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INCOME TAXES | 12 Months Ended
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Dec. 31, 2025
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES On July 4, 2025, U.S. tax reform legislation known as the One Big Beautiful Bill Act (the Tax Act) was signed into law. Key provisions of the Tax Act relevant to the Company’s operations include immediate expensing of certain domestic capital expenditures and domestic research and development costs, and the ability to accelerate previously capitalized domestic research and development costs beginning in 2025. Other changes, which are primarily related to U.S. international tax provisions, begin in 2026. The Tax Act did not materially change the Company’s effective tax rate for 2025. The Company has reflected the effects of the Tax Act in the consolidated financial statements for the year ending December 31, 2025, in accordance with the Income Taxes Topic of the ASC. Significant components of the provisions for income taxes were as follows:
| 2025 |  | 2024 |  | 2023
Current: |  |  |  |  |
Federal | $ | 374.0 |  |  | $ | 558.0 |  |  | $ | 553.4 |
Foreign | 157.3 |  |  | 155.1 |  |  | 147.6 |
State and local | 85.2 |  |  | 132.2 |  |  | 109.0 |
Total current | 616.5 |  |  | 845.3 |  |  | 810.0 |
Deferred: |  |  |  |  |
Federal | 170.6 |  |  | (54.8) |  |  | (39.9) |
Foreign | (44.0) |  |  | (15.8) |  |  | (51.5) |
State and local | 26.6 |  |  | (4.3) |  |  | 2.5 |
Total deferred | 153.2 |  |  | (74.9) |  |  | (88.9) |
Total provisions for income taxes | $ | 769.7 |  |  | $ | 770.4 |  |  | $ | 721.1 |
The reconciliation of the statutory federal income tax rate to the effective tax rate for the current year in accordance with the adoption of ASU 2023-09 is as follows:
| 2025
Statutory federal income tax rate | $ | 701.0 |  |  | 21.0 | %
Effect of: |  |  |
State and local income taxes (1) | 103.2 |  |  | 3.2 |
Foreign tax effects | 41.2 |  |  | 1.2 |
Effect of cross border tax law | (6.4) |  |  | (0.2) |
Tax credits: |  |  |
Investment vehicles | (8.7) |  |  | (0.3) |
Other | (8.8) |  |  | (0.3) |
Changes in valuation allowances | 3.6 |  |  | 0.1 |
Nontaxable or nondeductible items: |  |  |
Employee share-based payments | (50.1) |  |  | (1.5) |
Other | 1.9 |  |  | 0.1 |
Changes in unrecognized tax benefits | (7.2) |  |  | (0.2) |
Reported effective tax rate | $ | 769.7 |  |  | 23.1 | %
(1) California, Texas, Illinois, Florida, Pennsylvania, New York, Wisconsin, and New Jersey make up greater than 50% of state and local income taxes. A reconciliation of the statutory federal income tax rate to the effective tax rate for years prior to the adoption of ASU 2023-09 is as follows:
| 2024 |  | 2023
Statutory federal income tax rate | 21.0 | % |  | 21.0 | %
Effect of: |  |  |
State and local income taxes | 3.2 |  |  | 3.0 |
Investment vehicles | (0.5) |  |  | (0.5) |
Employee share-based payments | (2.1) |  |  | (1.1) |
Research and development credits | (0.3) |  |  | (0.4) |
Amended returns and refunds | (0.2) |  |  | 0.2 |
Taxes on non-U.S. earnings | 1.1 |  |  | 0.8 |
Other - net | 0.1 |  |  | 0.2 |
Reported effective tax rate | 22.3 | % |  | 23.2 | %
The increase in the effective tax rate for 2025 compared to 2024 was primarily attributable to less favorable impacts of tax benefits related to employee share-based payments. The other significant components of the Company’s effective tax rate were consistent year-over-year. Significant components of Income before income taxes as used for income tax purposes, were as follows:
| 2025 |  | 2024 |  | 2023
Domestic | $ | 3,019.3 |  |  | $ | 3,046.6 |  |  | $ | 2,817.0 |
Foreign | 318.9 |  |  | 405.2 |  |  | 292.9 |
Income before income taxes | $ | 3,338.2 |  |  | $ | 3,451.8 |  |  | $ | 3,109.9 |
A summary of total income taxes paid, net of refunds, in accordance with the adoption of ASU 2023-09 for the year ended December 31, 2025, is as follows:
Federal | $ | 317.8 |  |  |  |  |
Foreign | 188.2 |  |  |  |  |
State and local | 86.7 |  |  |  |  |
Total income taxes paid, net of refunds | $ | 592.7 |  |  |  |  |
Individual jurisdictions comprising greater than 5% of total income taxes paid, net of refunds, for the year end December 31, 2025 include the U.S. Federal, Mexico and Brazil for $317.8 million, $48.3 million and $47.5 million, respectively. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes using the enacted tax rates and laws that are currently in effect. Significant components of the Company’s deferred tax assets and liabilities were as follows as of December 31:
| 2025 |  | 2024 |  | 2023
Deferred tax assets: |  |  |  |  |
Environmental and other similar items | $ | 62.9 |  |  | $ | 66.8 |  |  | $ | 72.0 |
Employee related and benefit items | 176.8 |  |  | 175.2 |  |  | 162.1 |
Operating lease liabilities | 510.5 |  |  | 499.6 |  |  | 483.2 |
Research and development capitalization | — |  |  | 103.9 |  |  | 81.5 |
Tax loss carryforwards & credits | 174.9 |  |  | 137.9 |  |  | 134.4 |
Other items | 162.5 |  |  | 193.1 |  |  | 177.8 |
Total gross deferred tax assets | 1,087.6 |  |  | 1,176.5 |  |  | 1,111.0 |
Valuation allowance | (158.0) |  |  | (124.5) |  |  | (106.6) |
Total deferred tax assets | 929.6 |  |  | 1,052.0 |  |  | 1,004.4 |
Deferred tax liabilities: |  |  |  |  |
Intangible assets and Property, plant and equipment, net | 921.4 |  |  | 948.7 |  |  | 1,001.1 |
LIFO inventories | 130.9 |  |  | 120.5 |  |  | 115.2 |
Operating lease right-of-use assets | 491.8 |  |  | 482.1 |  |  | 465.6 |
Other items | 56.3 |  |  | 40.7 |  |  | 28.6 |
Total deferred tax liabilities | 1,600.4 |  |  | 1,592.0 |  |  | 1,610.5 |
Net deferred tax liabilities | $ | 670.8 |  |  | $ | 540.0 |  |  | $ | 606.1 |
Netted against the Company’s deferred tax assets were valuation allowances of $158.0 million, $124.5 million and $106.6 million at December 31, 2025, 2024 and 2023, respectively. The valuation allowances as of December 31, 2025 are primarily related to certain foreign jurisdictions with cumulative losses and U.S foreign tax credits where future projections of foreign source income result in uncertainty regarding recovery. The Company has $12.5 million of domestic net operating loss carryforwards acquired through acquisitions that have expiration dates through tax year 2037, foreign tax credits of $54.0 million that expire in tax years 2028 through 2035 and foreign net operating losses of $402.6 million. The foreign net operating losses are related to various jurisdictions that provide for both indefinite carryforward periods and others with carryforward periods that expire between tax years 2026 to 2035. The Company and its subsidiaries file income tax returns in the U.S. federal and various state and foreign jurisdictions. The Company finalized the IRS audit for the 2017 through 2019 income tax returns in the fourth quarter of 2024 and paid the related tax and interest assessments in 2025. The Company’s 2020 through 2022 income tax returns are currently under IRS audit. As of December 31, 2025, the federal statute of limitations has not expired for the 2020 through 2025 tax years. As of December 31, 2025, the Company is subject to non-U.S. income tax examinations for the tax years of 2014 through 2025. In addition, the Company is subject to state and local income tax examinations for tax years 2016 through 2025. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| 2025 |  | 2024 |  | 2023
Balance at beginning of year | $ | 99.3 |  |  | $ | 121.8 |  |  | $ | 242.4 |
Additions based on tax positions related to the current year | 16.5 |  |  | 16.0 |  |  | 14.2 |
Additions for tax positions of prior years | 3.9 |  |  | 12.8 |  |  | 12.6 |
Reductions for tax positions of prior years | (6.5) |  |  | (8.6) |  |  | (16.9) |
Settlements | (1.7) |  |  | (31.7) |  |  | (123.2) |
Lapses of statutes of limitations | (4.6) |  |  | (11.0) |  |  | (7.3) |
Balance at end of year | $ | 106.9 |  |  | $ | 99.3 |  |  | $ | 121.8 |
The increase in unrecognized tax benefits was primarily related to new positions related to the current year for U.S. federal and various state jurisdictions. These additions were partially offset by various positions taken on prior year income tax returns filed for U.S. federal and various state jurisdictions that were no longer deemed to be at risk or positions reversed due to the lapse of statutes of limitations. At December 31, 2025, 2024 and 2023, the total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $91.9 million, $84.0 million and $109.4 million, respectively. The Company classifies all income tax related interest and penalties as income tax expense. During the years ended December 31, 2025, 2024 and 2023 there was an increase in income tax interest and penalties of $5.5 million, $7.8 million and $5.9 million, respectively. The Company accrued $23.9 million, $18.8 million and $20.4 million at December 31, 2025, 2024 and 2023, respectively, for the potential payment of interest and penalties.

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