v3.25.4

INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2025
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The components of our earnings before income taxes for the last three fiscal years consisted of:
(in millions) | 2025 |  | 2024 |  | 2023
U.S. | $ | 2,021 |  |  | $ | 1,717 |  |  | $ | 2,113 |
Non-U.S. | 1,373 |  |  | 1,434 |  |  | 1,265 |
| $ | 3,394 |  |  | $ | 3,151 |  |  | $ | 3,378 |
Our (provision) benefit for income taxes for the last three fiscal years consisted of:
(in millions) | 2025 |  | 2024 |  | 2023
Current | -U.S. Federal | $ | (409) |  |  | $ | (447) |  |  | $ | (431) |
| -U.S. State | (70) |  |  | (124) |  |  | (158) |
| -Non-U.S. | (252) |  |  | (282) |  |  | (249) |
|  | (731) |  |  | (853) |  |  | (838) |
Deferred | -U.S. Federal | 8 |  |  | 125 |  |  | 94 |
| -U.S. State | 4 |  |  | 19 |  |  | 16 |
| -Non-U.S. | (74) |  |  | (67) |  |  | 433 |
|  | (62) |  |  | 77 |  |  | 543 |
|  | $ | (793) |  |  | $ | (776) |  |  | $ | (295) |
Unrecognized Tax Benefits The following table reconciles our unrecognized tax benefit balance for each year from the beginning of 2023 to the end of 2025:
(in millions) | Amount
Unrecognized tax benefit at beginning of 2023 | $ | 255 |
Change attributable to tax positions taken in prior years | (90) |
Change attributable to tax positions taken during the current period | 16 |
Decrease attributable to settlements with taxing authorities | (9) |
Unrecognized tax benefit at year-end 2023 | 172 |
Change attributable to tax positions taken in prior years | (4) |
Change attributable to tax positions taken during the current period | 17 |
Decrease attributable to settlements with taxing authorities | (2) |
Unrecognized tax benefit at year-end 2024 | 183 |
Change attributable to tax positions taken in prior years | 1 |
Change attributable to tax positions taken during the current period | 16 |
Decrease attributable to lapse of statute of limitations | (106) |
Unrecognized tax benefit at year-end 2025 | $ | 94 |
Our unrecognized tax benefit balance included $90 million at year-end 2025, $171 million at year-end 2024, and $161 million at year-end 2023 of tax positions that, if recognized, would impact our effective tax rate. We recognize accrued interest and penalties for our unrecognized tax benefits as a component of tax expenses. Related interest (benefit) expense totaled $(41) million in 2025, $14 million in 2024, and $6 million in 2023. We accrued interest and penalties related to our unrecognized tax benefits of approximately $22 million at year-end 2025 and $63 million at year-end 2024. We file income tax returns, including returns for our subsidiaries, in various jurisdictions around the world. The U.S. Internal Revenue Service has examined our federal income tax returns, and as of year-end 2025, we have settled all issues for tax years through 2022. Our 2023 and 2024 tax year audits are currently ongoing. Various foreign, state, and local income tax returns are also under examination by the applicable taxing authorities. Deferred Income Taxes Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases, as well as from net operating loss and tax credit carry-forwards. We state those balances at the enacted tax rates we expect will be in effect when we pay or recover the taxes. Deferred income tax assets represent amounts available to reduce income taxes we will pay on taxable income in future years. We evaluate our ability to realize these future tax deductions and credits by assessing whether we expect to have sufficient future taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings, and available tax planning strategies to utilize these future deductions and credits. We establish a valuation allowance when we no longer consider it more likely than not that a deferred tax asset will be realized. The following table presents the tax effect of each type of temporary difference and carry-forward that gave rise to significant portions of our deferred tax assets and liabilities as of year-end 2025 and year-end 2024:
(in millions) | At Year-End 2025 |  | At Year-End 2024
Deferred Tax Assets |  |  |
Employee benefits | $ | 289 |  |  | $ | 302 |
Net operating loss carry-forwards | 982 |  |  | 1,046 |
Accrued expenses and other reserves | 134 |  |  | 153 |
Tax credits | 64 |  |  | 62 |
Loyalty Program | 343 |  |  | 313 |
Deferred income | 114 |  |  | 114 |
Lease liabilities | 255 |  |  | 239 |
Interest limitation | 106 |  |  | 123 |
Property and equipment | 29 |  |  | 15 |
Other | 47 |  |  | 36 |
Deferred tax assets | 2,363 |  |  | 2,403 |
Valuation allowance | (1,011) |  |  | (1,070) |
Deferred tax assets after valuation allowance | 1,352 |  |  | 1,333 |
Deferred Tax Liabilities |  |  |
Intangibles | (584) |  |  | (477) |
Right-of-use assets | (245) |  |  | (223) |
Other | (32) |  |  | (64) |
Deferred tax liabilities | (861) |  |  | (764) |
Net deferred taxes | $ | 491 |  |  | $ | 569 |
Our valuation allowance is primarily attributable to non-U.S. net operating loss carry-forwards. At year-end 2025, we had approximately $52 million of tax credits that will expire through 2035 and $12 million of tax credits that do not expire. We recorded $5 million of net operating loss benefits in 2025 and $22 million in 2024. At year-end 2025, we had approximately $4,436 million of primarily state and foreign net operating losses, of which $2,867 million will expire between 2042 and 2045. We made no provision for U.S. income taxes or additional non-U.S. taxes on certain undistributed earnings of non-U.S. subsidiaries. These earnings could become subject to additional taxes if the non-U.S. subsidiaries dividend or loan those earnings to an affiliate or if we sell our interests in the non-U.S. subsidiaries. We cannot practically estimate the amount of additional taxes that might be payable on the undistributed earnings. Reconciliation of U.S. Federal Statutory Income Tax Rate to Actual Income Tax Rate The following table reconciles the U.S. statutory tax rate to our effective income tax rate for the year ended December 31, 2025, as required by ASU 2023-09 (see “New Accounting Standards Adopted” caption in Note 2 for more information):
| 2025
($ in millions) | Amount |  | Percent
U.S. statutory tax rate | $ | 713 |  |  | 21.0 | %
Federal |  |  |
Effect of cross-border tax laws |  |  |
Foreign Tax Credits | (41) |  |  | (1.2) |
Other | 17 |  |  | 0.5 |
Other | (24) |  |  | (0.7) |
State and local income tax, net of federal tax benefit (1) | 95 |  |  | 2.8 |
Non-U.S. tax effects |  |  |
Canada |  |  |
Effect of cross-border tax laws | 37 |  |  | 1.1 |
Luxembourg |  |  |
Changes in valuation allowance | (56) |  |  | (1.6) |
Nontaxable or nondeductible items | 76 |  |  | 2.2 |
Other Non-U.S. jurisdictions | 105 |  |  | 3.1 |
Changes in unrecognized tax benefits | (129) |  |  | (3.8) |
Effective rate | $ | 793 |  |  | 23.4 | %
(1) State and local taxes in California, Maryland, and New York make up the majority (greater than 50%) of the tax in this category. The following table reconciles the U.S. statutory tax rate to our effective income tax rate for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09:
| 2024 |  | 2023
U.S. statutory tax rate | 21.0 | % |  | 21.0 | %
U.S. state income taxes, net of U.S. federal tax benefit | 2.4 |  |  | 2.8 |
Non-U.S. income | 1.6 |  |  | 0.3 |
Change in valuation allowance | (0.9) |  |  | (5.8) |
Change in uncertain tax positions | 0.4 |  |  | (2.3) |
Excess tax benefits related to equity awards | (1.0) |  |  | (0.8) |
U.S. tax on foreign earnings | 1.0 |  |  | 1.1 |
Intellectual property restructuring | 0.0 |  |  | (7.9) |
Other, net | 0.1 |  |  | 0.3 |
Effective rate | 24.6 | % |  | 8.7 | %
Other Information The following table presents income taxes paid (net of refunds received) for the year ended December 31, 2025, as required by ASU 2023-09:
(in millions) | 2025
U.S. Federal | $ | 496 |
U.S. State | 156 |
Non-U.S. |
Switzerland | 126 |
Other jurisdictions | 292 |
Total cash paid | $ | 1,070 |
We paid cash for income taxes, net of refunds, of $947 million in 2024 and $907 million in 2023.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income tax. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 942 -SubTopic 740 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147477617/942-740-50-1 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480738/235-10-S50-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 944 -SubTopic 740 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478822/944-740-50-1 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12 Reference 5: http://www.xbrl.org/2003/role/exampleRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 231 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482663/740-10-55-231 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12C -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12C Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12B -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12B Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147477891/740-270-50-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-1 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480990/946-20-50-13 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480678/235-10-S99-1 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/740/tableOfContent Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-14 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-21 Reference 15: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-17 Reference 16: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-2 Reference 17: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482603/740-30-50-2 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration