v3.25.4
INCOME TAXES
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES
NOTE 8: INCOME TAXES
The components of income (loss) before income taxes were as follows:
Year Ended December 31,
(in millions)202320242025
Domestic$(534)$1,063 $2,086 
Foreign1 1 22 
Income (loss) before income taxes$(533)$1,064 $2,108 
The components of the provision for (benefit from) income taxes were as follows:
Year Ended December 31,
(in millions)202320242025
Current:
Federal$5 $16 $22 
State3 6 18 
Foreign— — 4 
Total current tax expense (benefit)8 22 44 
Deferred:
Federal— (333)173 
State— (36)20 
Foreign— — (12)
Total deferred tax expense (benefit)— (369)181 
Total provision for (benefit from) income taxes$8 $(347)$225 
The table below provides the updated requirements of ASU 2023-09 for 2025. See Note 2 - Recent Accounting Pronouncements for additional details on the adoption of ASU 2023-09.
The reconciliation of statutory federal income tax rate and our effective income tax rate was as follows (in millions, except for percentages):
Year Ended December 31, 2025
Amount
Percent
Federal tax at statutory rate$443 21.0 %
State tax (benefit), net of federal benefit(1)
34 1.6 
Foreign tax effects(12)(0.6)
Effect of cross-border tax laws1 0.1 
Nontaxable or nondeductible items:
Share-based compensation(184)(8.7)
Others
5 0.2 
Tax credits:
Research and development credits(66)(3.1)
Changes in unrecognized tax benefits
— — 
Change in valuation allowance3 0.1 
Other adjustments1 0.1 
Total provision for (benefit from) income taxes
$225 10.7 %
(1) State and local taxes in New York, New Jersey, Pennsylvania and Illinois made up the majority (greater than 50 percent) of the tax effect in this category.
For the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the reconciliation of statutory federal income tax rate and our effective income tax rate was as follows (in percentages):
Year Ended December 31,
20232024
Federal tax at statutory rate21.0 %21.0 %
State tax (benefit), net of federal benefit
(1.9)1.1 
Share-based compensation

(29.7)(3.5)
Research and development credits5.6 (4.8)
Non-deductible regulatory settlements(4.6)(0.7)
Other0.2 0.3 
Change in valuation allowance8.0 (46.0)
Effective tax rate(1.4)%(32.6)%
For the year ended December 31, 2025, total income taxes paid (net of refunds) consisted of the following:
Year Ended
December 31,
(in millions)2025
U.S. federal$49 
U.S. state and local45
Foreign1
Total$95 
Individual jurisdictions equaling 5% or more of the total income taxes paid (net of refunds) for the year ended December 31, 2025 include U.S. federal at $49 million, California at $15 million, and New York at $6 million.
Significant components of our deferred tax assets and liabilities consisted of the following:
Year Ended December 31,
(in millions)
20242025
Deferred tax assets:
Tax credit carryforwards$174 $193 
Research and experimentation expenditure amortization248 122 
Lease liabilities33 52 
Net operating loss carryforwards29 40 
Accruals and other liabilities16 29 
Provision for credit losses16 28 
Share-based compensation16 10 
Other31 41 
Total deferred tax assets563 515 
Deferred tax liabilities:
Deferred customer match incentives(74)(153)
Right of use assets(24)(43)
Depreciation and amortization(6)(31)
Other— (4)
Total deferred tax liabilities(104)(231)
Valuation allowance(88)(105)
Net deferred tax assets$371 $179 
The reconciliation of the beginning and ending amount of the deferred tax asset valuation allowance was as follows:
Year Ended December 31,
(in millions)202320242025
Balance at beginning of period$607 $574 $88 
Charged/(credited) to net income (loss)(34)(486)6 
Charges utilized/(write-offs)1 — — 
Additions due to acquisition— — 11 
Balance at end of period$574 $88 $105 
The realization of tax benefits of net deferred assets is dependent upon future levels of taxable income, of an appropriate character, in the periods the items are expected to be deductible or taxable. Based on our analysis of all positive and negative evidence available for the year ended December 31, 2025, we continue to maintain a valuation allowance for our California, and certain other U.S. states and certain foreign net deferred tax assets, as we believe it is more likely than not that the tax benefits of these jurisdictions’ net deferred tax assets may not be realized. The valuation allowance for California, and certain other U.S. states and certain foreign net deferred tax assets increased by approximately $17 million for the year ended December 31, 2025.
As of December 31, 2025, we have $44 million of U.S. federal, $297 million of state, and $11 million of non-U.S. net operating loss carryforwards available to reduce future taxable income. Our U.S. federal net operating loss will carryforward indefinitely. Our state net operating losses begin to expire in 2026,
while our non-U.S. net operating losses begin to expire in 2029. We have U.S. federal tax credit carryforwards of $191 million that will begin to expire in 2043, if not utilized, and state tax credit carryforwards of $158 million that will begin to expire in 2026.
Utilization of the net operating loss and credit carryforwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Code, and similar state provisions. The annual limitation may result in the expiration of net operating losses and tax credits before utilization.
We had unrecognized tax benefits of approximately $134 million of which $88 million would affect our effective tax rate if recognized as of December 31, 2025. The remaining $46 million of unrecognized tax benefits would not impact the effective tax rate due to realizability of those deferred tax assets. We record interest and penalties related to unrecognized tax benefits in income tax expenses. There were no interest or penalties accrued during the year ended December 31, 2024. Interest accrued during the year ended December 31, 2025 was immaterial.
The reconciliation of the beginning and ending amount of unrecognized tax benefits were as follows:
Year Ended December 31,
(in millions)
20242025
Unrecognized benefit - beginning of period$74 $98 
Gross increases - current year tax positions23 35 
Gross increases - prior year tax positions1 1 
Gross decreases - prior year tax positions— — 
Unrecognized benefit - end of period$98 $134 
We file in U.S. federal, various state, and foreign jurisdictions. The tax years from 2013 remain open to examination by the U.S. federal and state authorities, due to carry over of unused net operating losses and tax credits. The tax years from 2022 remain open for the most significant foreign jurisdiction.