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Income Taxes | 3 Months Ended
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Mar. 31, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The effective tax rate was 22.4 percent and 22.5 percent for the three months ended March 31, 2025 and 2024, respectively. We are under continuous examination by the Internal Revenue Service (IRS) and tax authorities in other countries and states in which we have significant business operations. The tax years under examination and open for examination vary by jurisdiction. We are currently under examination by the IRS for the 2017 and 2018 tax years. In 2024, we received a Notice of Proposed Adjustment (Notice) from the IRS regarding transfer pricing between our U.S. and foreign subsidiaries for the 2017 and 2018 tax years currently under examination. The Notice proposes an increase to our U.S. taxable income that would result in an additional estimated U.S. federal income tax payment of approximately $185 million for 2017 and 2018, excluding interest and state income taxes, and asserts penalties of approximately $50 million for the same period. Although the Notice only applies to the 2017 and 2018 tax years currently under examination, the IRS may seek similar adjustments for subsequent tax years. We strongly disagree with the IRS’s positions and plan to pursue all available remedies to vigorously contest the adjustments made by the IRS. We believe our income tax reserves are appropriate for all open tax years and that final resolution of this matter will not have a material impact on our results of operations. However, the ultimate outcome of this matter is uncertain, and if we are required to pay the IRS additional U.S. taxes, interest and/or potential penalties, our results of operations could be materially affected for the period in which the matter is resolved. We believe it is reasonably possible that our unrecognized tax benefits could decrease within the next twelve months by as much as $132 million, principally as a result of potential resolutions of prior years’ tax items with various taxing authorities. The prior years’ tax items include unrecognized tax benefits relating to the deductibility of certain expenses or losses and the attribution of taxable income to a particular jurisdiction or jurisdictions. Of the $132 million of unrecognized tax benefits, approximately $104 million relates to amounts that, if recognized, would impact the effective tax rate in a future period. Tax Credit Investments As of March 31, 2025 and 2024, we had $1,699 million and $1,454 million in tax credit investments, respectively, included in Other assets on the Consolidated Balance Sheets, comprised of Low Income Housing Tax Credit investments and other qualifying investments. We account for such tax credit investments using the Proportional Amortization Method. The following table presents tax credit investment expenses and associated income tax credits and other income tax benefits for the three months ended March 31: Table 13.1: Tax Credit Investments Expenses and Credits
|  | Three Months Ended March 31, |  |
(Millions) |  | 2025 |  | 2024 |  |  |  |
Proportional amortization recognized in tax provision |  | $ | 57 |  |  | $ | 47 |  |  |  |  |
Income tax credits and Other income tax benefits (a) recognized in tax provision |  | 66 |  |  | 57 |  |  |  |  |
(a) Other income tax benefits are a result of tax deductible expenses generated by our tax credit investments Income tax credits and other income tax benefits associated with our tax credit investments are also recognized in the Consolidated Statements of Cash Flows in the Operating activities section primarily under Accounts payable and other liabilities. Refer to Note 6 to our “Consolidated Financial Statements” in the 2024 Form 10-K for additional information on our tax credit investments for the year ended December 31, 2024.

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