v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
Provision for Income Taxes
Income taxes are provided for using the asset and liability method under which deferred tax assets and liabilities are recognized for temporary differences between the financial reporting and tax bases of assets and liabilities. The firm reports interest expense related to income tax matters in provision for taxes and income tax penalties in other expenses.
The table below presents information about the provision for taxes.
Year Ended December
$ in millions202520242023
Current taxes
U.S. federal$1,120 $2,000 $1,230
State and local571 659 389 
Non-U.S.2,781 2,262 1,964 
Total current tax expense4,472 4,921 3,583 
Deferred taxes
U.S. federal371 (869)(954)
State and local(83)(140)(356)
Non-U.S.(84)209 (50)
Total deferred tax (benefit)/expense
204 (800)(1,360)
Provision for taxes$4,676 $4,121 $2,223 
The firm adopted ASU No. 2023-09 for annual periods beginning in January 2025 under the prospective approach. This ASU introduced new disclosures, including a breakdown of pre-tax earnings by U.S. and non-U.S., and information about income taxes paid. The ASU also made certain changes to the disclosure of the reconciliation of the U.S. federal statutory tax rate to the effective tax rate.
The table below presents information about the firm's U.S. and non-U.S. pre-tax earnings based on the location of the legal entity in which the pre-tax earnings are generated.
Year Ended
$ in millions
December 2025
U.S.
$13,764 
Non-U.S.
8,088 
Total
$21,852 
The table below presents a reconciliation of the 2025 U.S. federal statutory tax rate to the effective tax rate.
Year Ended
$ in millionsDecember 2025
U.S. federal statutory tax rate
$4,589 21.0%
State and local taxes, net of U.S. federal benefit176 0.8 
Foreign tax effects:
U.K.
Statutory rate difference348 1.6 
Other permanent items
(186)(0.8)
Other foreign jurisdictions
221 1.0 
Enactment of new tax laws
– – 
Effect of cross-border tax laws:
NCTI
356 1.6 
Non-U.S. branches
(278)(1.3)
Other(144)(0.7)
Tax credits
(131)(0.6)
Valuation allowances
(160)(0.7)
Non-taxable or non-deductible:
Settlement of employee share-based awards
(347)(1.6)
Non-taxable distributions
(363)(1.7)
Other
118 0.6 
Changes in unrecognized tax benefits480 2.2 
Other adjustments
(3)– 
Effective tax rate
$4,676 21.4%
In the table above:
•State and local taxes, net of U.S. federal benefit primarily includes taxes in New York State and City, and California.
•Statutory rate difference represents the statutory rate difference between the U.S. and the respective jurisdiction on pre-tax earnings/(losses) in that jurisdiction.
•The firm recognizes income tax expense associated with Net Controlled Foreign Corporation Tested Income (NCTI), formerly known as Global Intangible Low Taxed Income (GILTI) in the period in which it is incurred.
•Non-U.S. branches represents the U.S. tax offset to foreign tax effects for non-U.S. earnings that are included with their U.S. parent for U.S. tax purposes.
•Settlement of employee share-based awards includes the U.S. federal tax benefits on both delivery of common stock underlying employee share-based awards and dividend equivalents paid on RSUs.
•Changes in unrecognized tax benefits includes current and prior year changes in U.S. and non-U.S. unrecognized tax benefits and the related interest expense, net.






The table below presents information about income taxes paid.
Year Ended
$ in millions
December 2025
U.S. federal $1,195 
State and local 349 
Non-U.S.:
France338 
U.K.960 
Other jurisdictions1,148 
Total
$3,990 
In the table above, jurisdictions that represent less than 5% of the total tax payments for the respective year have been included in other jurisdictions.
The table below presents a reconciliation of the U.S. federal statutory tax rate to the effective tax rate for both 2024 and 2023, and is based on applicable U.S. GAAP requirements prior to the adoption of ASU No. 2023-09.
Year Ended December
20242023
U.S. federal statutory tax rate
21.0%21.0%
State and local taxes, net of U.S. federal benefit2.4 0.6 
Settlement of employee share-based awards(1.2)(1.8)
Non-U.S. operations(1.4)(2.4)
GILTI
2.8 4.4 
Tax credits(0.8)(1.6)
Tax-exempt income, including dividends(0.6)(1.0)
Non-deductible legal expenses– 0.2 
Other0.2 1.3 
Effective tax rate
22.4%20.7%
Deferred Income Taxes
Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities. These temporary differences result in taxable or deductible amounts in future years and are measured using the tax rates and laws that will be in effect when such differences are expected to reverse. Valuation allowances are established to reduce deferred tax assets to the amount that more likely than not will be realized and primarily relate to the ability to utilize losses and tax credits in various tax jurisdictions. Tax assets are included in other assets and tax liabilities are included in other liabilities.














The table below presents information about deferred tax assets and liabilities, excluding the impact of netting within tax jurisdictions.
As of December
$ in millions20252024
Deferred tax assets
Compensation and benefits$2,125 $1,888 
ASC 740 asset related to unrecognized tax benefits387 366 
Non-U.S. operations1,398 1,507 
Unrealized losses
2,984 2,786 
Net operating losses766 786 
Occupancy-related86 85 
Other comprehensive income/(loss)-related1,182 714 
Tax credits carryforward392 461 
Operating lease liabilities612 581 
Allowance for credit losses814 1,412 
Other, net640 421 
Subtotal11,386 11,007 
Valuation allowance(1,970)(2,064)
Total deferred tax assets$9,416 $8,943 
Deferred tax liabilities
Depreciation and amortization$1,081 $982 
Operating lease right-of-use assets538 512 
Total deferred tax liabilities$1,619 $1,494 
The firm has recorded deferred tax assets of $766 million as of December 2025 and $786 million as of December 2024, in connection with U.S. federal, state and local and foreign net operating loss carryforwards. The firm also recorded a valuation allowance of $327 million as of December 2025 and $328 million as of December 2024, related to these net operating loss carryforwards.

As of December 2025, the U.S. federal net operating loss carryforward was $1.2 billion, the state and local net operating loss carryforward was $3.3 billion, and the foreign net operating loss carryforward was $1.5 billion. If not utilized, the U.S. federal and the state and local net operating loss carryforwards will begin to expire in 2026 and the foreign net operating loss carryforwards will begin to expire in 2028. If these carryforwards expire, they will not have a material impact on the firm’s results of operations. As of December 2025, the firm has recorded deferred tax assets of $336 million in connection with foreign tax credit carryforwards and a related valuation allowance of $323 million. As of December 2025, the firm has recorded deferred tax assets of $43 million in connection with general business credit carryforwards and a related valuation allowance of $5 million related to these general business credit carryforwards. As of December 2025, the firm has recorded deferred tax assets of $13 million in connection with state and local tax credit carryforwards and a related valuation allowance of $4 million related to these tax credit carryforwards. If not utilized, the foreign tax credit carryforward will begin to expire in 2033, the general business credit carryforward will begin to expire in 2026 and the state and local tax credit carryforward will begin to expire in 2026.
As of both December 2025 and December 2024, the firm had no U.S. federal capital loss carryforwards and no related net deferred income tax assets. As of December 2025, the firm had deferred tax assets of $8 million in connection with state and local capital loss carryforwards and a related valuation allowance of $1 million related to these capital loss carryforwards. As of December 2025, the firm had deferred tax assets of $548 million in connection with foreign capital loss carryforwards and a related valuation allowance of $513 million related to these capital loss carryforwards.
The valuation allowance decreased by $94 million during 2025, primarily due to a net increase in deferred tax assets from which the firm expects to realize a benefit. The valuation allowance increased by $86 million during 2024, primarily due to an increase in deferred tax assets from which the firm does not expect to realize any benefit.
The firm permanently reinvested eligible earnings of certain foreign subsidiaries. As of both December 2025 and December 2024, all U.S. taxes were accrued on these subsidiaries’ distributable earnings.

Unrecognized Tax Benefits
The firm recognizes tax positions in the consolidated financial statements only when it is more likely than not that the position will be sustained on examination by the relevant taxing authority based on the technical merits of the position. A position that meets this standard is measured at the largest amount of benefit that will more likely than not be realized on settlement. A liability is established for differences between positions taken in a tax return and amounts recognized in the consolidated financial statements.
The accrued liability for interest expense related to income tax matters and income tax penalties was $669 million as of December 2025 and $475 million as of December 2024. The firm recognized interest expense and income tax penalties of $149 million for 2025, $113 million for 2024 and $90 million for 2023.
The table below presents the changes in the liability for unrecognized tax benefits, which is included in other liabilities.
Year Ended or as of December
$ in millions202520242023
Beginning balance
$2,162 $1,726 $1,533 
Increases based on current year tax positions
353 381 143 
Increases based on prior years' tax positions217 87 164 
Decreases based on prior years' tax positions(113)(23)(92)
Decreases related to settlements
(28)(9)(20)
Exchange rate fluctuations
9 – (2)
Ending balance
$2,600 $2,162 $1,726 
In the table above, the liability for unrecognized tax benefits included $2.2 billion as of December 2025, $1.8 billion as of December 2024 and $1.4 billion as of December 2023 of unrecognized tax benefits which, if recognized, would reduce the annual effective tax rate. The remaining unrecognized tax benefits in the table above would not affect the annual tax rate, as such benefits have jurisdictional offsets or relate to temporary differences.

Regulatory Tax Examinations
The firm is subject to examination by the U.S. Internal Revenue Service (IRS) and other taxing authorities in jurisdictions where the firm has significant business operations, such as the United Kingdom, Japan, Hong Kong and various states, such as New York. The tax years under examination vary by jurisdiction. The firm does not expect completion of these audits to have a material impact on the firm’s financial condition, but it may be material to operating results for a particular period, depending, in part, on the operating results for that period.
The table below presents the earliest tax years that remain subject to examination by major jurisdiction.
As of
JurisdictionDecember 2025
U.S. Federal2011
New York State and City2015
United Kingdom2017
Japan2019
Hong Kong2019
The firm has been accepted into the Compliance Assurance Process (CAP) program by the IRS for each of the tax years from 2013 through 2026. This program allows the firm to work with the IRS to identify and resolve potential U.S. federal tax issues before the filing of tax returns. All issues addressed through the CAP program for the 2011 through 2018 tax years have been resolved and completion is pending final review by the Joint Committee on Taxation. All issues for the 2019 through 2022 tax years have been resolved and will be effectively settled pending administrative completion by the IRS. Final completion of tax years 2011 through 2022 will not have a material impact on the effective tax rate. The 2023 and 2024 tax years remain subject to post-filing review. New York State and City examinations of tax years 2015 through 2018 commenced during 2021.
All years, including and subsequent to the years in the table above, remain open to examination by the taxing authorities. The firm believes that the liability for unrecognized tax benefits it has established is adequate in relation to the potential for additional assessments.