Income Taxes (Tables)

12 Months Ended

Dec. 31, 2025

U.S. and foreign income before taxes are set forth below:


	2025		2024		2023
U.S.	$	1,069	$	1,131	$	1,246
Foreign	1,008		769		572
	$	2,077	$	1,900	$	1,818

Details of income tax provision (benefit)

The details of our income tax provision (benefit) are set forth below:


		2025		2024		2023
Current:	Federal	$	(5)	$	170	$	221
	Foreign	371		226		222
	State	45		48		68
		$	411	$	444	$	511

Deferred:	Federal	$	173	$	(40)	$	(121)
	Foreign	(81)		15		(153)
	State	15		(5)		(16)
		$	107	$	(30)	$	(290)
		$	518	$	414	$	221

Details of deferred tax assets (liabilities)


	2025		2024
Operating losses and interest deduction carryforwards	$	227	$	213
Capital losses	69		70
Tax credit carryforwards	48		200
Employee benefits	73		83
Share-based compensation	36		44
Lease-related liabilities	374		267
Accrued liabilities and other	73		66
Intangible assets	654		575
Property, plant and equipment	23		25
Deferred income	102		105
Capitalized Research & Development Costs	34		120
Gross deferred tax assets	1,713		1,768
Deferred tax asset valuation allowances	(284)		(369)
Net deferred tax assets	1,429		1,399
Property, plant and equipment	(86)		(47)
Operating lease right-of-use assets	(320)		(235)
Employee benefits	(9)		(6)
Derivative Instruments	(2)		(5)
Other	(48)		(36)
Gross deferred tax liabilities	(465)		(329)
Net deferred tax assets (liabilities)	$	964	$	1,070

As a result of the OBBBA, the Company recorded a $168 million reduction in net deferred tax assets existing as of the enactment date. The reduction was the result of recording a valuation allowance on the foreign tax credit related deferred tax assets as well as the impact of accelerating tax deductions for qualified depreciable property and research expenditures. As a result of the accelerated tax deductions, our cash tax payments for 2025 were significantly reduced.

The details of the 2025 and 2024 valuation allowance activity are set forth below:


	2025		2024
Beginning of Year	$	(369)	$	(386)
Increases	(18)		(5)
Decreases	106		16
Other Adjustments	(3)		6
End of Year	$	(284)	$	(369)

Reported in Consolidated Balance Sheets as:


	2025		2024
Deferred income taxes	$	965	$	1,071
Other liabilities and deferred credits	(1)		(1)
	$	964	$	1,070

Loss carryforwards, by year of expiration


	Gross Amount		Deferred Tax Asset		Valuation Allowance		Expiration
Federal net operating losses - Indefinite	$	42	$	9	$	—	None
Foreign net operating losses	306		46		(4)		2026-2045
Foreign net operating losses - Indefinite	367		81		(16)		None
State net operating losses	1,171		50		(35)		2026-2045
Foreign capital loss carryforward - Indefinite	277		69		(69)		None
Foreign tax credits (US Tax Return)	13		13		(17)		2026-2045
Foreign country tax credits	35		35		(13)		2031
Foreign deduction carryforward - Indefinite	2		—		—		None
State interest deduction carryforward - Indefinite	893		41		(40)		None
	$	3,106	$	344	$	(194)

Schedule of Unrecognized Tax Benefits Roll Forward


	2025		2024
Beginning of Year	$	126	$	151
Additions on tax positions - current year	4		6
Additions for tax positions - prior years	54		1
Reductions for tax positions - prior years	(74)		(10)
Reductions for settlements	—		(22)
Statute	(3)		—
CTA/Other	8		—
End of Year	$	115	$	126

YUM BRANDS INC 10-K