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Income Taxes
 9 Months Ended
Sep. 30, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The One Big Beautiful Bill Act (“OBBB”) was signed into law in July 2025. The OBBB includes various tax law changes, including the restoration of favorable tax treatment for certain business-related provisions and modifications to the international tax law framework. The OBBB has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. These provisions and modifications have not had a material impact on our condensed consolidated financial statements.
Earnings before income taxes, provision for income taxes and income tax rates consisted of the following:
For the Nine Months Ended September 30,For the Three Months Ended September 30,
(in millions)2025202420252024
Earnings before income taxes$7,876$10,881$3,075$3,026
Provision for income taxes2,0462,656700733
Income tax rate26.0 %24.4 %22.8 %24.2 %
Our income tax rate for the nine months ended September 30, 2025 differed from the U.S. federal statutory rate of 21%, due primarily to state tax expense, the non-deductible impairment of the e-vapor reporting unit goodwill and a valuation allowance associated with our unrealized capital losses, partially offset by a net income tax benefit related to tax reserves as discussed below. Our income tax rate for the three months ended September 30, 2025 differed from the U.S. federal statutory rate of 21%, due primarily to state tax expense and a valuation allowance associated with our unrealized capital losses, partially offset by a net income tax benefit related to tax reserves as discussed below. For further discussion of the impairment charge, see Note 4. Goodwill and Other Intangible Assets, net.
Our income tax rate for the nine months ended September 30, 2024 differed from the U.S. federal statutory rate of 21%, due primarily to state tax expense, partially offset by an income tax benefit from the partial release of a valuation allowance recorded against a deferred tax asset associated with our losses related to our former investment in JUUL Labs, Inc. (“JUUL”). The valuation allowance release was due to our capital gain on the ABI Transaction. Our income tax rate for the three months ended September 30, 2024 differed from the U.S. federal statutory rate of 21%, due primarily to state tax expense. For further discussion of the ABI Transaction, see Note 6. Investments in Equity Securities.
We are subject to income taxation in many jurisdictions. Unrecognized tax benefits reflect the differences between tax positions we have taken or expect to take on income tax returns and the amounts recognized in the financial statements. Resolution of the related tax positions with the relevant tax authorities may take many years to complete, and such timing is not entirely within our control.
On September 29, 2025, the U.S. District Court for the Eastern District of Virginia ruled in favor of the IRS and denied our refund claim for the 2017 tax year, based on the Tax Cuts and Jobs Act of 2017’s removal of downward attribution rules, which the IRS invoked to attribute income from certain of ABI’s foreign subsidiaries to Altria. We intend to vigorously contest the ruling by pursuing all available appellate remedies. This ruling also has a potential impact for our 2018 through 2025 tax years. Following this ruling, we reevaluated our position and concluded as of September 30, 2025, that it is no longer more likely than not that we will prevail at the conclusion of the appellate process.
Consequently, we reversed a receivable of $45 million for the 2017 tax year and recorded a full reserve for this uncertain tax position of $310 million for the 2018 through 2025 tax years. Additionally, we reduced a deferred tax liability by $461 million due to the resulting increase in the tax basis of our investment in ABI, partially offset by a $77 million increase to a valuation allowance associated with the indirect effect on unrealized capital losses due to the decrease of a previously anticipated capital gain on the ABI Transaction. As a result of the foregoing, we recognized a net tax benefit of $29 million for the nine and three months ended September 30, 2025 in our condensed consolidated statement of earnings related to a favorable rate differential associated with certain cross-border taxes included in the tax reserve. Effective January 1, 2026, the OBBB reinstates this downward attribution rule, which will limit the impact of this ruling to the 2017 through 2025 tax years.
At September 30, 2025, our total unrecognized tax benefits were $573 million. The amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate at September 30, 2025, was $20 million, along with $410 million affecting deferred taxes. The amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate at December 31, 2024, was $189 million, along with $27 million affecting deferred taxes. Unrecognized tax benefits increased by $291 million from December 31, 2024 due primarily to the removal of downward attribution rules applicable to income from certain ABI foreign subsidiaries.
The following chart provides a reconciliation of the beginning and ending valuation allowances for the nine months ended September 30, 2025:
(in millions)
Balance at beginning of year$668 
Additions to valuation allowance charged to income tax expense84 
Releases of valuation allowance credited to income tax benefit(12)
Balance at end of period$740 
The changes in the valuation allowances for the nine months ended September 30, 2025 were due primarily to the indirect effects of tax reserves, as discussed above, on our unrealized capital losses. The cumulative valuation allowance at September 30, 2025 was primarily attributable to deferred tax assets recorded in connection with the unrealized capital losses related to our former investment in JUUL and our investment in Cronos. As we continue to evaluate all sources of potential income that may become available to utilize these losses, our valuation allowance position may change. It is possible sufficient positive evidence may be available in future periods to cause us to reduce or eliminate the valuation allowance on certain deferred tax assets. That change to the valuation allowance would result in the recognition of previously unrecognized deferred tax assets and a decrease in income tax expense in the period the release is recorded.