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Income Taxes
 9 Months Ended
Sep. 30, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Our effective tax rate, exclusive of non-controlling interests, for the three and nine months ended September 30, 2025 was 14.7% and 21.4%, respectively. Our effective tax rate, exclusive of non-controlling interests, for the three and nine months ended September 30, 2024, was 12.5% and 19.4%, respectively. Our effective tax rate for the three and nine months ended September 30, 2025 reflects a benefit of $65 million due to our investments in renewable energy assets, $8 million and $18 million, respectively, due to investments in renewable natural gas projects and commercial electric vehicles, and $9 million due to the realization of additional federal and state tax benefits, as well as adjustments to deferred taxes due to the completion of our 2024 tax returns.
Our effective tax rate for the three and nine months ended September 30, 2024 reflected a benefit of $81 million and $122 million, respectively, due to our investments in renewable energy assets qualifying for tax credits under Section 48 of the Internal Revenue Code, $6 million due to the realization of additional federal and state tax benefits, as well as adjustments to deferred taxes due to the completion of our 2023 tax returns.
For the nine months ended September 30, 2025 and 2024, net cash paid for income taxes was $166 million and $183 million, respectively.
On July 4, 2025, the One Big Beautiful Bill Act (the "Act”) was signed into law. The Act, among other things, implemented changes to the tax treatment relating to bonus depreciation, research and experimental expenditures and interest expense, and included phase-outs and restrictions on several clean energy tax incentives. The Company does not expect the Act to have a material impact on our effective tax rate.
We have deferred tax assets related to state net operating loss carryforwards. We provide a partial valuation allowance due to uncertainty surrounding the future utilization of these carryforwards in the taxing jurisdictions where the loss carryforwards exist. When determining the need for a valuation allowance, we consider all positive and negative evidence, including recent financial results, scheduled reversals of deferred tax liabilities, projected future taxable income and tax planning strategies. The realization of our deferred tax asset for state loss carryforwards ultimately depends upon the existence of sufficient taxable income in the appropriate state taxing jurisdictions in future periods. The weight given to the positive and negative evidence is commensurate with the extent such evidence can be objectively verified. We continue to regularly monitor both positive and negative evidence in determining the ongoing need for a valuation allowance. As of September 30, 2025, the valuation allowance associated with our state loss carryforwards was $40 million.
We are subject to income tax in the United States and Canada, as well as multiple state jurisdictions. Income tax in our foreign jurisdictions is not material for all periods presented. Our compliance with income tax rules and regulations is periodically audited by taxing authorities. These authorities may challenge the positions taken in our tax filings. Thus, to provide for certain potential tax exposures, we maintain liabilities for uncertain tax positions for our estimate of the final outcome of these examinations. Our federal statute of limitations is closed through 2021, except for an acquired subsidiary for which the statute of limitations is closed through 2020. In addition, we are currently under state examination or administrative review in various jurisdictions for tax years 2013 through 2023.
We believe the recorded liabilities for uncertain tax positions are adequate. However, a significant assessment against us in excess of the liabilities recorded could have a material adverse effect on our consolidated financial position, results of operations and cash flows. As of September 30, 2025, we are unable to estimate the resolution of our gross unrecognized benefits over the next 12 months.
We recognize interest and penalties as incurred within the provision for income taxes in the consolidated statement of income. As of September 30, 2025, we accrued a liability for penalties of $1 million and a liability for interest (including interest on penalties) of $5 million related to our uncertain tax positions.