Annual report [Section 13 and 15(d), not S-K Item 405]

INCOME TAXES (Tables)

v3.25.4
INCOME TAXES (Tables)
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Tax Expense Benefit
The income tax expense (benefit) for 2025, 2024 and 2023 consists of the following (in millions):
2025 2024 2023
Current:
U.S. Federal $ 970  $ 1,093  $ 1,012 
U.S. State and Local 113  172  195 
Non-U.S. 517  410  459 
Total Current 1,600  1,675  1,666 
Deferred:
U.S. Federal (26) 38  150 
U.S. State and Local 7  (30) 20 
Non-U.S. 11  (23) 29 
Total Deferred (8) (15) 199 
Total Income Tax Expense $ 1,592  $ 1,660  $ 1,865 
Income Before Income Taxes
Income before income taxes includes the following components (in millions):
2025 2024 2023
United States $ 5,240  $ 5,839  $ 6,246 
Non-U.S. 1,924  1,603  2,327 
Total Income Before Income Taxes
 $ 7,164  $ 7,442  $ 8,573 
Reconciliation of Statutory Federal Income Tax Rate to Effective Income Tax Rate The table below provides the updated effective tax rate reconciliation. A reconciliation of the statutory federal income tax rate to the effective income tax rate for 2025 consists of the following (in millions, except percentages):
2025
$
%
U.S. Federal Statutory Tax Rate
 $ 1,505  21.0 
State and Local Income Taxes, Net of Federal Income Tax Effect(1)
101  1.4 
Foreign Tax Effects
 168  2.4 
Effect of Cross-Border Tax Laws, Net of Related Credits
 (68) (0.9)
Tax Credits
 (90) (1.3)
Changes in Valuation Allowances
 (91) (1.3)
Nontaxable or Nondeductible Items
 45  0.6 
Other Adjustments
 22  0.3 
Effective Income Tax Rate
 $ 1,592  22.2 
(1) State taxes in California, Illinois, New York, Minnesota, Florida, and Pennsylvania made up the majority (greater than 50 percent) of the tax effect in this category.
As previously disclosed, during 2024 and 2023, a reconciliation of the statutory federal income tax rate to the effective income tax rate consists of the following:
2024 2023
Statutory U.S. federal income tax rate 21.0  % 21.0  %
U.S. state and local income taxes (net of federal benefit)
 1.8  1.9 
Non-U.S. tax rate differential —  (0.6)
FDII and GILTI, net(1)
(1.2) (0.9)
U.S. federal tax credits (0.8) (0.7)
Goodwill and other asset impairments —  0.1 
Net uncertain tax positions 0.2  (0.5)
Other 1.3  1.5 
Effective income tax rate 22.3  % 21.8  %
(1)    Foreign-Derived Intangible Income ("FDII") and Global Intangible Low-Taxed Income ("GILTI").
Deferred Tax Liabilities and Assets
Deferred income tax assets and liabilities are comprised of the following as of December 31, 2025 and 2024 (in millions):
2025 2024
Fixed assets and capitalized software $ (5,938) $ (5,914)
Operating lease right-of-use assets (950) (943)
Other (764) (612)
Deferred tax liabilities (7,652) (7,469)
Pension and postretirement benefits 1,433  1,474 
Loss and credit carryforwards 241  308 
Insurance reserves 683  646 
Accrued employee compensation 356  352 
Operating lease liabilities 1,018  1,021 
Other 455  367 
Deferred tax assets 4,186  4,168 
Deferred tax assets valuation allowance (84) (182)
Deferred tax asset (net of valuation allowance) 4,102  3,986 
Net deferred tax asset (liability) $ (3,550) $ (3,483)
Amounts recognized in our consolidated balance sheets:
Deferred tax assets $ 140  $ 112 
Deferred tax liabilities (3,690) (3,595)
Net deferred tax asset (liability) $ (3,550) $ (3,483)
U.S. State and Local Operating Loss and Credit Carryforwards
Further, we have U.S. state and local operating loss and credit carryforwards as follows (in millions):
2025 2024
U.S. state and local operating loss carryforwards $ 976  $ 1,043 
U.S. state and local credit carryforwards $ 66  $ 47 
Schedule of Unrecognized Tax Benefits Roll Forward
The following table summarizes the activity related to our uncertain tax positions (in millions):
Tax Interest Penalties
Balance as of January 1, 2023
 $ 533  $ 104  $ 4 
Additions for tax positions of the current year 26  —  — 
Additions for tax positions of prior years 147  37  1 
Reductions for tax positions of prior years for:
Changes based on facts and circumstances (164) (24) (1)
Settlements during the period (47) (9) — 
Lapses of applicable statute of limitations (3) —  — 
Balance as of December 31, 2023
 492  108  4 
Additions for tax positions of the current year 33  —  — 
Additions for tax positions of prior years 52  33  — 
Reductions for tax positions of prior years for:
Changes based on facts and circumstances (81) (11) (1)
Settlements during the period (33) (5) — 
Lapses of applicable statute of limitations (16) (3) — 
Balance as of December 31, 2024
 447  122  3 
Additions for tax positions of the current year 20  1  — 
Additions for tax positions of prior years 43  41  — 
Reductions for tax positions of prior years for:
Changes based on facts and circumstances (42) (7) — 
Settlements during the period (15) (2) — 
Lapses of applicable statute of limitations (1) —  — 
Balance as of December 31, 2025
 $ 452  $ 155  $ 3 
Schedule of Cash Flow, Supplemental Disclosures
The following table presents supplemental cash flow information (in millions):
2025 2024 2023
Cash paid during the year for:
Interest (net of amount capitalized)(1)
$ 990  $ 854  $ 762 
Income taxes (net of refunds) 1,912  1,347  1,976 
Operating cash flows from operating leases
 954  877  835 
Financing cash flows from finance leases
 133  136  126 
Noncash transactions:
Accrued capital expenditures $ 524  $ 227  $ 309 
Property, plant and equipment recognized during the construction period of build-to-suit financing arrangement 107  —  — 
Right-of-use assets obtained in exchange for operating lease obligations
 808  740  1,278 
Right-of-use assets obtained in exchange for finance lease obligations(2)
731  120  209 
(1)    Includes $18, $20 and $17 million of cash paid for interest on finance leases in 2025, 2024 and 2023, respectively.
(2)    Includes $551 million related to new aircraft leases that commenced in 2025, which were accounted for as finance leases.
The following table provides cash taxes paid for income taxes, net of refunds for the year 2025:
2025
U.S. Federal $ 1,329 
U.S. State and Local 157 
Non-U.S.
Canada 106 
Other 320 
Total Non-U.S.
 $ 426 
Total cash paid for income taxes (net of refunds) $ 1,912