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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The following table summarizes our U.S. and foreign income (loss) before income taxes:
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
| (In millions)
U.S. | $ | 1,280 |  |  | $ | 935 |  |  | $ | 67 |
Foreign | 262 |  |  | 83 |  |  | 471 |
Total | $ | 1,542 |  |  | $ | 1,018 |  |  | $ | 538 |
Provision for Income Taxes The following table summarizes our provision for income taxes:
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
|  |  | (In millions) |  |
Current income tax expense: |  |  |  |  |
U.S. federal | $ | 123 |  |  | $ | 128 |  |  | $ | 17 |
State | 30 |  |  | 36 |  |  | 6 |
Foreign | 91 |  |  | 104 |  |  | 102 |
Current income tax expense | 244 |  |  | 268 |  |  | 125 |
Deferred income tax (benefit) expense: |  |  |  |  |
U.S. federal | 77 |  |  | 75 |  |  | (4) |
State | 18 |  |  | (4) |  |  | (2) |
Foreign | (21) |  |  | (9) |  |  | 76 |
Deferred income tax (benefit) expense | 74 |  |  | 62 |  |  | 70 |
Income tax expense | $ | 318 |  |  | $ | 330 |  |  | $ | 195 |
We reduced our current income tax payable by $24 million, $17 million, and $17 million for the years ended December 31, 2024, 2023 and 2022 for tax deductions attributable to stock-based compensation. Deferred Income Taxes As of December 31, 2024 and 2023, the significant components of our deferred tax assets and deferred tax liabilities were as follows:
| December 31,
| 2024 |  | 2023
| (In millions)
Deferred tax assets: |  |  |
Provision for accrued expenses | $ | 47 |  |  | $ | 42 |
Deferred loyalty rewards | 217 |  |  | 204 |
Net operating loss and tax credit carryforwards | 130 |  |  | 314 |
Property and equipment | 25 |  |  | 23 |
Capitalized research and development | 391 |  |  | 325 |
Operating lease liabilities | 118 |  |  | 130 |
Long-term investments | 108 |  |  | 168 |
Other | 59 |  |  | 79 |
Total deferred tax assets | 1,095 |  |  | 1,285 |
Less valuation allowance | (176) |  |  | (244) |
Net deferred tax assets | $ | 919 |  |  | $ | 1,041 |
Deferred tax liabilities: |  |  |
Goodwill and intangible assets | (308) |  |  | (345) |
Anticipatory foreign tax credits | (17) |  |  | (16) |
Operating lease ROU assets | (115) |  |  | (127) |
Other | (2) |  |  | — |
Total deferred tax liabilities | $ | (442) |  |  | $ | (488) |
Net deferred tax assets | $ | 477 |  |  | $ | 553 |
As of December 31, 2024, we had state net operating loss carryforwards (“NOLs”) of approximately $229 million and foreign NOLs of approximately $272 million. State NOLs of $68 million may be carried forward indefinitely, and state NOLs of $161 million expire at various times starting from 2025. Foreign NOLs of $175 million may be carried forward indefinitely, and foreign NOLs of $97 million expire at various times starting from 2026. As of December 31, 2024, we had tax credit carryforwards of approximately $103 million, which expire at various times starting from 2038. As of December 31, 2024, we had a valuation allowance of approximately $176 million related to capital loss carryforwards and unrealized losses on minority investments for which it is more likely than not the tax benefits will not be realized. The valuation allowance decreased by $68 million from the amount recorded as of December 31, 2023, primarily due to a decrease in the unrealized losses on minority investments. The amount of the deferred tax asset considered realizable may be adjusted if capital gains are realized or if, in certain jurisdictions, objective negative evidence in the form of cumulative GAAP losses is no longer applicable and additional weight may be given to subjective evidence such as our projections for growth. Most of our foreign undistributed earnings have already been subject to U.S. federal income tax. We do not assert indefinite reinvestment on the undistributed earnings of our foreign subsidiaries. Reconciliation of U.S. Federal Statutory Income Tax Rate to Effective Income Tax Rate A reconciliation of amounts computed by applying the U.S. federal statutory income tax rate to income before income taxes to total income tax expense is as follows:
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
|  |  | (In millions) |  |
Income tax expense at the U.S. federal statutory rate of 21% | $ | 324 |  |  | $ | 214 |  |  | $ | 113 |
Foreign tax rate differential | — |  |  | (27) |  |  | (75) |
U.S. federal research and development credit | (48) |  |  | (52) |  |  | (40) |
Excess tax benefits related to stock-based compensation | (7) |  |  | 9 |  |  | (17) |
Nondeductible compensation | 34 |  |  | 28 |  |  | 37 |
Unrecognized tax benefits and related interest | 37 |  |  | 39 |  |  | 27 |
Change in valuation allowances | (67) |  |  | — |  |  | 77 |
Return to provision true-ups | 2 |  |  | (44) |  |  | (11) |
State taxes | 32 |  |  | 22 |  |  | 3 |
Non-creditable foreign withholding tax | 2 |  |  | 3 |  |  | 21 |
Non-deductible goodwill impairment | — |  |  | 92 |  |  | — |
Divestitures and entity restructuring | — |  |  | 67 |  |  | 65 |
Foreign-derived intangible income | (28) |  |  | (25) |  |  | (15) |
Other, net | 37 |  |  | 4 |  |  | 10 |
Income tax expense | $ | 318 |  |  | $ | 330 |  |  | $ | 195 |
Our effective tax rate for 2024 was broadly in line with the 21% U.S. federal statutory income tax rate. Our effective tax rate for 2023 was higher than the 21% U.S. federal statutory income tax rate due to a non-deductible goodwill impairment and the TripAdvisor audit assessment discussed below, partially offset by research and experimentation credits. Our effective tax rate for 2022 was higher than the 21% U.S. federal statutory income tax rate due to valuation allowances on minority investments and nondeductible compensation, partially offset by research and experimentation credits. Unrecognized Tax Benefits and Interest A reconciliation of the beginning and ending amount of gross unrecognized tax benefits and interest is as follows:
| 2024 |  | 2023 |  | 2022
|  |  | (In millions) |  |
Balance, beginning of year | $ | 425 |  |  | $ | 379 |  |  | $ | 349 |
Increases to tax positions related to the current year | 18 |  |  | 19 |  |  | 23 |
Increases to tax positions related to prior years | 4 |  |  | 4 |  |  | 5 |
Decreases to tax positions related to prior years | (3) |  |  | — |  |  | — |
Settlements during current year | (3) |  |  | (1) |  |  | (8) |
Interest and penalties | 27 |  |  | 24 |  |  | 10 |
Balance, end of year | $ | 468 |  |  | $ | 425 |  |  | $ | 379 |
As of December 31, 2024, we had $468 million of gross unrecognized tax benefits, $239 million of which, if recognized, would affect the effective tax rate. As of December 31, 2023, we had $425 million of gross unrecognized tax benefits, $223 million of which, if recognized, would affect the effective tax rate. As of December 31, 2022, we had $379 million of gross unrecognized tax benefits, $213 million of which, if recognized, would affect the effective tax rate. We recognize interest and penalties related to unrecognized tax benefits in the provision for income taxes in our consolidated statement of operations. Accrued interest and penalties of $117 million and $90 million were reflected in our consolidated balance sheets as of December 31, 2024 and 2023. The Company is routinely audited by U.S. federal, state, local and foreign income tax authorities. These audits include questioning the timing and amount of income and deductions, and the allocation of income and deductions among various tax jurisdictions. The IRS is currently examining Expedia Group’s U.S. consolidated federal income tax returns for the periods ended December 31, 2011 through December 31, 2020. The Company has consented to an extension of the statute of limitations, until June 30, 2026 for the 2011 through 2020 tax years. As of December 31, 2024, for the Expedia Group, Inc. and Subsidiaries group, statutes of limitations for tax years 2011 through 2023 remain open to examination in the U.S. federal jurisdiction and most state jurisdictions. For the HomeAway and Orbitz groups, statutes of limitations for tax years 2007 through 2015 remain open to examination in the U.S. federal and most state jurisdictions due to NOL carryforwards. For tax years 2011 to 2013 and 2014 to 2016, the IRS issued final adjustments related to transfer pricing with our foreign subsidiaries. The 2011 to 2013 adjustments would result in federal income tax of approximately $244 million, subject to interest. The 2014 to 2016 adjustments would result in federal income tax of approximately $431 million, subject to interest. We do not agree with these adjustments and will continue to vigorously defend our position through administrative procedures. We are also under examination by the IRS for our 2017 to 2020 tax years. On December 20, 2011, we completed a spin-off of TripAdvisor into a separate publicly-traded corporation. Pursuant to the tax sharing agreement between Expedia Group and TripAdvisor, TripAdvisor is responsible for its potential income tax liabilities in connection with any consolidated income tax returns filed as a part of Expedia Group’s consolidated income tax return prior to or in connection with the spin-off. TripAdvisor is required to indemnify Expedia Group for any such taxes, including interest, penalties, legal, and professional fees. In 2023, TripAdvisor agreed in principle with the IRS to an assessed amount of $120 million, inclusive of interest and state tax effects, for transfer pricing adjustments with its foreign subsidiaries for the 2009 to 2011 tax years. The assessment is a tax liability for tax years when TripAdvisor was part of Expedia Group's consolidated income tax return and is covered by the indemnification pursuant to the tax sharing agreement. In May 2023, Expedia Group received from the IRS the final assessment for the 2009 through 2011 tax years related to the TripAdvisor matter. Expedia Group remitted $113 million in settlement payments to the IRS, as the primary obligor for this assessment, and received the reimbursement required from TripAdvisor in settlement of the indemnification receivable for this matter. During 2023, we recorded $67 million of additional income tax expense and a corresponding tax indemnification adjustment in other, net in our consolidated statements of operations representing the estimate of the incremental assessed payment to the IRS, including state tax effects. During 2024, we recorded an additional $6 million of income tax expense related to interest adjustments for the 2010-2011 tax years.

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