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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Taxes |
Income Taxes | 8. Income Taxes Income Tax Expense Our income tax expense consisted of the following for the year ended December 31 (in millions):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2024 |  | 2023 |  | 2022
Current: |  | ​ |  |  | ​ |  |  | ​ |
Federal | ​ | $ | 419 | ​ | $ | 477 | ​ | $ | 456
State | ​ |  | 133 | ​ |  | 151 | ​ |  | 130
Foreign | ​ |  | 37 | ​ | ​ | 34 | ​ | ​ | 43
​ | ​ |  | 589 | ​ | ​ | 662 | ​ | ​ | 629
Deferred: | ​ |  |  | ​ | ​ |  | ​ | ​ |
Federal | ​ |  | 98 | ​ | ​ | 73 | ​ | ​ | 20
State | ​ |  | 19 | ​ | ​ | 2 | ​ | ​ | 30
Foreign | ​ |  | 7 | ​ | ​ | 8 | ​ | ​ | (1)
​ | ​ |  | 124 | ​ | ​ | 83 | ​ | ​ | 49
Income tax expense | ​ | $ | 713 | ​ | $ | 745 | ​ | $ | 678
​ The U.S. federal statutory income tax rate is reconciled to the effective income tax rate for the year ended December 31 as follows:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2024 |  |  | 2023 |  | ​ | 2022 |
Income tax expense at U.S. federal statutory rate |  | 21.00 | % |  | 21.00 | % | ​ | 21.00 | %
State and local income taxes, net of federal income tax benefit |  | 4.05 |  |  | 4.15 |  | ​ | 4.16 | ​
Adoption of new accounting standard | ​ | 2.25 | ​ | ​ | — | ​ | ​ | — | ​
Federal tax credits |  | (6.63) |  |  | (3.23) |  | ​ | (2.81) | ​
Taxing authority audit settlements and other tax adjustments |  | (0.95) |  |  | (0.02) |  | ​ | 0.54 | ​
Tax impact of equity-based compensation transactions |  | (0.61) |  |  | (0.35) |  | ​ | (0.45) | ​
Tax impact of impairments |  | 0.42 |  |  | 1.87 |  | ​ | 0.02 | ​
Tax rate differential on foreign income |  | 0.29 |  |  | 0.21 |  | ​ | 0.27 | ​
Other |  | 0.80 |  |  | 1.03 |  | ​ | 0.51 | ​
Effective income tax rate |  | 20.62 | % |  | 24.66 | % | ​ | 23.24 | %
​ The comparability of our income tax expense for the reported periods has been primarily affected by (i) federal tax credits; (ii) variations in our income before income taxes; (iii) impacts on adopting Accounting Standards Updates (“ASU”) 2023-02 and (iv) the tax implications of impairments. For financial reporting purposes, income before income taxes by source for the year ended December 31 was as follows (in millions):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2024 |  | 2023 |  | 2022
Domestic | ​ | $ | 3,325 | ​ | $ | 2,878 | ​ | $ | 2,779
Foreign | ​ |  | 133 | ​ | ​ | 143 | ​ | ​ | 139
Income before income taxes | ​ | $ | 3,458 | ​ | $ | 3,021 | ​ | $ | 2,918
​ Renewable Natural Gas — Through our subsidiaries, including our WM Renewable Energy segment, we have invested in building landfill gas-to-energy facilities in the U.S. and Canada that produce renewable electricity and RNG. We expect our new RNG facilities to qualify for federal tax credits and to realize those credits through 2027 under Sections 48 and 45Z of the Internal Revenue Code. We completed construction of five RNG facilities in 2024 and one RNG facility in 2023, resulting in a reduction to our income tax expense of $137 million and $8 million, respectively for investment tax credits under Section 48. Low-Income Housing — We have significant financial interests in entities established to invest in and manage low-income housing properties. In October 2024, we acquired an additional noncontrolling interest in a limited liability company established to invest in and manage low-income housing properties. Total consideration for this investment is expected to be $426 million, comprised of a $316 million note payable, an initial cash payment of $33 million and $77 million of interest payments expected to be paid over the life of the investment. At the time of the investment, we increased our investments in unconsolidated entities in our Consolidated Balance Sheet by $349 million, representing the principal balance of the note and the initial cash payment. We support the operations of these entities in exchange for a pro-rata share of the tax credits they generate. The low-income housing investments qualify for federal tax credits that we expect to realize through 2036 under Section 42 or Section 45D of the Internal Revenue Code. As a result of adopting ASU 2023-02, we amortize our investments in these entities using the proportional amortization method. Under the proportional amortization method, the equity investment is amortized in proportion to the income tax credits and other income tax benefits received. The amortization expense and the income tax credits are required to be presented on a net basis in income tax expense on the Consolidated Statements of Operations. Prior to fiscal year 2024, we accounted for our investments in these entities using the equity method of accounting, recognizing our share of each entity’s results of operations and other reductions in the value of our investments in equity in net income (losses) of unconsolidated entities, within our Consolidated Statements of Operations. During the year ended December 31, 2024, we recognized additional income tax expense of $78 million, related to amortization under ASU 2023-02. For the years ended December 31, 2023 and 2022, we recognized net losses of $66 million and $65 million, respectively, and a reduction in our income tax expense of $104 million, $108 million and $99 million in 2024, 2023 and 2022, respectively, primarily due to federal tax credits realized from these investments as well as the tax benefits from the pre-tax losses realized. In addition, during the years ended December 31, 2024, 2023 and 2022, we recognized interest expense of $24 million, $15 million and $14 million, respectively, associated with our investments in low-income housing properties. See Note 18 for additional information related to these unconsolidated variable interest entities. Tax Implications of Impairments — During the years ended December 31, 2024 and 2023, we recognized additional income tax expense of $14 million and $50 million, respectively, due to non-cash impairment charges that were not deductible for tax purposes in the year of impairment. The non-cash impairment charge recognized during 2022 was deductible for tax purposes. See Note 11 for more information related to our impairment charges. Tax Audits — We participate in the IRS’s Compliance Assurance Process, which means we work with the IRS throughout the year towards resolving any material issues prior to the filing of our annual tax return. Any unresolved issues as of the tax return filing date are subject to routine examination procedures. In the fourth quarter of 2022, the Company received a notice of tax due for the 2017 tax year related to a remaining disagreement with the IRS. In response to the notice, the Company made a deposit of approximately $103 million with the IRS. In the fourth quarter of 2024, the Company filed a claim for refund of the entire amount deposited with the IRS. We expect to litigate any denial of the claim for refund. As of December 31, 2024 and 2023, the IRS deposit, net of reserve for uncertain tax positions, was classified as a component of other long-term assets in the Company’s Consolidated Balance Sheets. In addition, we are in the examination phase of IRS audits for the 2023 and 2024 tax years and expect the audits to be completed within the next 15 months. We are also currently undergoing audits by the Canada Revenue Agency for the 2021 tax year and various state and local jurisdictions for tax years that date back to 2014. Deferred Tax Assets (Liabilities) The components of net deferred tax liabilities as of December 31 are as follows (in millions):
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2024 |  | 2023
Deferred tax assets: |  | ​ |  |  | ​ |
Net operating loss, capital loss and tax credit carry-forwards | ​ | $ | 159 | ​ | $ | 137
Landfill and environmental remediation liabilities | ​ |  | 162 | ​ |  | 195
Operating lease liabilities | ​ |  | 276 | ​ |  | 128
Miscellaneous and other reserves, net | ​ |  | 258 | ​ |  | 143
Total deferred tax assets | ​ |  | 855 | ​ |  | 603
Valuation allowance | ​ |  | (199) | ​ |  | (181)
Deferred tax liabilities: | ​ |  |  | ​ |  |
Property and equipment | ​ |  | (1,308) | ​ |  | (1,091)
Goodwill and other intangibles | ​ |  | (1,895) | ​ |  | (1,046)
Operating lease right-of-use assets | ​ |  | (263) | ​ |  | (111)
Net deferred tax liabilities | ​ | $ | (2,810) | ​ | $ | (1,826)
​ These net deferred tax liabilities are included as a component of other long-term assets, accrued liabilities and deferred income taxes in our Consolidated Balance Sheets. As of December 31, 2024, we had $123 million of international net operating loss carry-forwards with expiration dates through 2041 and $2.0 billion of state net operating loss carry-forwards with expiration dates through 2044. We also had $106 million of federal and foreign interest expense carry-forwards that do not expire, $40 million of foreign tax credit carry-forwards with expiration dates through 2033 and $6 million of state tax credit carry-forwards with expiration dates through 2034. We have established valuation allowances for uncertainties in realizing the benefit of certain tax loss and credit carry-forwards and other deferred tax assets. While we expect to realize the deferred tax assets, net of the valuation allowances, changes in estimates of future taxable income or in tax laws may alter this expectation. Liabilities for Uncertain Tax Positions A reconciliation of the beginning and ending amount of gross unrecognized tax benefits, including accrued interest, is as follows (in millions):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2024 |  | 2023 |  | 2022
Balance as of January 1 | ​ | $ | 66 | ​ | $ | 64 | ​ | $ | 64
Additions based on tax positions related to the current year | ​ |  | 4 | ​ |  | 6 | ​ |  | 5
Accrued interest | ​ |  | 2 | ​ |  | 2 | ​ |  | 1
Acquisitions | ​ |  | 2 | ​ |  | — | ​ |  | —
Settlements | ​ |  | (21) | ​ |  | — | ​ |  | —
Lapse of statute of limitations | ​ |  | (10) | ​ |  | (6) | ​ |  | (6)
Balance as of December 31 | ​ | $ | 43 | ​ | $ | 66 | ​ | $ | 64
​ These liabilities are included as a component of other long-term liabilities or as an offset to other long-term assets in our Consolidated Balance Sheets because the Company does not anticipate that settlement of the liabilities will require payment of cash within the next 12 months. As of December 31, 2024, we had $36 million of net unrecognized tax benefits that, if recognized in future periods, would impact our effective income tax rate. We recognize interest expense related to unrecognized tax benefits in our income tax expense, which was not material for the reported periods. We did not have any material accrued liabilities or expense for penalties related to unrecognized tax benefits for the reported periods.

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