Income Taxes

12 Months Ended

Dec. 31, 2025

35.	Income Taxes

(a)	Income tax expense for the years ended December 31, 2023, 2024 and 2025 were as follows:


(in millions of Won)	2023			2024			2025
Current income taxes(*1)	￦	802,997			598,276			665,415
Deferred income tax due to temporary differences		3,631			(332,431	)		54,613
Items recognized directly in equity		(17,261	)		55,109			(107,893	)

Income tax expense	￦	789,367			320,954			612,135

(*1)	Refund (additional payment) of income taxes as a result of a final corporation tax return, tax audits and others credited (charged) directly to current income taxes.

(b)	The income taxes credited (charged) directly to equity for the years ended December 31, 2023, 2024 and 2025 were as follows:


(in millions of Won)	2023			2024			2025
Net changes in fair value of equity investments at fair value through other comprehensive income(*1)	￦	(71,600	)		41,999			(129,758	)
Remeasurements of defined benefit plans(*1)		34,406			27,261			15,475
Others		19,933			(14,151	)		6,390

	￦	(17,261	)		55,109			(107,893	)

(*1)	Those amounts were recognized in other comprehensive income.

(c)

The following table reconciles the calculated income tax expense based on POSCO’s statutory rate (26.4%, 26.4% and 26.75% for 2023

, 2024

and 202

) to the actual amount of taxes recorded by the Company for the years ended December 31, 2023

, 2024

and 202


(in millions of Won)	2023			2024			2025
Profit before income taxes	￦	2,635,426			1,326,230			1,139,158
Income tax expense computed at statutory rate		685,381			303,124			348,803
Adjustments:
Tax credits		(82,233	)		(22,122	)		(35,757	)
Additional income tax expense for prior years (Refund of taxes for prior years)		152,656			(77,482	)		(41,631	)
Investment in subsidiaries, associates and joint ventures		146,498			107,197			(1,691	)
Tax effects due to permanent differences		(3,011	)		(3,801	)		9,010
Carryforward of unused tax losses(*1)		(126,110	)		(19,545	)		(3,418	)
Effect of tax rate change		4,998			7,368			253,132
Others		11,188			26,215			83,687

		103,986			17,830			263,332

Income tax expense	￦	789,367			320,954			612,135

Effective tax rate (%)		29.95	%		24.20	%		53.74	%

(*1)	During the year ended December 31, 2023, POSCO HOLDINGS INC. recognized tax benefits of ￦ 122,922 million from utilizing tax losses carryforwards of a joint venture upon disposal of the joint venture.

(d)	The movements in deferred tax assets (liabilities) for the years ended December 31, 2024 and 2025 were as follows:


(in millions of Won)	2024									2025
	Beginning			Inc. (Dec.)			Ending			Beginning			Inc. (Dec.)			Ending
Deferred income tax due to temporary differences
Allowance for doubtful accounts	￦	156,608			30,864			187,472			187,472			88,053			275,525
PP&E and Intangible asset(*1)		239,702			47,225			286,927			286,927			(859,828	)		(572,901	)
Share of profit or loss of equity-accounted investees		290,919			(5,965	)		284,954			284,954			27,420			312,374
Allowance for inventories valuation		63,187			(28,338	)		34,849			34,849			(18,580	)		16,269
Prepaid expenses		13,553			1,389			14,942			14,942			(869	)		14,073
Gain or loss on foreign currency translation		143,239			74,341			217,580			217,580			(94,052	)		123,528
Defined benefit liabilities		(3,534	)		12,664			9,130			9,130			26,705			35,835
Provision for construction losses		11,669			668			12,337			12,337			15,340			27,677
Provision for construction warranty		45,723			(2,482	)		43,241			43,241			2,428			45,669
Accrued income		(21,271	)		6,712			(14,559	)		(14,559	)		(25,991	)		(40,550	)
Provision for accelerated depreciation(*1)		(2,660,730	)		33,443			(2,627,287	)		(1,091,668	)		646,835			(444,833	)
Spin-off(*1)		1,536,177			(558	)		1,535,619			—			—			—
Impairment loss on AFS		94,317			(29,506	)		64,811			64,811			7,576			72,387
Difference in acquisition costs of treasury shares		43,741			(9,513	)		34,228			34,228			(13,736	)		20,492
Others		159,102			(40,486	)		118,616			118,616			165,854			284,470

		112,402			90,458			202,860			202,860			(32,845	)		170,015


(in millions of Won)	2024							2025
	Beginning			Inc. (Dec.)		Ending		Beginning		Inc. (Dec.)			Ending
Deferred income taxes recognized directly to equity
Net changes in fair value of equity investments at fair value through other comprehensive income		(35,572	)		47,453		11,881		11,881		(129,758	)		(117,877	)
Others		47,288			13,110		60,398		60,398		21,866			82,264

		11,716			60,563		72,279		72,279		(107,892	)		(35,613	)

Deferred tax from tax credit
Tax credit carry-forward and others		253,559			130,817		384,376		384,376		148,700			533,076
Investments in subsidiaries, associates and joint ventures
Investments in subsidiaries, associates and joint ventures		217,686			50,594		268,280		268,280		(62,576	)		205,704

	￦	595,363			332,432		927,795		927,795		(54,613	)		873,182

(*1)

During the year ended December 31, 2025, following the application of the consolidated tax return system, the Company determined that it has a legally enforceable right and intends to offset deferred tax assets and liabilities, and they relate to the same tax authority. Accordingly, the related amounts have been presented on a net basis.

(e)	Deferred tax assets and liabilities as of December 31, 2024 and 2025 are as follows:


(in millions of Won)	2024								2025
	Assets		Liabilities			Net			Assets		Liabilities			Net
Deferred income tax due to temporary differences
Allowance for doubtful accounts	￦	187,522		(50	)		187,472			275,547		(22	)		275,525
PP&E and Intangible asset		381,583		(94,656	)		286,927			569,256		(1,142,157	)		(572,901	)
Share of profit or loss of equity-accounted investees		297,596		(12,642	)		284,954			325,925		(13,551	)		312,374
Allowance for inventories valuation		34,849		—			34,849			16,269		—			16,269
Prepaid expenses		16,366		(1,424	)		14,942			14,313		(240	)		14,073
Gain or loss on foreign currency translation		222,220		(4,640	)		217,580			142,708		(19,180	)		123,528
Defined benefit liabilities		612,680		(603,550	)		9,130			614,728		(578,893	)		35,835
Provision for construction losses		12,337		—			12,337			27,677		—			27,677
Provision for construction warranty		43,241		—			43,241			45,669		—			45,669
Accrued income		—		(14,559	)		(14,559	)		—		(40,550	)		(40,550	)
Provision for accelerated depreciation		—		(2,627,287	)		(2,627,287	)		—		(444,833	)		(444,833	)
Spin-off		1,538,619		(3,000	)		1,535,619			—		—			—
Impairment loss on AFS		64,811		—			64,811			72,387		—			72,387
Difference in acquisition costs of treasury shares		34,228		—			34,228			20,492		—			20,492
Others		203,111		(84,495	)		118,616			382,584		(98,114	)		284,470

		3,649,163		(3,446,303	)		202,860			2,507,555		(2,337,540	)		170,015

Deferred income taxes recognized directly to equity
Net changes in fair value of equity investments at fair value through other comprehensive income		59,666		(47,785	)		11,881			48,881		(166,758	)		(117,877	)
Others		67,722		(7,324	)		60,398			87,824		(5,560	)		82,264

		127,388		(55,109	)		72,279			136,705		(172,318	)		(35,613	)


(in millions of Won)	2024							2025
	Assets		Liabilities			Net		Assets		Liabilities			Net
Deferred tax from tax credit
Tax credit carry-forward and others		384,376		—			384,376		533,076		—			533,076
Investments in subsidiaries, associates and joint ventures
Investments in subsidiaries, associates and joint ventures		544,482		(276,202	)		268,280		527,879		(322,175	)		205,704

	￦	4,705,409		(3,777,614	)		927,795		3,705,215		(2,832,033	)		873,182

(f)

As of December 31, 2025, deductible temporary differences of

￦

5,856,845 million and taxable temporary differences of

￦

11,718,879 million related to investments in subsidiaries and associates were not recognized as deferred tax assets or liabilities because it is not probable that they will reverse in the foreseeable future.

(g)	The Company recognized current tax payable or receivable at the amount expected to be paid or received that reflects uncertainty related to income taxes.

(h)	Application of the consolidated tax return system

From the year ended December 31, 2025, the controlling company applies the consolidated tax return system, under which the controlling company and its domestic subsidiaries are treated as a single tax unit for income tax purposes. As the consolidated parent entity, the controlling company is responsible for filing the tax return and paying the income tax on behalf of the consolidated group and subsequently collects the respective tax amounts from each domestic subsidiary.

Current income tax liabilities recognized for the year ended December 31, 2025 in relation to the consolidated tax return system are as follows:


(in millions of Won)	2025
Current income tax liabilities(*1)	￦	72,405

(*1)	Calculated and recognized based on the application of the consolidated tax return system for the year ended December 31, 2025.

(i)	Global minimum top-up tax

In 2023, Pillar Two legislation has been enacted in the Republic of Korea, where the controlling company is domiciled, which is effective for the fiscal years starting on or after January 1, 2024. Accordingly, the Company calculated the Pillar Two income tax expense for the year ended December 31, 2025 as it is subject to global minimum

top-up

tax under the application of the OECD’s Pillar Two Model Rules via domestic legislation. The Company reviewed subsidiaries qualifying as taxpayer, including the controlling company and, as a result, did not recognize any income tax expense for the year ended December 31, 2025 as the impact of the global minimum

top-up

tax on the consolidated financial statements as of December 31, 2025 would not be significant. Furthermore, the Company applies temporary exception to the recognition and disclosure of deferred taxes arising from the jurisdictional implementation of the Pillar Two Model Rules as prescribed in IAS No. 12

Income Taxes

. Accordingly, it did not recognize deferred tax assets and liabilities related to the global minimum

top-up

tax and does not disclose information related to deferred income tax.