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INCOME TAXES | 12 Months Ended
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Dec. 31, 2025
Income Tax Disclosure [Abstract] |
INCOME TAXES | P. INCOME TAXES Components of income taxes on income before income taxes and the components of deferred tax assets and liabilities were as follows, in millions:
| 2025 |  | 2024 |  | 2023
Income before income taxes: |  |  |  |  |
U.S. | $ | 889 |  |  | $ | 881 |  |  | $ | 968 |
Foreign | 246 |  |  | 280 |  |  | 270 |
| $ | 1,135 |  |  | $ | 1,161 |  |  | $ | 1,238 |
Income tax expense: |  |  |  |  |
Currently payable: |  |  |  |  |
U.S. Federal | $ | 123 |  |  | $ | 153 |  |  | $ | 189 |
State and local | 17 |  |  | 26 |  |  | 47 |
Foreign | 74 |  |  | 80 |  |  | 74 |
Deferred: |  |  |  |  |
U.S. Federal | 51 |  |  | 14 |  |  | — |
State and local | 8 |  |  | 9 |  |  | (39) |
Foreign | 4 |  |  | 5 |  |  | 7 |
| $ | 277 |  |  | $ | 287 |  |  | $ | 278 |
Deferred tax assets at December 31: |  |  |  |  |
Receivables | $ | 9 |  |  | $ | 8 |  |  |
Inventories | 16 |  |  | 13 |  |  |
Other assets, including stock-based compensation | 7 |  |  | 8 |  |  |
Accrued liabilities | 43 |  |  | 48 |  |  |
Noncurrent operating lease liabilities | 46 |  |  | 44 |  |  |
Other long-term liabilities | 46 |  |  | 49 |  |  |
Capitalized research expenditures | — |  |  | 48 |  |  |
Net operating loss carryforward | 52 |  |  | 57 |  |  |
Tax credit carryforward | 7 |  |  | 8 |  |  |
| 226 |  |  | 283 |  |  |
Valuation allowance | (27) |  |  | (27) |  |  |
| 199 |  |  | 256 |  |  |
Deferred tax liabilities at December 31: |  |  |  |  |
Property and equipment | 83 |  |  | 77 |  |  |
Operating lease right-of-use assets | 49 |  |  | 45 |  |  |
Intangibles | 79 |  |  | 80 |  |  |
Investment in foreign subsidiaries | 16 |  |  | 14 |  |  |
Other | 17 |  |  | 16 |  |  |
| 244 |  |  | 232 |  |  |
Net deferred tax (liability) asset at December 31 | $ | (45) |  |  | $ | 24 |  |  |
The net deferred tax (liability) asset consisted of net deferred tax assets (included in other assets) of $50 million and $62 million, and net deferred tax liabilities (included in other liabilities) of $95 million and $38 million, at December 31, 2025 and 2024, respectively. P. INCOME TAXES (Continued) In the fourth quarter of 2023, we recognized a $29 million state income tax benefit, net of federal expense, due to a legal restructuring of certain U.S. businesses that occurred in early 2024 which allowed for the utilization of certain loss carryforwards that were not previously recognized. We continue to maintain a valuation allowance of $27 million on certain state and foreign deferred tax assets as of both December 31, 2025 and 2024 due primarily to cumulative losses in those jurisdictions and net operating losses that are expected to expire unused. Our capital allocation strategy includes reinvesting in our business, maintaining an investment grade credit rating, maintaining a relevant dividend and deploying excess free cash flow to share repurchases or acquisitions. In order to provide greater flexibility in the execution of our capital allocation strategy, we may repatriate earnings from certain foreign subsidiaries. Our deferred tax balance on investment in foreign subsidiaries reflects the impact of all taxable temporary differences, including those related to substantially all undistributed foreign earnings, except those that are legally restricted, and consists primarily of foreign withholding taxes. Of the $59 million and $65 million deferred tax assets related to the net operating loss and tax credit carryforwards at December 31, 2025 and 2024, respectively, $40 million and $46 million, respectively, will expire between 2026 and 2045, if unused, and $19 million for both periods have no expiration. A reconciliation of income tax expense at the U.S. Federal statutory tax rate to the income tax expense on income before income taxes was as follows, in millions:
| Year Ended December 31,
| 2025 |  | 2024 |  | 2023
Income tax expense at U.S. Federal statutory tax rate | $ | 238 |  |  | 21.0 | % |  | $ | 244 |  |  | 21.0 | % |  | $ | 260 |  |  | 21.0 | %
State and local tax effects, net of U.S. Federal tax benefit (A): |  |  |  |  |  |  |  |  |  |  |
State and local taxes | 32 |  |  | 2.8 |  |  | 26 |  |  | 2.2 |  |  | 29 |  |  | 2.3 |
Valuation allowance | (2) |  |  | (0.2) |  |  | (1) |  |  | (0.1) |  |  | (29) |  |  | (2.3) |
Foreign tax effects: |  |  |  |  |  |  |  |  |  |  |
Germany: |  |  |  |  |  |  |  |  |  |  |
Municipal taxes | 15 |  |  | 1.4 |  |  | 19 |  |  | 1.6 |  |  | 17 |  |  | 1.3 |
Other | 5 |  |  | 0.4 |  |  | — |  |  | — |  |  | (3) |  |  | (0.2) |
Other foreign jurisdictions | 6 |  |  | 0.5 |  |  | 8 |  |  | 0.7 |  |  | 10 |  |  | 0.8 |
Effect of cross-border tax laws | (1) |  |  | (0.1) |  |  | (4) |  |  | (0.3) |  |  | (4) |  |  | (0.3) |
Tax credits | (7) |  |  | (0.6) |  |  | (8) |  |  | (0.7) |  |  | (8) |  |  | (0.6) |
Nontaxable or nondeductible items: |  |  |  |  |  |  |  |  |  |  |
Stock-based compensation | (2) |  |  | (0.2) |  |  | (10) |  |  | (0.9) |  |  | (6) |  |  | (0.5) |
Nondeductible expense | 3 |  |  | 0.3 |  |  | 9 |  |  | 0.8 |  |  | 6 |  |  | 0.5 |
Changes in unrecognized tax benefits | (10) |  |  | (0.9) |  |  | 3 |  |  | 0.3 |  |  | 7 |  |  | 0.6 |
Other adjustments | — |  |  | — |  |  | 1 |  |  | 0.1 |  |  | (1) |  |  | (0.1) |
Income tax expense | $ | 277 |  |  | 24.4 | % |  | $ | 287 |  |  | 24.7 | % |  | $ | 278 |  |  | 22.5 | %
(A)The states that contribute to the majority (greater than 50%) of the tax effect in this category include California, New Jersey, Illinois, and New York for 2025; California, New York, New Jersey, Texas, and Michigan for 2024; and California, Florida, Maryland, Georgia, Oregon, and Tennessee for 2023. P. INCOME TAXES (Concluded) Income taxes paid by jurisdiction, exceeding 5% of the total income taxes paid by year, were as follows, in millions:
| Year Ended December 31,
| 2025 |  | 2024 |  | 2023
U.S. Federal | $ | 110 |  |  | $ | 160 |  |  | $ | 194 |
State and local | 27 |  |  | 26 |  |  | 36 |
Foreign: |  |  |  |  |
Germany: |  |  |  |  |
Corporate income tax | 31 |  |  | 24 |  |  | 34 |
Schiltach municipal tax | 15 |  |  |  |  |
Other | 10 |  |  | 17 |  |  | 23 |
China | 15 |  |  |  |  |
Other foreign jurisdictions | 28 |  |  | 33 |  |  | 41 |
Total | $ | 236 |  |  | $ | 260 |  |  | $ | 328 |
A reconciliation of the beginning and ending liability for uncertain tax positions is as follows, in millions:
| 2025 |  | 2024
Balance at January 1 | $ | 85 |  |  | $ | 84 |
Current year tax positions: |  |  |
Additions | 14 |  |  | 14 |
Reductions | (4) |  |  | (1) |
Prior year tax positions: |  |  |
Additions | — |  |  | 1 |
Reductions | (1) |  |  | — |
Lapse of applicable statutes of limitation | (21) |  |  | (13) |
Balance at December 31 | $ | 73 |  |  | $ | 85 |
Liability for interest and penalties | 15 |  |  | 16 |
Balance at December 31, including interest and penalties | $ | 88 |  |  | $ | 101 |
If recognized, $58 million and $67 million of the liability for uncertain tax positions at December 31, 2025 and 2024, respectively, net of any U.S. Federal tax benefit, would impact our effective tax rate. Interest and penalties recognized in income tax expense were insignificant in years ended December 31, 2025, 2024 and 2023. Of the $88 million and $101 million total liability for uncertain tax positions (including related interest and penalties) at December 31, 2025 and 2024, respectively, $84 million and $97 million are recorded in other liabilities, respectively, and $4 million in both periods is recorded as a net offset to other assets. We file income tax returns in the U.S. Federal jurisdiction, and various local, state and foreign jurisdictions. We continue to participate in the Compliance Assurance Process ("CAP"). CAP is a real-time audit of the U.S. Federal income tax return that allows the Internal Revenue Service ("IRS"), working in conjunction with us, to determine tax return compliance with the U.S. Federal tax law prior to filing the return. This program provides us with greater certainty about our tax liability for a given year within months, rather than years, of filing our annual tax return and greatly reduces the need for recording a liability for U.S. Federal uncertain tax positions. The IRS has completed their examination of our consolidated U.S. Federal tax returns through 2024. With few exceptions, we are no longer subject to state or foreign income tax examinations on filed returns for years before 2021.

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