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Income Taxes | 12 Months Ended
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Dec. 31, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of earnings before income taxes and the components of our income tax provision are as follows:
| Year ended December 31,
| 2025 |  | 2024 |  | 2023
| (in millions)
Domestic | $ | 2,031 |  |  | $ | 1,533 |  |  | $ | 2,248 |
Non-U.S. | 208 |  |  | 229 |  |  | — |
Earnings before income taxes | $ | 2,239 |  |  | $ | 1,762 |  |  | $ | 2,248 |
Current |  |  |  |  |
Federal | $ | 328 |  |  | $ | 312 |  |  | $ | 271 |
Foreign | 61 |  |  | 42 |  |  | (26) |
State | 46 |  |  | 46 |  |  | 84 |
| 435 |  |  | 400 |  |  | 329 |
Deferred |  |  |  |  |
Federal | 15 |  |  | (89) |  |  | 108 |
Foreign | (9) |  |  | 3 |  |  | (5) |
State | — |  |  | (29) |  |  | (22) |
| 6 |  |  | (115) |  |  | 81 |
Income tax provision | $ | 441 |  |  | $ | 285 |  |  | $ | 410 |
Differences in the expected income tax provision based on statutory rates applied to earnings before income taxes and the income tax provision reflected in the consolidated statements of operations are summarized below.
| Year ended December 31,
| 2025 |  | 2024 |  | 2023
| (in millions, except percentages)
Earnings before income taxes | $ | 2,239 |  |  |  |  | $ | 1,762 |  |  |  |  | $ | 2,248 |  |  |
Expected tax provision at U.S. statutory rate of 21% | $ | 470 |  |  | 21.0 | % |  | $ | 370 |  |  | 21.0 | % |  | $ | 472 |  |  | 21.0 | %
Domestic federal reconciling items: |  |  |  |  |  |  |  |  |  |  |
Tax credits | (6) |  |  | (0.3) | % |  | (3) |  |  | (0.2) | % |  | (16) |  |  | (0.7) | %
Nontaxable or nondeductible items: |  |  |  |  |  |  |  |  |  |  |
Net earnings attributable to noncontrolling interests | (72) |  |  | (3.2) | % |  | (54) |  |  | (3.1) | % |  | (66) |  |  | (2.9) | %
Other | (1) |  |  | — | % |  | 6 |  |  | 0.3 | % |  | (3) |  |  | (0.1) | %
Effect of cross-border tax laws | 1 |  |  | — | % |  | 1 |  |  | 0.1 | % |  | 3 |  |  | 0.1 | %
Changes in valuation allowances | 4 |  |  | 0.2 | % |  | 2 |  |  | 0.1 | % |  | 10 |  |  | 0.4 | %
Other: |  |  |  |  |  |  |  |  |  |  |
Foreign-derived intangible income deduction | (27) |  |  | (1.2) | % |  | (27) |  |  | (1.5) | % |  | (20) |  |  | (0.9) | %
Other | 2 |  |  | 0.1 | % |  | 1 |  |  | 0.1 | % |  | 1 |  |  | 0.1 | %
State and local income tax, net of federal income tax effect(1) | 35 |  |  | 1.6 | % |  | 10 |  |  | 0.6 | % |  | 53 |  |  | 2.4 | %
Foreign tax effects | 14 |  |  | 0.6 | % |  | (5) |  |  | (0.3) | % |  | (13) |  |  | (0.6) | %
Changes in unrecognized tax benefits | 21 |  |  | 0.9 | % |  | (16) |  |  | (0.9) | % |  | (11) |  |  | (0.5) | %
Income tax provision | $ | 441 |  |  |  |  | $ | 285 |  |  |  |  | $ | 410 |  |  |
Effective tax rate | 19.7 | % |  |  |  | 16.2 | % |  |  |  | 18.3 | % |  |
______________________________________________________________________________ (1)In both 2025 and 2024, state and local income taxes in Illinois, Iowa, Louisiana, and Minnesota comprise the majority of the state and local income tax, net of federal income tax effect category. In 2023, state and local income taxes in Illinois, Iowa and Minnesota comprise the majority of the state and local income tax, net of federal income tax effect category. Our effective tax rate is impacted by earnings attributable to the noncontrolling interests as our consolidated income tax provision does not include a tax provision on the earnings attributable to the noncontrolling interests. As a result, earnings attributable to the noncontrolling interests of $343 million, $259 million and $313 million in 2025, 2024 and 2023, respectively, which are included in earnings before income taxes, impacted the effective tax rate in all three years. See Note 18—Noncontrolling Interests for additional information. Canada Revenue Agency Competent Authority Matter In the second half of 2022, as a result of the conclusion of arbitration proceedings and the settlement provisions between the United States and Canadian competent authorities related to tax years 2006 through 2011, we paid additional income taxes and related interest resulting in total payments of $224 million, which also reflect the impact of changes in foreign currency exchange rates. In 2023, due primarily to the availability of additional foreign tax credits to offset in part the increased Canadian tax referenced above, we filed amended tax returns in the United States to request a refund of taxes paid. In the third quarter of 2024, we were informed that the Canada Revenue Agency (CRA) granted one of our Canadian subsidiaries discretionary interest relief for certain tax years from 2006 through 2011, which were previously settled through arbitration proceedings between the United States and Canadian competent authorities. In the fourth quarter of 2024, we received the CRA portion of the interest relief consisting of interest refunds of $21 million and related interest of $2 million, and we were informed that the Alberta Tax and Revenue Administration (Alberta TRA) granted us discretionary interest relief in parallel with the CRA relief. The interest relief from the Alberta TRA was estimated to be approximately $16 million, consisting of interest refunds of $15 million and related interest of $1 million, based on estimates and foreign currency exchange rates as of December 31, 2024. As a result, in our consolidated statement of operations for the year ended December 31, 2024, we recognized $39 million of income consisting of a $36 million reduction in interest expense and $3 million of interest income. During the fourth quarter of 2025, the Alberta TRA finalized interest relief owed to the Company, which was applied as credits to our account and is available to offset future income tax owed to the Alberta TRA. Deferred Taxes Deferred tax assets and deferred tax liabilities are as follows:
| December 31,
| 2025 |  | 2024
| (in millions)
Deferred tax assets: |  |  |
Net operating loss and capital loss carryforwards, state | $ | 54 |  |  | $ | 56 |
Net operating loss and capital loss carryforwards, foreign | 56 |  |  | 49 |
Retirement and other employee benefits | 8 |  |  | 2 |
Foreign tax credits | 61 |  |  | 57 |
State tax credits | 14 |  |  | 11 |
Operating lease liabilities | 100 |  |  | 66 |
Other | 46 |  |  | 34 |
| 339 |  |  | 275 |
Valuation allowance | (118) |  |  | (107) |
| 221 |  |  | 168 |
Deferred tax liabilities: |  |  |
Depreciation and amortization | (291) |  |  | (273) |
Investments in partnerships | (647) |  |  | (659) |
Operating lease right-of-use assets | (98) |  |  | (63) |
Foreign earnings | (21) |  |  | (14) |
Other | (33) |  |  | (30) |
| (1,090) |  |  | (1,039) |
Net deferred tax liability | $ | (869) |  |  | $ | (871) |
The Company does not have an indefinite reinvestment assertion in any of our foreign subsidiaries. As of December 31, 2025, we recorded a deferred tax liability of $21 million on the undistributed earnings of our Canadian subsidiaries. As of December 31, 2025, our net operating loss and capital loss carryforwards consist primarily of state net operating loss carryforwards of $53 million, of which $14 million will expire at various dates between 2036 and 2044 and the remaining $39 million can be carried forward indefinitely, and foreign capital loss carryforwards of $55 million, which can be carried forward indefinitely. Our foreign subsidiaries have operations that do not normally generate capital gains and have no practical plans to do so in the future. As a result, we have recorded a full valuation allowance against all foreign capital loss carryforwards. As of December 31, 2025, we have state tax credit carryforwards resulting in a deferred tax asset of $14 million. The state tax credits can be carried forward indefinitely. In 2025, the net increase in the valuation allowance is primarily attributable to an increase of $5 million in a capital loss carryforward and associated valuation allowance generated from the loss on sale of the Ince facility, and an increase of $4 million in excess foreign tax credits associated with certain U.S. taxed foreign branch income. The excess foreign tax credits carried forward, subject to U.S. foreign tax credit limitation rules, are not expected to be utilized prior to expiration and have a full valuation allowance. See Note 6—Property, Plant and Equipment—Net for additional information on the sale of our Ince facility. In 2024, the net decrease in the valuation allowance is primarily attributable to a reduction of $83 million in a capital loss carryforward and the associated valuation allowance for one of our foreign subsidiaries in Canada. Additionally, based on income generated in the United Kingdom and the reversal of deferred tax assets, the remaining valuation allowance originally recorded in 2022 for one of our foreign subsidiaries in the United Kingdom was released in 2024, resulting in an $11 million decrease to the valuation allowance. Both of these decreases were partially offset by the impact of changes in foreign currency exchange rates. In 2023, the net increase in the valuation allowance is primarily attributable to excess foreign tax credits associated with certain U.S. taxed foreign branch income and the impact of changes in foreign currency exchange rates, partially offset by the utilization of deferred tax assets of one of our foreign subsidiaries in the United Kingdom. The excess foreign tax credits carried forward, subject to U.S. foreign tax credit limitation rules, are not expected to be utilized prior to expiration and have a full valuation allowance of $55 million reflecting an increase of $11 million in 2023. Based on recent income generated in the United Kingdom, a portion of the deferred tax assets for which a full valuation allowance had been recorded in 2022 was utilized in 2023, resulting in a $7 million decrease to the deferred tax assets and the valuation allowance of one of our foreign subsidiaries in the United Kingdom. Unrecognized Tax Benefits A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| December 31,
| 2025 |  | 2024
| (in millions)
Unrecognized tax benefits: |  |  |
Balance as of January 1 | $ | 230 |  |  | $ | 222 |
Additions for tax positions taken during the current year | 8 |  |  | 1 |
Additions for tax positions taken during prior years | 53 |  |  | 7 |
Reductions related to lapsed statutes of limitations | — |  |  | — |
Reductions related to settlements with tax jurisdictions | (3) |  |  | — |
Balance as of December 31 | $ | 288 |  |  | $ | 230 |
In 2025, we increased the amount of our unrecognized tax benefit by $58 million, which primarily relate to U.S. tax positions under the Internal Revenue Service audit and refunds claimed on amended state tax returns. As of December 31, 2025, we had $288 million of unrecognized tax benefits. The majority of our unrecognized tax benefits as of December 31, 2025 relate to transfer pricing positions for tax years after 2011 for certain of our Canadian subsidiaries which were accepted for consideration under the bilateral settlement provisions of the U.S.-Canada tax treaty by the United States and Canadian competent authorities. These unrecognized tax benefits have corollary receivables for the other jurisdiction impacted by the transfer pricing relationship, which are recorded as noncurrent income tax receivables and included in other assets on our consolidated balance sheet. Recognizing these unrecognized tax benefits would result in additional tax expense of $1 million in the future. In addition, in order to mitigate the assessment of future Canadian interest on these Canadian transfer pricing positions, we made payments to the Canadian taxing authorities of CAD $363 million (approximately $267 million) in 2022, which are recorded as noncurrent income tax receivables and included in other assets on our consolidated balance sheet. For the amounts ultimately owed and paid to the Canadian tax authorities upon resolution of these tax years after 2011, the Company would seek refunds of related taxes paid in the United States. In 2024, we increased the amount of our unrecognized tax benefit by $8 million, which primarily relates to transfer pricing positions. In 2023, we increased the amount of our unrecognized tax benefits by $74 million, which primarily relates to refunds claimed on the U.S. amended returns filed during the year, as discussed above under Canada Revenue Agency Competent Authority Matter. In addition, we reduced the amount of unrecognized tax benefits by $33 million, reflecting primarily the settlement of issues raised on state and Canadian income tax audits for various open tax years. We file federal, provincial, state and local income tax returns principally in the United States, Canada and the United Kingdom, as well as in certain other foreign jurisdictions. In general, filed tax returns remain subject to examination by United States tax jurisdictions for years 2017 and thereafter, by Canadian tax jurisdictions for years 2012 and thereafter, and by the United Kingdom for years 2022 and thereafter. Interest expense and penalties related to our unrecognized tax benefits of $7 million, $8 million and $(4) million were recorded for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, amounts recognized in our consolidated balance sheet for accrued interest and penalties related to our unrecognized tax benefits was $69 million, of which $58 million is included in other liabilities and $11 million is included as a reduction to other assets. As of December 31, 2024, amounts recognized in our consolidated balance sheet for accrued interest and penalties related to our unrecognized tax benefits was $55 million, which was included in other liabilities.

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