v3.25.4

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income (loss) from continuing operations before taxes related to our U.S. and foreign operations was as follows:
|  | Years Ended December 31,
(In millions) |  | 2025 |  | 2024 |  | 2023
U.S. |  | $ | 456 |  |  | $ | 486 |  |  | $ | 286 |
Foreign |  | (19) |  |  | (13) |  |  | (26) |
Income from continuing operations before income tax provision |  | $ | 437 |  |  | $ | 473 |  |  | $ | 260 |
The income tax provision is comprised of the following:
|  | Years Ended December 31,
(In millions) |  | 2025 |  | 2024 |  | 2023
Current: |  |  |  |  |  |
U.S. Federal |  | $ | 2 |  |  | $ | 8 |  |  | $ | 25 |
State |  | 4 |  |  | 6 |  |  | 6 |
Foreign |  | 17 |  |  | 15 |  |  | 6 |
Total current income tax provision (benefit) |  | $ | 22 |  |  | $ | 29 |  |  | $ | 37 |
Deferred: |  |  |  |  |  |
U.S. Federal |  | $ | 94 |  |  | $ | 56 |  |  | $ | 38 |
State |  | 10 |  |  | 7 |  |  | 3 |
Foreign |  | (5) |  |  | (6) |  |  | (10) |
Total deferred income tax provision |  | $ | 99 |  |  | $ | 57 |  |  | $ | 31 |
Total: |  |  |  |  |  |
U.S. Federal |  | $ | 96 |  |  | $ | 64 |  |  | $ | 63 |
State |  | 14 |  |  | 13 |  |  | 9 |
Foreign |  | 11 |  |  | 9 |  |  | (4) |
Total income tax provision |  | $ | 121 |  |  | $ | 86 |  |  | $ | 68 |
The effective tax rate reconciliations were as follows:
|  | Years Ended December 31,
(Dollars in millions) |  | 2025 |  | 2024 |  | 2023
US federal statutory income tax rate |  | $ | 92 |  | 21.0 | % |  | $ | 99 |  | 21.0 | % |  | $ | 54 |  | 21.0 | %
Domestic state and local taxes, net of federal effect (1) |  | 11 |  | 2.5 |  |  | 11 |  | 2.3 |  |  | 7 |  | 2.7 |
Foreign Tax Effects |  |  |  |  |  |  |  |  |
France |  |  |  |  |  |  |  |  |
Changes in valuation allowances |  | 4 |  | 1.0 |  |  | 7 |  | 1.4 |  |  | 1 |  | 0.2 |
Other |  | 3 |  | 0.7 |  |  | 4 |  | 0.8 |  |  | 2 |  | 0.7 |
Spain |  |  |  |  |  |  |  |  |
Changes in valuation allowances |  | 8 |  | 1.8 |  |  | — |  | — |  |  | — |  | — |
Other |  | (2) |  | (0.4) |  |  | (2) |  | (0.4) |  |  | (1) |  | (0.3) |
Other foreign jurisdictions |  | 3 |  | 0.6 |  |  | 3 |  | 0.6 |  |  | (1) |  | (0.3) |
Effect of Cross-Border Tax Laws |  |  |  |  |  |  |  |  |
Global intangible low-taxed income |  | — |  | — |  |  | 9 |  | 1.8 |  |  | — |  | (0.1) |
Other |  | 1 |  | 0.2 |  |  | — |  | — |  |  | (2) |  | (0.6) |
Nontaxable or Nondeductible Items |  |  |  |  |  |  |  |  |
Non-deductible compensation |  | 11 |  | 2.6 |  |  | 15 |  | 3.1 |  |  | 13 |  | 5.0 |
Other |  | 1 |  | 0.1 |  |  | — |  | 0.1 |  |  | 1 |  | 0.2 |
Changes in Unrecognized Tax Benefits |  | — |  | — |  |  | — |  | 0.1 |  |  | (3) |  | (1.1) |
Tax Credits |  |  |  |  |  |  |  |  |
Foreign Tax Credits |  | (6) |  | (1.4) |  |  | (3) |  | (0.5) |  |  | — |  | — |
Other |  | (2) |  | (0.5) |  |  | (2) |  | (0.3) |  |  | (2) |  | (0.7) |
Other Adjustments |  |  |  |  |  |  |  |  |
Stock-based compensation |  | (5) |  | (1.1) |  |  | (6) |  | (1.2) |  |  | — |  | (0.2) |
Benefit from legal entity reorganization (2) |  | — |  | — |  |  | (50) |  | (10.5) |  |  | — |  | — |
Other adjustments |  | 2 |  | 0.5 |  |  | — |  | (0.1) |  |  | (1) |  | (0.6) |
Effective tax rate |  | $ | 121 |  | 27.8 | % |  | $ | 86 |  | 18.1 | % |  | $ | 68 |  | 26.0 | %
(1) State taxes in California, Wisconsin, Massachusetts, Illinois, Michigan, and Georgia made up the majority (greater than 50%) of the tax effect in this category. (2) During the second quarter of 2024, the Company executed a legal entity reorganization in our European Transportation business that resulted in a one-time tax benefit of $41 million in 2024. The impact of this benefit is reflected in the table within Domestic state and local taxes ($3 million benefit), Foreign tax effects ($5 million expense), Effect of cross-border laws ($9 million expense), Tax credits ($2 million benefit), and Other adjustments ($50 million benefit). As previously disclosed, we expect the legal entity reorganization in our European Transportation business to generate a net cash refund of approximately $45 million. In 2024, we made tax payments of $7 million and in 2025 we received a cash refund of $49 million. We expect to receive the remaining $3 million cash refund in 2026. Components of the Net Deferred Tax Asset or Liability The tax effects of temporary differences that give rise to significant portions of the deferred tax asset and deferred tax liability were as follows:
|  | Years Ended December 31,
(In millions) |  | 2025 |  | 2024
Deferred tax asset |  |  |  |
Net operating loss and other tax attribute carryforwards |  | $ | 63 |  |  | $ | 33 |
Accrued expenses |  | 49 |  |  | 75 |
Other |  | 44 |  |  | 24 |
Total deferred tax asset |  | 156 |  |  | 132 |
Valuation allowance |  | (54) |  |  | (26) |
Total deferred tax asset, net |  | 102 |  |  | 106 |
Deferred tax liability |  |  |  |
Intangible assets |  | (79) |  |  | (80) |
Property and equipment |  | (454) |  |  | (384) |
Pension and other retirement obligations |  | (7) |  |  | — |
Other |  | (31) |  |  | (25) |
Total deferred tax liability |  | (571) |  |  | (489) |
Net deferred tax liability |  | $ | (470) |  |  | $ | (382) |
The deferred tax asset and deferred tax liability above are reflected on our Consolidated Balance Sheets as follows:
|  | December 31,
(In millions) |  | 2025 |  | 2024
Other long-term assets |  | $ | 12 |  |  | $ | 11 |
Deferred tax liability |  | (482) |  |  | (393) |
Net deferred tax liability |  | $ | (470) |  |  | $ | (382) |
Operating Loss and Tax Credit Carryforwards Our operating loss and tax credit carryforwards were as follows:
|  |  |  | December 31,
(In millions) |  | Expiration Date |  | 2025 |  | 2024
Tax effect (before federal benefit) of state net operating losses |  | Various times starting in 2026 (1) |  | $ | 6 |  |  | $ | 5 |
Federal tax credit carryforwards |  | Various times starting in 2033 |  | 2 |  |  | — |
State tax credit carryforward |  | Various times starting in 2026 (1) |  | 1 |  |  | 1 |
Foreign net operating losses available to offset future taxable income |  | Various times starting in 2026 (1) |  | 211 |  |  | 109 |
(1) Some credits and losses have unlimited carryforward periods. Valuation Allowance We established a valuation allowance for some of our deferred tax assets as it is more likely than not that these assets will not be realized in the foreseeable future. We concluded that the remaining deferred tax assets will more likely than not be realized, though this is not assured, and as such no valuation allowance has been provided on these assets. The balances and activity related to our valuation allowance were as follows:
(In millions) |  | Beginning Balance |  | Additions |  | Reductions |  | Ending Balance
Year Ended December 31, 2025 |  | $ | 26 |  |  | $ | 29 |  |  | $ | (1) |  |  | $ | 54 |
Year Ended December 31, 2024 |  | 18 |  |  | 9 |  |  | (1) |  |  | 26 |
Year Ended December 31, 2023 |  | 35 |  |  | 1 |  |  | (18) |  |  | 18 |
Unrecognized Tax Benefits A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|  | Years Ended December 31,
(In millions) |  | 2025 |  | 2024 |  | 2023
Beginning balance |  | $ | 3 |  |  | $ | 4 |  |  | $ | 6 |
Additions for tax positions of prior years |  | — |  |  | — |  |  | 2 |
Settlements with tax authorities |  | — |  |  | (1) |  |  | — |
Reductions due to the statute of limitations |  | — |  |  | — |  |  | (4) |
Ending balance |  | $ | 3 |  |  | $ | 3 |  |  | $ | 4 |
Interest and penalties |  | 3 |  |  | 2 |  |  | 2 |
Gross unrecognized tax benefits |  | $ | 6 |  |  | $ | 5 |  |  | $ | 6 |
Total unrecognized tax benefits that, if recognized, would impact the effective income tax rate as of the end of the year |  | $ | 6 |  |  | $ | 5 |  |  | $ | 6 |
We are subject to taxation in the United States and various state and foreign jurisdictions. As of December 31, 2025, we have three tax years under examination by the IRS. We have various U.S. state and local examinations and non-U.S. examinations in process. The U.S. federal tax returns after 2021, state and local returns after 2018, and non-U.S. returns after 2016 are open under relevant statutes of limitations and are subject to audit. Cash Paid (Received) for Income Taxes Cash paid (received) for income taxes is comprised of the following:
|  | Years Ended December 31,
(In millions) |  | 2025 |  | 2024 |  | 2023
U.S. Federal |  | $ | (28) |  |  | $ | 65 |  |  | $ | 21 |
U.S. State and Local |  | 9 |  |  | 13 |  |  | 4 |
Foreign |  |  |  |  |  |
United Kingdom |  | 5 |  |  | 6 |  |  | 3 |
Canada |  | 4 |  |  | * |  | 3 |
France |  | 2 |  |  | * |  | *
Other |  | 5 |  |  | 6 |  |  | 3 |
Total Foreign |  | 15 |  |  | 12 |  |  | 10 |
Total cash paid (received) for income taxes, net of refunds |  | $ | (4) |  |  | $ | 90 |  |  | $ | 34 |
*Jurisdiction below the threshold for separate disclosure for the period presented. Cash paid (received) included in Other. In July 2025, the One Big Beautiful Bill Act was signed into law. The legislation includes modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions including 100% bonus depreciation for qualified property placed in service after January 19, 2025, immediate expensing of domestic research and experimental costs, and business interest expense limitations. We recognized the effects of the legislation in 2025 for the provisions currently enacted, which increased our deferred tax liability and reduced our federal income tax liability and related tax payments for 2025. We anticipate similar impacts in future years with no significant impact on our annual effective tax rate.

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