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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The following table sets forth the geographic split of earnings before income taxes (in millions).
| Year Ended December 31
| 2024 |  | 2023 |  | 2022
United States | $ | 656 |  |  | $ | 1,844 |  |  | $ | 2,725 |
Foreign | 1,599 |  |  | 2,450 |  |  | 2,508 |
Total Earnings Before Income Taxes | $ | 2,255 |  |  | $ | 4,294 |  |  | $ | 5,233 |
Significant components of income tax expense are as follows (in millions):
| Year Ended December 31
| 2024 |  | 2023 |  | 2022
Current expense |  |  |  |  |
Federal | $ | 108 |  |  | $ | 291 |  |  | $ | 379 |
State | 8 |  |  | 47 |  |  | 97 |
Foreign | 490 |  |  | 513 |  |  | 481 |
| $ | 606 |  |  | $ | 851 |  |  | $ | 957 |
Deferred expense (benefit) |  |  |  |  |
Federal | (99) |  |  | (52) |  |  | 23 |
State | 6 |  |  | (10) |  |  | 7 |
Foreign | (37) |  |  | 39 |  |  | (119) |
| $ | (130) |  |  | $ | (23) |  |  | $ | (89) |
Income tax expense | $ | 476 |  |  | $ | 828 |  |  | $ | 868 |
Significant components of deferred tax liabilities and assets are as follows (in millions):
| December 31, 2024 |  | December 31, 2023
Deferred tax liabilities |  |  |
Property, plant, and equipment | $ | 808 |  |  | $ | 827 |
Intangibles | 343 |  |  | 358 |
Right of use assets | 317 |  |  | 263 |
Equity in earnings of affiliates | 236 |  |  | 214 |
Debt exchange | 49 |  |  | 50 |
Reserves and other accruals | 133 |  |  | 49 |
Other | 30 |  |  | 137 |
| $ | 1,916 |  |  | $ | 1,898 |
Deferred tax assets |  |  |
Pension and postretirement benefits | $ | 95 |  |  | $ | 111 |
Inventories | 12 |  |  | 20 |
Lease liabilities | 323 |  |  | 268 |
Stock compensation | 36 |  |  | 42 |
Foreign tax loss carryforwards | 386 |  |  | 494 |
Capital loss carryforwards | 41 |  |  | 42 |
State tax attributes | 23 |  |  | 25 |
US carryforwards | 196 |  |  | 27 |
Other | 111 |  |  | 71 |
Gross deferred tax assets | 1,223 |  |  | 1,100 |
Valuation allowances | (223) |  |  | (216) |
Net deferred tax assets | $ | 1,000 |  |  | $ | 884 |
Net deferred tax liabilities | $ | 916 |  |  | $ | 1,014 |
The net deferred tax liabilities are classified as follows: |  |  |
Noncurrent assets | $ | 352 |  |  | $ | 295 |
Noncurrent liabilities | (1,268) |  |  | (1,309) |
| $ | (916) |  |  | $ | (1,014) |
Net Operating Losses and Valuation Allowances The Company had $386 million and $494 million of tax assets related to net operating loss carryforwards of certain international subsidiaries at December 31, 2024 and 2023, respectively. As of December 31, 2024, approximately $314 million of these assets have no expiration date, and the remaining $72 million expire at various times through fiscal 2034. The annual usage of certain of these assets is limited to a percentage of taxable income of the respective foreign subsidiary for the year. The Company has recorded a valuation allowance of $166 million and $160 million against these tax assets at December 31, 2024 and 2023, respectively, due to the uncertainty of their realization. The Company had $41 million of tax assets related to foreign capital loss carryforwards at each of December 31, 2024 and 2023. The Company recorded a valuation allowance of $41 million against these tax assets at each of December 31, 2024 and 2023 due to the uncertainty of their realization. The Company had $196 million of tax assets related to U.S. income tax attributes at December 31, 2024, of which $39 million will expire between 2029 and 2034, $89 million will expire in 2044, and the remaining $68 million have no expiration date. The Company had $23 million and $25 million of tax assets related to state income tax attributes (incentive credits and net operating loss carryforwards), net of federal tax benefit, at December 31, 2024 and 2023, respectively, a majority of which will expire between 2025 and 2029. Due to the uncertainty of realization, the Company recorded a valuation allowance of $16 million and $14 million related to state income tax assets net of federal tax benefit as of December 31, 2024 and 2023, respectively. The change in the valuation allowance was related to the increase in the state income tax attributes over what was reserved in prior years. In assessing the need for a valuation allowance, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. During 2024, the Company increased valuation allowances primarily related to net operating loss carryforwards. The activity related to the income tax valuation allowance for the years ended December 31, 2024, 2023, and 2022 was as follows (in millions):
| Year Ended December 31
| 2024 |  | 2023 |  | 2022
Opening balance, January 1 | $ | 216 |  |  | $ | 209 |  |  | $ | 281 |
Additions | 40 |  |  | 58 |  |  | 18 |
Deductions | (33) |  |  | (51) |  |  | (90) |
Ending balance, December 31 | $ | 223 |  |  | $ | 216 |  |  | $ | 209 |
Income Tax Rate Reconciliation Reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate on earnings is as follows:
| Year Ended December 31
| 2024 |  | 2023 |  | 2022
US Federal Statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes, net of federal tax benefit | 0.2 |  |  | 0.9 |  |  | 1.4 |
Foreign earnings taxed at rates other than the U.S. statutory rate | 2.2 |  |  | (0.3) |  |  | (3.8) |
Foreign currency effects/remeasurement | (4.8) |  |  | 0.5 |  |  | 0.6 |
Withholding Tax | 1.8 |  |  | 0.1 |  |  | — |
Impairment of Investments | 4.3 |  |  | 0.5 |  |  | — |
Change in Uncertain Tax Position | 3.2 |  |  | 0.1 |  |  | 0.5 |
Tax benefit on U.S. biodiesel credits | (2.9) |  |  | (1.7) |  |  | (1.2) |
Second-generation biofuel credit | (1.2) |  |  | — |  |  | — |
U.S. railroad credits | (2.5) |  |  | (1.5) |  |  | (1.2) |
U.S. tax on foreign earnings | 0.6 |  |  | 1.2 |  |  | 0.2 |
Other | (0.8) |  |  | (1.5) |  |  | (0.9) |
Effective income tax rate | 21.1 | % |  | 19.3 | % |  | 16.6 | %
The effective tax rates for 2024 and 2023 were impacted by the tax impact of impairments on investments and the Company's geographic mix of earnings. The effective tax rate for 2022 was impacted by the Company's geographic mix of earnings and discrete tax items. ADM’s operations in foreign jurisdictions accounted for 71%, 57%, and 48% of the Company’s total pre-tax earnings in fiscal years 2024, 2023, and 2022, respectively. The foreign rate differential was primarily due to various tax rates applicable to the income earned from the Company’s operations in Europe, Asia, South America and the Caribbean. U.S. Legislative Changes On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (the “Inflation Act”), which includes, among other provisions, changes to the U.S. corporate income tax system, including a 15% minimum tax based on “adjusted financial statement income,” and a one percent excise tax on net repurchases of stock for tax years beginning after December 31, 2022. While the Inflation Act has no immediate impact and is not expected to have a material adverse effect on ADM’s results of operations going forward, the Company will continue to evaluate its impact as further information becomes available. Other Matters It is not practicable to determine the amount of unrecognized deferred tax liability related to any remaining undistributed earnings of foreign subsidiaries and corporate joint ventures not subject to the transition tax. The Company has elected to pay the one-time transition tax on accumulated foreign earnings over eight years. As of December 31, 2024, the Company’s remaining transition tax liability was $61 million, which will be paid in 2025. The Company incurred U.S. taxable income of $674 million, $425 million, and $684 million related to Global Intangible Low-Taxed Income (GILTI) and deducted $16 million, $77 million, and $67 million related to Foreign Derived Intangible Income Deduction in fiscal years 2024, 2023, and 2022, respectively. The Company made an accounting policy election to treat GILTI as a period cost. The Company has recorded and will continue to record the impact of tax reform items as U.S. tax authorities issue Treasury Regulations and other guidance addressing tax reform-related changes. The additional guidance, along with the potential for additional global tax legislation changes, may affect significant deductions and income inclusions and could have a material adverse effect on the Company’s net income or cash flow. Unrecognized Tax Benefits The following table sets forth a rollforward of activity of unrecognized tax benefits for the year ended December 31, 2024 and 2023 (in millions).
| December 31,
| 2024 |  | 2023
Opening balance, January 1 | $ | 168 |  |  | $ | 151 |
Net additions related to current year’s tax positions | 12 |  |  | 2 |
Net additions related to prior years’ tax positions | 57 |  |  | 28 |
Additions (adjustments) related to acquisitions | 2 |  |  | — |
Reductions related to lapse of statute of limitations | (6) |  |  | (6) |
Settlements with tax authorities | (48) |  |  | (7) |
Ending balance, December 31 | $ | 185 |  |  | $ | 168 |
The additions and reductions in unrecognized tax benefits shown in the table included effects related to net income and shareholders’ equity. The changes in unrecognized tax benefits did not have a material effect on the Company’s net income or cash flow. At December 31, 2024 and 2023, the Company had accrued interest and penalties on unrecognized tax benefits of $59 million and $52 million, respectively. The Company is subject to income taxation and routine examinations in many jurisdictions around the world and frequently faces challenges regarding the amount of taxes due. These challenges include positions taken by the Company related to the timing, nature, and amount of deductions and the allocation of income among various jurisdictions. In its routine evaluations of the exposure associated with various tax filing positions, the Company recognizes a liability, when necessary, for estimated potential tax owed by the Company in accordance with applicable accounting standards. Resolution of the related tax positions, through negotiations with relevant tax authorities or through litigation, may take years to complete. Therefore, it is difficult to predict the timing for resolution of tax positions and the Company cannot predict or provide assurance as to the ultimate outcome of these ongoing or future examinations. However, the Company does not anticipate that the total amount of unrecognized tax benefits will increase or decrease significantly in the next twelve months. Given the long periods of time involved in resolving tax positions, the Company does not expect that the recognition of unrecognized tax benefits will have a material impact on the Company’s effective income tax rate in any given period. If the total amount of unrecognized tax benefits were recognized by the Company at one time, there would be a reduction of $183 million on the tax expense for that period. The Company remains subject to federal examination in the U.S. for the calendar tax years 2018 through 2024. In the year ended December 31, 2014, the Company’s wholly-owned subsidiary in the Netherlands, ADM Europe B.V., received a tax assessment of $122 million, including interest, from the Netherlands tax authority challenging the transfer pricing aspects of a business reorganization implemented in the year ended December 31, 2009. On July 11, 2024, the Tax Court of Appeals issued a ruling decreasing the assessment to $52 million, including interest. The Company decided not to appeal the decision further, and therefore the Tax Court of Appeals order is final. As of December 31, 2024, the Company has paid the final assessed amount, and the issue is considered settled.

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