v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes
Note 15—Income Taxes
Components of income tax provision (benefit) were:
Millions of Dollars
202520242023
Income Taxes
Federal
Current$655 629 1,054 
Deferred537 247 825 
Foreign
Current3,287 3,249 2,931 
Deferred33 71 254 
State and local
Current177 182 202 
Deferred(21)49 65 
Total tax provision (benefit)$4,668 4,427 5,331 
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. Major components of deferred tax liabilities and assets at December 31 were:
Millions of Dollars
20252024
Deferred Tax Liabilities
PP&E and intangibles$16,244 15,609 
Inventory15 91 
Other160 155 
Total deferred tax liabilities16,419 15,855 
Deferred Tax Assets
Benefit plan accruals330 432 
Asset retirement obligations and accrued environmental costs2,985 2,799 
Investments in joint ventures2,356 2,269 
Other financial accruals and deferrals507 497 
Loss and credit carryforwards4,048 4,910 
Other103 187 
Total deferred tax assets10,329 11,094 
Less: valuation allowance(5,926)(6,435)
Total deferred tax assets net of valuation allowance4,403 4,659 
Net deferred tax liabilities$12,016 11,196 
At December 31, 2025, noncurrent assets and liabilities included deferred taxes of $221 million and $12,237 million, respectively. At December 31, 2024, noncurrent assets and liabilities included deferred taxes of $230 million and $11,426 million, respectively.
At December 31, 2025, the loss and credit carryforward deferred tax assets were primarily related to U.S. foreign tax credit carryforwards of $2.9 billion and various jurisdictions net operating loss and credit carryforwards of $1.1 billion.

At December 31, 2024, the loss and credit carryforward deferred tax assets were primarily related to U.S. foreign tax credit carryforwards of $3.3 billion and various jurisdictions net operating loss and credit carryforwards of $1.6 billion. In 2024, $1.2 billion of U.S. foreign tax credits expired. This reduction was partly offset by an increase of $700 million in our U.S. net operating loss, foreign tax credit carryforwards, and other credit carryforwards due to our acquisition of Marathon Oil. See Note 3.
The following table shows a reconciliation of the beginning and ending deferred tax asset valuation allowance for 2025, 2024 and 2023:
Millions of Dollars
202520242023
Balance at January 1$6,435 7,656 8,049 
Charged to expense (benefit)(59)(409)(2)
Other*(450)(812)(391)
Balance at December 31
$5,926 6,435 7,656 
*Represents changes due to deferred tax assets that have no impact to our effective tax rate, acquisitions/dispositions/revisions and the effect of translating foreign financial statements.

Valuation allowances have been established to reduce deferred tax assets to an amount that will, more likely than not, be realized. At December 31, 2025, we have maintained a valuation allowance with respect to substantially all U.S. foreign tax credit carryforwards, basis differences in our APLNG investment, and certain net operating loss carryforwards for various jurisdictions. During 2025, the valuation allowance movement charged to earnings primarily relates to the utilization of previously unrecognized capital loss carryforwards due to our agreement to the sale of our interest in the Ursa and Europa Fields, and the Ursa Pipeline Company LLC. During 2024, the valuation allowance movement charged to earnings primarily relates to the ability to utilize a portion of ConocoPhillips foreign tax credit carryforwards due to the acquisition of Marathon Oil. Other movements are primarily related to valuation allowances on expiring tax attributes. Based on our historical taxable income, expectations for the future and available tax-planning strategies, management expects deferred tax assets, net of valuation allowances, will primarily be realized as offsets to reversing deferred tax liabilities. See Note 3.

As a result of the acquisition of Marathon Oil, we utilized foreign tax credits previously offset by a valuation allowance. During the fourth quarter of 2024, a tax benefit of $394 million was recorded as a result of the acquisition and the subsequent utilization of the foreign tax credits. See Note 3.
At December 31, 2025, we had unremitted income considered to be permanently reinvested in certain foreign subsidiaries and foreign corporate joint ventures. Deferred income taxes have not been provided on this amount, as we do not plan to initiate any action that would require the payment of income taxes. The estimated amount of additional tax, primarily local withholding tax, that would be payable on this income if distributed is approximately $314 million.
The following table shows a reconciliation of the beginning and ending unrecognized tax benefits for 2025, 2024 and 2023:
Millions of Dollars
202520242023
Balance at January 1$377 387 710 
Additions based on tax positions related to the current year— 3 5 
Additions for tax positions of prior years13 127 1 
Reductions for tax positions of prior years— — (9)
Settlements(3)(121)(96)
Lapse of statute(13)(19)(224)
Balance at December 31
$374 377 387 
Included in the balance of unrecognized tax benefits for 2025, 2024 and 2023 were $365 million, $368 million and $378 million, respectively, which, if recognized, would impact our effective tax rate.

The balance of the unrecognized tax benefits decreased in 2025 due to the lapsing of the statute of limitations on certain of our foreign subsidiaries, partially offset by additions on tax positions related to prior years on certain of our foreign subsidiaries.
The balance of the unrecognized tax benefits decreased in 2024 due to the resolution of certain items with U.S. and Norwegian taxing authorities. The balance of our unrecognized tax benefits increased in 2024 primarily due to U.S. tax credits acquired through our acquisition of Marathon Oil. See Note 3.

The balance of the unrecognized tax benefits decreased in 2023 due to the lapsing of the statute of limitations on certain of our foreign subsidiaries of $224 million as well as the closing of our 2018 Canadian domestic audit that resulted in a reduction of $92 million.
At December 31, 2025, 2024 and 2023, accrued liabilities for interest and penalties totaled $47 million, $26 million and $45 million, respectively, net of accrued income taxes. Interest and penalties resulted in a reduction to earnings of $21 million in 2025, an increase to earnings of $19 million in 2024 and a reduction to earnings of $10 million in 2023.
We file tax returns in the U.S. federal jurisdiction and in many foreign and state jurisdictions. Audits in major jurisdictions are generally complete as follows: Canada (2018), Norway (2024) and U.S. (2021). Issues in dispute for audited years and audits for subsequent years are ongoing and in various stages of completion in the many jurisdictions in which we operate around the world. Consequently, the balance in unrecognized tax benefits can be expected to fluctuate from period to period. Within the next twelve months, we may have audit periods close that could significantly impact our total unrecognized tax benefits. It is reasonably possible such changes could be significant when compared with our total unrecognized tax benefits, but the amount of change is not estimable.
The amounts of U.S. and foreign income (loss) before income taxes, with a reconciliation of tax at the federal statutory rate to the provision for income taxes, under newly adopted ASU 2023-09 "Improvements to Income Tax Disclosures", which we adopted for the year ended 2025 on a retrospective basis were:
Millions of DollarsPercent of Pre-Tax Income (Loss)
202520242023202520242023
Income (loss) before income taxes
United States$6,176 6,731 9,472 48.8 %49.2 58.2 
Foreign6,480 6,941 6,816 51.2 50.8 41.8 
$12,656 13,672 16,288 100.0 %100.0 100.0 
U.S. federal statutory tax rate$2,658 2,871 3,421 21.0 %21.0 21.0 
State income taxes, net of federal Income tax effect*
127 187 214 1.0 1.4 1.3 
Foreign tax effects
Norway
Statutory tax rate difference between Norway and U.S.1,020 1,205 1,298 8.1 8.8 8.0 
Other(48)(97)(96)(0.4)(0.7)(0.5)
Libya— — — 
Additional foreign income tax1,087 1,027 1,072 8.6 7.5 6.6 
Other(25)(17)(11)(0.2)(0.1)(0.1)
Australia— — — 
Equity in earnings, net of tax(160)(230)(242)(1.3)(1.7)(1.5)
Other(6)(3)(12)— — (0.1)
Other foreign jurisdictions102 (126)51 0.8 (0.9)0.3 
Effect of cross-border tax laws44 59 21 0.4 0.4 0.1 
Tax Credits(21)— — (0.2)— — 
Valuation allowances(60)(409)(25)(0.5)(3.0)(0.2)
Nontaxable or nondeductible items(24)18 (44)(0.2)0.1 (0.3)
Changes in unrecognized tax benefits(11)(54)(312)(0.1)(0.4)(1.9)
Other Adjustments(15)(4)(4)(0.1)— — 
Total$4,668 4,427 5,331 36.9 %32.4 32.7 
*For 2025, state taxes in Alaska contributed to the majority (greater than 50 percent) of the tax effect in this category. For 2024, state taxes in Alaska contributed to the majority (greater than 50 percent) of the tax effect in this category. For 2023, state taxes in Alaska and California contributed to the majority (greater than 50 percent) of the tax effect in this category.
Our effective tax rate for 2025 was driven by our jurisdictional tax rates for this profit mix with a favorable impact from the utilization of previously unrecognized capital loss carryforwards.

Our effective tax rate for 2024 was driven by our jurisdictional tax rates for this profit mix with a favorable impact from the acquisition of Marathon Oil, enabling the utilization of foreign tax credits previously offset by a valuation allowance. See Note 3.

Our effective tax rate for 2023 was driven by our jurisdictional tax rates for this profit mix with a favorable impact from routine tax credits. The adjustment to tax reserves primarily relates to the lapsing of the statute of limitations on certain of our foreign subsidiaries and the closing of the 2018 Canadian domestic audit.