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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Schedule of Income before Income Tax Domestic and Foreign | The sources of income from continuing operations before income taxes are:
(dollars in millions) | 2024 |  | 2023 |  | 2022
United States (1) | $ | 3,016 |  |  | $ | 938 |  |  | $ | 4,151 |
Foreign | 3,178 |  |  | 2,898 |  |  | 1,966 |
Income from continuing operations before income taxes | $ | 6,194 |  |  | $ | 3,836 |  |  | $ | 6,117 |
(1) 2023 includes the impacts of the Powder Metal Matter.
Schedule of Components of Income Tax Expense (Benefit) | The income tax expense (benefit) for the years ended December 31 are as follows:
(dollars in millions) | 2024 |  | 2023 |  | 2022
Current: |  |  |  |  |
United States: |  |  |  |  |
Federal | $ | 443 |  |  | $ | 213 |  |  | $ | 1,724 |
State | 179 |  |  | 70 |  |  | 216 |
Foreign | 606 |  |  | 575 |  |  | 513 |
| 1,228 |  |  | 858 |  |  | 2,453 |
Future: |  |  |  |  |
United States: |  |  |  |  |
Federal | (13) |  |  | (411) |  |  | (1,399) |
State | 71 |  |  | (53) |  |  | (166) |
Foreign | (105) |  |  | 62 |  |  | (98) |
| (47) |  |  | (402) |  |  | (1,663) |
Income tax expense | $ | 1,181 |  |  | $ | 456 |  |  | $ | 790 |
Schedule of Effective Income Tax Rate Reconciliation | Differences between effective income tax rates and the statutory U.S. federal income tax rate are as follows:
| 2024 |  | 2023 |  | 2022
(dollars in millions) | Amount | Rate |  | Amount | Rate |  | Amount | Rate
Statutory U.S. federal income tax rate | $ | 1,301 |  | 21.0 | % |  | $ | 805 |  | 21.0 | % |  | $ | 1,285 |  | 21.0 | %
Tax on international activities | 6 |  | 0.1 |  |  | (27) |  | (0.7) |  |  | (186) |  | (3.1) |
Disposals of businesses | 126 |  | 2.0 |  |  | — |  | — |  |  | — |  | — |
U.S. research and development credit | (188) |  | (3.0) |  |  | (168) |  | (4.4) |  |  | (164) |  | (2.7) |
U.S. federal audit settlements and statute lapse | (277) |  | (4.5) |  |  | (59) |  | (1.5) |  |  | — |  | — |
State income tax, net | 187 |  | 3.0 |  |  | 17 |  | 0.4 |  |  | 59 |  | 1.0 |
Foreign Derived Intangible Income (FDII) | (126) |  | (2.0) |  |  | (142) |  | (3.7) |  |  | (214) |  | (3.5) |
Non-deductible legal charges (1) | 148 | 2.4 |  |  | 5 |  | 0.1 |  |  | — |  | — |
Other | 4 |  | 0.1 |  |  | 25 |  | 0.7 |  |  | 10 |  | 0.2 |
Effective income tax rate | $ | 1,181 |  | 19.1 | % |  | $ | 456 |  | 11.9 | % |  | $ | 790 |  | 12.9 | %
(1) 2024 includes the impact of certain non-deductible legal charges related to the Resolution of Certain Legal Matters. See “Note 17: Commitments and Contingencies” for additional information.
Schedule of Deferred Tax Assets and Liabilities | The tax effects of temporary differences and tax carryforwards which gave rise to future income tax benefits and payables at December 31, 2024 and 2023 are as follows:
(dollars in millions) | 2024 |  | 2023
Future income tax benefits: |  |  |
Insurance and employee benefits | $ | 897 |  |  | $ | 994 |
Inventory and contract balances | — |  |  | 571 |
Warranty provisions | 221 |  |  | 240 |
Capitalization of research and experimental expenditures | 2,208 |  |  | 1,631 |
Other basis differences | 1,060 |  |  | 779 |
Powder Metal Matter | 455 |  |  | 644 |
Tax loss carryforwards | 1,055 |  |  | 905 |
Tax credit carryforwards | 800 |  |  | 891 |
Valuation allowances | (1,439) |  |  | (1,465) |
Total future income tax benefits | $ | 5,257 |  |  | $ | 5,190 |
Future income taxes payable: |  |  |
Goodwill and Intangible assets | $ | 5,675 |  |  | $ | 6,228 |
Fixed assets | 1,614 |  |  | 1,739 |
Inventory and contract balances | 193 |  |  | — |
Other basis differences | 627 |  |  | 238 |
Total future income tax payable | $ | 8,109 |  |  | $ | 8,205 |
Summary of Valuation Allowance | Changes to valuation allowances consisted of the following:
(dollars in millions) | 2024 |  | 2023 |  | 2022
Balance at January 1 | $ | 1,465 |  |  | $ | 842 |  |  | $ | 825 |
Additions charged to income tax expense | 228 |  |  | 170 |  |  | 54 |
Reductions credited to income tax expense | (239) |  |  | (58) |  |  | (82) |
Other adjustments (1) | (15) |  |  | 511 |  |  | 45 |
Balance at December 31 | $ | 1,439 |  |  | $ | 1,465 |  |  | $ | 842 |
(1) 2023 includes the addition of the indefinite-lived tax loss carryforwards now disclosed in connection with Organisation for Economic Co-operation and Development (OECD) Pillar Two.
Summary Of Tax Credit Carryforwards | At December 31, 2024, tax credit carryforwards, principally state and foreign, and tax loss carryforwards, principally state and foreign, were as follows:
(dollars in millions) | Tax Credit Carryforwards |  | Tax Loss Carryforwards
Expiration period: |  |  |
2025-2029 | $ | 56 |  |  | $ | 327 |
2030-2034 | 37 |  |  | 137 |
2035-2044 | 201 |  |  | 1,255 |
Indefinite | 506 |  |  | 3,823 |
Total | $ | 800 |  |  | $ | 5,542 |
Schedule of Unrecognized Tax Benefits Roll Forward | A reconciliation of the beginning and ending amounts of unrecognized tax benefits and interest expense related to unrecognized tax benefits for the years ended December 31, 2024, 2023, and 2022 is as follows:
(dollars in millions) | 2024 |  | 2023 |  | 2022
Balance at January 1 | $ | 1,442 |  |  | $ | 1,515 |  |  | $ | 1,458 |
Additions for tax positions related to the current year | 84 |  |  | 89 |  |  | 106 |
Additions for tax positions of prior years | 164 |  |  | 5 |  |  | 23 |
Reductions for tax positions of prior years | (13) |  |  | (141) |  |  | (56) |
Settlements | (414) |  |  | (26) |  |  | (16) |
Balance at December 31 | $ | 1,263 |  |  | $ | 1,442 |  |  | $ | 1,515 |
Gross interest expense related to unrecognized tax benefits | $ | 127 |  |  | $ | 62 |  |  | $ | 34 |
Total accrued interest balance at December 31 | 255 |  |  | 233 |  |  | 190 |

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