INCOME TAX

12 Months Ended

Dec. 31, 2025

The income tax expense for the years ended December 31, 2025, 2024 and 2023 consisted of the following:


	Years Ended December 31,
	2025		2024		2023

	(in thousands)

Current income tax expense (benefit):
Federal	$	282,092	$	289,893	$	290,887
State	73,817		60,358		78,459
Foreign	179,523		191,762		196,384
	535,432		542,013		565,730
Deferred income tax expense (benefit):
Federal	(174,619)		(192,569)		(253,489)
State	(10,388)		(36,605)		(38,131)
Foreign	(98,868)		(71,326)		(87,593)
	(283,875)		(300,500)		(379,213)
	$	251,557	$	241,513	$	186,517

Income tax expense allocated to noncontrolling interests was $14.9 million, $15.4 million and $11.8 million for the years ended December 31, 2025, 2024 and 2023, respectively.

The following table presents income (loss) before income taxes for the years ended December 31, 2025, 2024 and 2023:


	Years Ended December 31,
	2025		2024		2023

	(in thousands)

United States	$	884,390	$	1,004,292	$	251,396
Foreign	375,729		526,024		530,266
	$	1,260,119	$	1,530,316	$	781,662

Approximately $66.7 million of our undistributed foreign earnings are considered to be indefinitely reinvested outside the United States as of December 31, 2025. Because those earnings are considered to be indefinitely reinvested, no deferred income taxes have been provided thereon. If we were to make a distribution of any portion of those earnings in the form of dividends or otherwise, any such amounts would be subject to withholding taxes payable to various foreign jurisdictions; however, the amounts would not be subject to any additional U.S. income tax.

Our effective tax rates for the years ended December 31, 2025, 2024 and 2023 differ from the federal statutory rate for those periods as follows:


	Years Ended December 31,
	2025				2024				2023
	Amount		Rate		Amount		Rate		Amount		Rate
	(in thousands)				(in thousands)				(in thousands)

Income from continuing operations before income taxes and equity in income of equity method investments	$	1,260,119			$	1,530,316			$	781,662
Federal U.S. statutory rate	264,625		21.0	%	321,366		21.0	%	164,149		21.0	%

Federal tax effects:
Tax credits:
Research and development tax credits	(24,315)		(1.9)	%	(29,100)		(1.9)	%	(31,373)		(4.0)	%
Transferable energy credits	(18,000)		(1.4)	%	—		—	%	—		—	%
Other	(412)		—	%	(548)		—	%	(1,070)		(0.1)	%
Nontaxable or nondeductible items:
Nondeductible executive compensation	6,053		0.5	%	6,470		0.4	%	10,772		1.4	%
Other	4,985		0.4	%	570		—	%	451		0.1	%
Cross-border tax laws:
Global intangible low-taxed income	18,683		1.5	%	25,261		1.7	%	32,921		4.2	%
Subpart F income	12,790		1.0	%	20,076		1.3	%	19,800		2.5	%
Foreign branches	(92,447)		(7.3)	%	(132,991)		(8.7)	%	(98,592)		(12.6)	%
Foreign-derived intangible income	(5,497)		(0.4)	%	(7,956)		(0.5)	%	(5,164)		(0.7)	%
Base Erosion Anti-Abuse Tax	18,269		1.4	%	—		—	%	—		—	%
Other reconciling items:
Gain/loss on dispositions and restructuring	100,711		8.0	%	—		—	%	50,470		6.5	%
Share-based compensation	5,887		0.5	%	2,317		0.2	%	9,729		1.2	%
Other	(22,595)		(1.8)	%	2,146		0.1	%	5,861		0.7	%

Changes in valuation allowances	(59,205)		(4.7)	%	(6,727)		(0.4)	%	(1,582)		(0.2)	%

State income taxes, net of federal effect(1)	50,790		4.0	%	16,216		1.1	%	28,903		3.7	%

Foreign tax effects:
Hong Kong:
Nontaxable or nondeductible items	(1,951)		(0.2)	%	(16,172)		(1.1)	%	(7,004)		(0.9)	%
Other	859		—	%	(3,310)		(0.3)	%	2,909		0.4	%
Spain	13,749		1.1	%	960		0.1	%	9,050		1.2	%
Other foreign jurisdictions	(13,499)		(1.1)	%	29,029		1.9	%	(7,565)		(1.0)	%

Changes in unrecognized tax benefits	(7,923)		(0.6)	%	13,906		0.9	%	3,852		0.5	%

Effective tax rate	$	251,557	20.0	%	$	241,513	15.8	%	$	186,517	23.9	%

(1) California, Pennsylvania and New York make up the majority (greater than 50 percent) of the state income tax expense, net of federal income tax effect category for the year ended December 31, 2025. California, Arizona, New York and New Jersey make up the majority of the state income tax expense, net of federal income tax effect category for the year ended December 31, 2024. California, Oklahoma, Pennsylvania, New Jersey and New York make up the majority of the state income tax expense, net of federal income tax effect category for the year ended December 31, 2023.

Cash paid for income taxes, net of refunds, for the years ended December 31, 2025, 2024 and 2023 was as follows:


	Years Ended December 31,
	2025		2024		2023

	(in thousands)

U.S. Federal	$	430,302	$	284,599	$	345,827

U.S. State & Local	100,691		45,329		101,515

Foreign:
Mexico	—		30,757		—
Spain	77,905		37,246		51,563
UK	66,772		67,676		81,238
Other	110,597		57,656		60,641

Total	$	786,267	$	523,263	$	640,784

Deferred income taxes are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax laws and rates. Deferred income taxes as of December 31, 2025 and 2024 reflect the effect of temporary differences between the amounts of assets and liabilities for financial accounting and income tax purposes. As of December 31, 2025 and 2024, principal components of deferred tax items were as follows:


	2025		2024

	(in thousands)

Deferred income tax assets:
Research and development costs	$	274,914	$	286,688
Foreign net operating loss carryforwards	287,647		222,076
Credits	281,915		200,474
Financial instruments	132,304		110,621
Lease liabilities	71,989		69,884
Accrued expenses	46,664		48,985
Share-based compensation expense	33,886		33,683
Domestic net operating loss carryforwards	23,075		28,628
Other	160,633		99,495
	1,313,027		1,100,534
Valuation allowance	(173,836)		(241,197)
	1,139,191		859,337
Deferred tax liabilities:
Acquired intangibles	1,236,865		1,238,613
Partnership interests	687,785		646,915
Property and equipment	386,355		367,078
Held for sale	157,989		—
Right-of-use assets	37,877		42,430
Other	66,394		50,336
	2,573,265		2,345,372
Net deferred income tax liability	$	1,434,074	$	1,486,035

The net deferred income taxes reflected in our consolidated balance sheets as of December 31, 2025 and 2024 are as follows:


	2025		2024

	(in thousands)

Noncurrent deferred income tax asset	$	(171,430)	$	(98,386)
Noncurrent deferred income tax liability	1,605,504		1,584,421
Net deferred income tax liability	$	1,434,074	$	1,486,035

A valuation allowance is provided against deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Changes to our valuation allowance during the years ended December 31, 2025, 2024 and 2023 are summarized below (in thousands):


Balance at December 31, 2022	$	(110,043)
Allowance for foreign net operating losses	(674)
Allowance for foreign tax credits	(101,271)
Allowance for state tax credits	3,079
Allowance for state interest limitation	(2,335)
Allowance for domestic net operating losses	195
Balance at December 31, 2023	(211,049)
Allowance for foreign net operating losses	(12,533)
Allowance for foreign tax credits	(16,975)
Allowance for state tax credits	(463)
Allowance for state interest limitation	(177)

Balance at December 31, 2024	(241,197)
Allowance for foreign net operating losses	4,763
Allowance for foreign tax credits	56,692
Allowance for state tax credits	2,966
Allowance for state interest limitation	2,513
Allowance for domestic net operating losses	427
Balance at December 31, 2025	$	(173,836)

The change in the valuation allowance for the year ended December 31, 2025 is primarily related to foreign and state tax credits, foreign net operating loss carryforwards, and state interest deduction carryforwards that were determined more likely than not to be realized. The change in the valuation allowance for the year ended December 31, 2024 is primarily related to increases related to foreign tax credits and foreign net operating loss carryforwards. The change in the valuation allowance for the year ended December 31, 2023 is primarily related to anticipatory foreign tax credits and state interest deduction carryforwards offset by recognition of state tax credit carryforwards determined more likely than not to be realized.

Foreign net operating loss carryforwards of $106.5 million will expire between December 31, 2026 and December 31, 2045, if not utilized. Foreign net operating loss carryforwards of $181.1 million have indefinite carryforward periods. Domestic net operating loss carryforwards of $23.0 million and tax credit carryforwards of $192.5 million will expire between December 31, 2026 and December 31, 2045, if not utilized.

We conduct business globally and file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities around the world. We are no longer subject to state income tax examinations for years ended on or before December 31, 2015, U.S. federal income tax examinations for years ended on or before December 31, 2016 and international corporation tax examinations for years ended on or before December 31, 2020.

A reconciliation of the beginning and ending amounts of unrecognized income tax benefits, excluding penalties and interest, for the years ended December 31, 2025, 2024 and 2023 is as follows:


	Years Ended December 31,
	2025		2024		2023

	(in thousands)

Balance at the beginning of the year	$	58,302	$	43,229	$	31,315
Additions related to acquisitions	—		—		4,054
Reductions for income tax positions of prior years	(12,805)		(164)		(887)
Settlements with income tax authorities	(121)		(1,656)		(988)
Additions for income tax positions of prior years	1,082		9,092		1,809
Additions based on income tax positions related to the current year	6,548		7,801		7,926
Balance at the end of the year	$	53,006	$	58,302	$	43,229

As of December 31, 2025, the total amount of gross unrecognized income tax benefits that, if recognized, would affect the provision for income taxes is $51.1 million.

- Definition

The entire disclosure for income tax.

+ References

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+ Details

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