v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income TaxesThe components of the provision for income taxes on continuing operations were as follows:
Year Ended December 31,
Millions of dollars
2025
2024
2023
Current income taxes:
Federal
$(3)
$10
$(21)
Foreign
(448)
(571)
(472)
State
(5)
(9)
(12)
Total current income taxes
(456)
(570)
(505)
Deferred income taxes:
Federal
(66)
(167)
(123)
Foreign
10
31
(59)
State
33
(12)
(14)
Total deferred income taxes
(23)
(148)
(196)
Income tax provision
$(479)
$(718)
$(701)
The United States and foreign components of income from continuing operations before income taxes were as follows:
Year Ended December 31,
Millions of dollars
2025
2024
2023
United States
$762
$1,695
$1,666
Foreign
1,009
1,539
1,697
Total income from continuing operations before income taxes
$1,771
$3,234
$3,363
Reconciliations between the actual provision for income taxes on continuing operations and that computed by applying
the United States statutory rate to income from continuing operations before income taxes were as follows:
Year Ended December 31,
Millions of dollars
2025
U.S. Federal Statutory Tax Rate
$372
21.0%
State and Local Income Tax, Net of Federal Income Tax Effect (a)
(24)
(1.4)
Foreign Tax Effects
Argentina
  Intercompany Withholding Tax
33
1.9
  Other
15
0.8
Brazil
27
1.5
Cayman Islands
    Statutory Tax Rate Difference Between Cayman Islands and United States
29
1.6
Mexico
 Foreign Exchange / Inflation Adjustment
(26)
(1.5)
 Other
28
1.6
Norway
23
1.3
Saudi Arabia
 Intercompany Withholding Tax
32
1.8
 Other
(3)
(0.2)
Singapore
 Statutory Tax Rate Difference Between Singapore and United States
(35)
(2.0)
 Other
25
1.4
United Arab Emirates
(19)
(1.1)
Other Foreign Jurisdictions
125
7.0
Domestic Federal Reconciling Items
Effect of Cross-Border Tax Laws
  Foreign Derived Intangible Income Deduction
(135)
(7.6)
  Global Intangible Low-Taxed Income
23
1.3
  Other
10
0.6
Tax Credits
  Foreign Tax Credit
(146)
(8.2)
  Research & Development Credit
(50)
(2.8)
Changes in Valuation Allowances
176
9.9
Nontaxable or Nondeductible items
32
1.8
Other Adjustments
(5)
(0.1)
Changes in Unrecognized Tax Benefits
(28)
(1.6)
Effective Tax Rate
$479
27.0%
(a)
During the year ended December 31, 2025, state and local income taxes in Texas comprise the majority (greater than 50 percent)
of the state and local income taxes, net of federal effect category.
Year Ended December 31,
2024
2023
United States statutory rate
21.0%
21.0%
Valuation allowance against tax assets
(2.1)
0.8
Impact of foreign income taxed at different rates
4.7
0.2
State income taxes
0.6
0.7
Impact of impairments and other charges
0.6
0.6
Adjustments of prior year taxes
(2.5)
(1.3)
Other items, net
(0.1)
(1.2)
Total effective tax rate on continuing operations
22.2%
20.8%
During the year ended December 31, 2025, we recorded a total income tax provision of $479 million on pre-tax
income of $1.8 billion, resulting in an effective tax rate of 27.0%. The effective tax rate for 2025 was primarily impacted by our
geographic mix of earnings, tax adjustments related to the reassessment of prior year tax accruals, and changes of valuation
allowance on some of our deferred tax assets, and discrete tax benefit from the Foreign-Derived Intangible Income (FDII)
deduction attributable to a royalty prepayment.
During the year ended December 31, 2024, we recorded a total income tax provision of $718 million on pre-tax
income of $3.2 billion, resulting in an effective tax rate of 22.2%. The effective tax rate for 2024 was primarily impacted by our
geographic mix of earnings, tax adjustments related to the reassessment of prior year tax accruals, and valuation allowances on
some of our deferred tax assets.
During the year ended December 31, 2023, we recorded a total income tax provision of $701 million on pre-tax
income of $3.4 billion, resulting in an effective tax rate of 20.8%. The effective tax rate for 2023 was primarily impacted by our
geographic mix of earnings, tax adjustments related to the reassessment of prior year tax accruals, and valuation allowances on
some of our deferred tax assets.
The primary components of our deferred tax assets and liabilities were as follows:
December 31,
Millions of dollars
2025
2024
Gross deferred tax assets:
Foreign tax credit carryforwards
$790
$950
Intangible assets
679
727
Operating and capital loss carryforwards
629
581
Royalty prepayment
239
—
Accrued liabilities
233
227
Employee compensation and benefits
157
170
Research and development tax credit carryforwards
86
85
Other
813
639
Total gross deferred tax assets
3,626
3,379
Gross deferred tax liabilities:
Depreciation and amortization
197
164
Operating lease right-of-use assets
133
144
Other
63
50
Total gross deferred tax liabilities
393
358
Valuation allowances
943
718
Net deferred income tax asset
$2,290
$2,303
At December 31, 2025, we had $635 million of domestic and foreign tax-effected operating and capital loss
carryforwards, with approximately $6 million estimated to be utilized against our unrecognized tax benefits. In addition, we had
approximately $819 million of foreign tax credit carryforwards which are offset by $29 million of foreign branch deferred
activity and unrecognized tax benefits reflected in the table above. The ultimate realization of these deferred tax assets depends
on our ability to generate sufficient taxable income in the appropriate taxing jurisdiction.
Our deferred tax assets from operating and capital losses, foreign tax credits, and research and development credits
will expire as follows:
Millions of dollars
U.S. Net Operating
Loss
Foreign Operating
and Capital Loss
Foreign Tax Credits
Research and
Development Credit
Total Deferred
Tax Assets
2026-2030
$5
$69
$430
$—
$504
2031-2035
6
24
353
—
383
2036-2045
13
68
36
85
202
Non-Expiring
13
437
—
—
450
$37
$598
$819
$85
$1,539
We have not recorded incremental U.S. income taxes or foreign withholding taxes on the undistributed earnings of
foreign subsidiaries subsequent to December 31, 2017. Under ASC 740, income taxes are generally not provided on such
undistributed earnings to the extent they are either not expected to be subject to tax upon repatriation or are considered to be
indefinitely reinvested.
For the year ended December 31, 2025, the “One Big Beautiful Bill Act,” was introduced which included federal tax
law revisions that affected the Company’s ability to utilize Foreign Tax Credits (FTC). Companies were required to recognize
the effects of changes in tax laws in the period in which the new legislation is enacted. As a result, the Company reassessed the
realizability of its FTC carryforwards and recorded an additional valuation allowance of $125 million against its FTC deferred
tax assets.
The following table presents a rollforward of our unrecognized tax benefits and associated interest and penalties.
Millions of dollars
Unrecognized Tax
Benefits
Interest
and Penalties
Balance at January 1, 2023
$311
$64
Change in prior year tax positions
(38)
(10)
Change in current year tax positions
8
1
Cash settlements with taxing authorities
(4)
(3)
Lapse of statute of limitations
(9)
(3)
Balance at December 31, 2023
$268
(a)
$49
Change in prior year tax positions
(68)
—
Change in current year tax positions
10
1
Cash settlements with taxing authorities
(1)
(1)
Lapse of statute of limitations
(13)
(4)
Balance at December 31, 2024
$196
(a)
$45
Change in prior year tax positions
40
3
Change in current year tax positions
15
2
Cash settlements with taxing authorities
(11)
—
Lapse of statute of limitations
(70)
(8)
Balance at December 31, 2025
$170
(a)(b)
$42
(a)
Includes $36 million as of December 31, 2025, $40 million as of December 31, 2024, and $43 million as of December 31, 2023 in foreign
unrecognized tax benefits that would give rise to a United States tax credit. As of December 31, 2025, December 31, 2024, and
December 31, 2023, a net $119 million, $137 million and $192 million after a net operating loss carryforward offset, respectively, of
unrecognized tax benefits would positively impact the effective tax rate and be recognized as additional tax benefits in our statement of
operations if resolved in our favor.
(b)
Includes $24 million as of December 31, 2025 that we believe could be resolved within the next 12 months.
Income taxes paid (net of refunds received) were as follows:
Year Ended
December 31,
Million of dollars
2025
US Federal
$27
US State and Local
9
Foreign
Mexico
112
Saudi Arabia
76
Other
415
Foreign Subtotal
603
Total
$639
Our tax returns are subject to review by the taxing authorities in the jurisdictions where we file tax returns. In most
cases we are no longer subject to examination by tax authorities for years before 2014. The only significant operating
jurisdiction that has tax filings under review or subject to examination by the tax authorities is the United States. The United
States federal income tax filings for tax years 2016 through 2024 are currently under review or remain open for review by the
IRS.
As of December 31, 2025, the primary unresolved issue for the IRS audit for 2016 relates to the classification of the
$3.5 billion ordinary deduction that we claimed for the termination fee we paid to Baker Hughes in the second quarter of 2016
for which we received a NOPA from the IRS on September 28, 2023. We regularly assess the likelihood of adverse outcomes
resulting from tax examinations to determine the adequacy of our tax reserves, and we believe our income tax reserves are
appropriately provided for all open tax years. We do not expect a final resolution of this issue in the next 12 months.
Based on the information currently available, we do not anticipate a significant increase or decrease to our tax
contingencies within the next 12 months.