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INCOME TAXES | 9 Months Ended
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Sep. 30, 2025
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES During the periods presented in the unaudited interim Combined Financial Statements, Qnity did not file separate tax returns in the U.S. for federal, certain state and local tax purposes, nor in foreign tax jurisdictions, as Qnity was included in the tax grouping of DuPont and its affiliate entities within the respective jurisdictions. The provision for income taxes included in these unaudited interim Combined Financial Statements has been calculated using the separate return basis, as if Qnity filed separate tax returns. Qnity’s Provision for income taxes as presented in the unaudited interim Combined Financial Statements may not be indicative of the income taxes that Qnity will generate in the future. The Company's effective tax rate fluctuates based on, among other factors, where income is earned and the level of income relative to attributes. The tax provision for the nine months ended September 30, 2025 resulted in an effective tax rate on operations of 19.8% on pre-tax income of $773 million, compared with an effective tax rate of 22.4%, on pre-tax income of $648 million for the nine months ended September 30, 2024. The lower effective tax rate for the first nine months of 2025 in comparison to the first nine months of 2024 resulted from a combination of certain discrete tax expenses incurred in 2024, including the settlement of an international tax audit, offset by changes to the geographic mix of earnings in 2025, including the impacts of the Organisation for Economic Co-Operation and Development's ("OECD") Global Anti-Base Erosion rules under Pillar Two in jurisdictions in which the Company operates. Each year DuPont, inclusive of Qnity, files hundreds of tax returns in the various national, state and local income taxing jurisdictions in which it operates, either as a separate taxpayer or as a member of DuPont’s consolidated income tax return. These tax returns are subject to examination and possible challenge by the tax authorities. Positions challenged by the tax authorities may be settled or appealed by Qnity. The uncertainty in income taxes is recognized in Qnity's interim financial statements in accordance with accounting for income taxes. The ultimate resolution of such uncertainties is not expected to have a material impact on Qnity’s interim results of operations. On July 4, 2025, the One Big Beautiful Bill Act (“the Act”) was enacted. The Act includes a broad range of tax reform provisions, including modifications and enhancements to the domestic and international provisions of the Tax Cuts and Jobs Act. Among other changes, the Act allows for immediate expensing of domestic research and development expenditures, revises provisions around foreign-sourced earnings and revises the corporate interest limitation rules. The legislation has multiple effective dates, with certain provisions becoming effective in fiscal 2025 and the majority becoming effective in fiscal 2026. The Company has considered the impact of the enacted provisions in its consolidated tax provision as of September 30, 2025. The legislation did not have a material impact on our income tax expense or effective tax rate for this quarter. The Company continues to evaluate the broader effects of the legislation as further guidance is issued.

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