. We consider other types of unremitted foreign earnings to be indefinitely reinvested. U.S. income and foreign withholding taxes have not been recorded on temporary differences related to investments in certain foreign subsidiaries as such differences are considered indefinitely reinvested. The amount of unrecognized deferred tax liability does not have a material impact on the financial statements.

We recognize the financial statement effects of a tax return position when it is more likely than not, based on the technical merits, that the position will ultimately be sustained. For tax positions that meet this recognition threshold, we apply our judgment, taking into account applicable tax laws, our experience in managing tax audits and relevant GAAP, to determine the amount of tax benefits to recognize in our financial statements. For each position, the difference between the benefit realized on our tax return and the benefit reflected in our financial statements is recorded on our consolidated balance sheets as an unrecognized tax benefit (UTB). We update our UTBs at each financial statement date to reflect the impacts of audit settlements and other resolutions of audit issues, the expiration of statutes of limitation, developments in tax law and ongoing discussions with taxing authorities.
A reconciliation of the change in our UTB balance from January 1 to December 31 for 2025, 2024 and 2023 is as follows:
Federal, State and Foreign Tax202520242023
Balance at beginning of year$12,533 $11,924 $9,657 
Increases for tax positions related to the current year521 369 1,026 
Increases for tax positions related to prior years294 1,017 448 
Decreases for tax positions related to prior years(124)(772)(212)
Lapse of statute of limitations(13)(8)(16)
Settlements96 3 1,021 
Balance at end of year13,307 12,533 11,924 
Accrued interest and penalties2,604 2,223 1,785 
Gross unrecognized income tax benefits15,911 14,756 13,709 
Less: Deferred federal and state income tax benefits(966)(849)(687)
Less: Tax attributable to timing items included above(7,401)(6,964)(6,438)
Total UTB that, if recognized, would impact the
effective income tax rate as of the end of the year
$7,544 $6,943 $6,584 
Periodically we make deposits to taxing jurisdictions which reduce our UTB balance but are not included in the reconciliation above. The amount of deposits that reduced our UTB balance was $2,894 at December 31, 2025, $2,282 at December 31, 2024 and $2,361 at December 31, 2023. Current tax assets on our consolidated balance sheets were $2,772 at December 31, 2025, $2,236 at December 31, 2024 and $2,079 at December 31, 2023.

Accrued interest and penalties included in UTBs were $2,604 as of December 31, 2025, $2,223 as of December 31, 2024 and $1,785 as of December 31, 2023. We record interest and penalties related to federal, state and foreign UTBs in income tax expense. The net interest and penalty expense included in income tax expense was $476 for 2025, $474 for 2024 and $324 for 2023.

We file income tax returns in the U.S. federal jurisdiction and various state, local and foreign jurisdictions. As a large taxpayer, our income tax returns are regularly audited by the Internal Revenue Service (IRS) and other taxing authorities.

The IRS has completed field examinations of our tax returns through 2015. All audit periods prior to 2006 are closed for federal examination purposes, and we have effectively resolved all outstanding audit issues for years through 2010 with the IRS Appeals Division.

The components of income tax expense (benefit) are as follows:
202520242023
Federal:
Current$970 $2,769 $2,280 
Deferred2,524 1,289 2,250 
3,494 4,058 4,530 
State and local:
Current(269)859 423 
Deferred331 (512)(832)
62 347 (409)
Foreign:
Current44 68 66 
Deferred21 (28)38 
65 40 104 
Total$3,621 $4,445 $4,225 
“Income Before Income Taxes” in the consolidated statements of income included the following components for the years ended December 31:
202520242023
U.S. income before income taxes
$26,993 $16,674 $20,506 
Foreign income (loss) before income taxes14 24 (658)
Total$27,007 $16,698 $19,848 

A reconciliation of income tax expense (benefit) and the amount computed by applying the statutory federal income tax rate of 21% to income before income taxes is as follows:
202520242023
AmountPercent
Amount
Percent
Amount
Percent
U.S. federal statutory tax rate
$5,671 21.0 %$3,507 21.0 %$4,168 21.0 %
State and local income taxes – net of federal tax effect1,2
(155)(0.6)276 1.6 262 1.3 
Foreign tax effects
40 0.2 22 0.1 98 0.5 
Effect of change in tax laws or rates enacted current period
— — — — — — 
Effect of cross-border tax laws— — (19)(0.1)(1)— 
Tax credits
Research and development credit
(139)(0.5)(183)(1.1)(180)(0.9)
Other
(5)— (7)— (5)— 
Changes in valuation allowance53 0.2 2 — 53 0.3 
Nontaxable or nondeductible items:
Goodwill impairment
— — 929 5.6 9 — 
Noncontrolling interest
(301)(1.1)(274)(1.6)(259)(1.3)
Divestiture of DIRECTV
(1,311)(4.9)— — — — 
Other
(124)(0.5)(43)(0.3)(157)(0.8)
Changes in unrecognized tax benefits2
578 2.1 388 2.3 467 2.4 
Other adjustments
Tax basis adjustments
(592)(2.2)— — — — 
Other
(94)(0.3)(153)(0.9)(230)(1.2)
Effective income tax rate
$3,621 13.4 %$4,445 26.6 %$4,225 21.3 %
1The states that contribute to the majority (greater than 50%) of the tax effect in this category include California for 2025; Florida, Illinois, Michigan, New York and Texas for 2024; and California and Illinois for 2023. State taxes are impacted by current year earnings, book-tax differences, apportionment methodologies, legislative changes, divestitures, return to accrual adjustments and other permanent book-tax differences.
2Effective January 1, 2025, we adopted ASU 2023-09, which requires the effective tax rate reconciliation to include a distinct category for changes in UTBs. This category must include the tax effects of changes in judgment related to prior-period tax positions, settlements and statute of limitations expirations, aggregated across all tax jurisdictions. Furthermore, in accordance with ASU 2023-09, we have elected to present tax positions taken in the current annual reporting period, aggregated across all tax jurisdictions, within “Changes in unrecognized tax benefits.”
The amounts of cash income taxes paid, net of amounts refunded, are as follows at December 31:
202520242023
Federal
$1,219 $2,452 $1,319 
State
91 (49)193 
Foreign
43 53 87 
Total$1,353 $2,456 $1,599