Income Taxes (Tables)

12 Months Ended

Dec. 31, 2025

Schedule of Income before Income Tax, Domestic and Foreign

The domestic and foreign components of income before income taxes were as follows:


	Year Ended December 31,
	2025		2024		2023
	(in millions)
U.S. income before income taxes	$	1,477	$	1,237	$	1,301
Foreign income before income taxes	595		546		391
Income before income taxes	$	2,072	$	1,783	$	1,692

Schedule of Components of Income Tax Expense (Benefit)

The components of our provision for income taxes were as follows:


	Year Ended December 31,
	2025		2024		2023
	(in millions)
Current:
Federal	$	329	$	357	$	586
State	99		82		136
Foreign	119		52		83
Total current	547		491		805
Deferred:
Federal	(8)		(51)		(250)
State	(2)		(15)		(83)
Foreign(1)	74		(181)		69
Total deferred	64		(247)		(264)
Total provision for income taxes	$	611	$	244	$	541

____________

(1)Includes a $29 million tax benefit for the year ended December 31, 2024, from the release of valuation allowances as the Company concluded it is more likely than not to realize the benefit of certain foreign deferred tax assets.

Schedule of Effective Income Tax Rate Reconciliation

Reconciliation of the U.S. federal statutory income tax rate to the Company's effective tax rate for the year ended December 31, 2025 in accordance with the amendments in ASU 2023-09 was as follows:


	Year Ended December 31, 2025
	Amount		Percent
	(in millions)
Provision for income taxes at U.S. federal statutory tax rate	$	435	21.0	%
State and local income taxes, net of federal income tax effect(1)	68		3.3	%
Foreign tax effects
U.K.
Tax credits(2)	(30)		(1.5)	%
Statutory tax rate difference between U.K. and U.S.	21		1.0	%
Other	(5)		(0.2)	%
Other foreign jurisdictions	81		3.9	%
Effect of cross-border tax laws(3)	11		0.5	%
Tax credits	(16)		(0.8)	%
Changes in valuation allowances	19		0.9	%
Nontaxable or nondeductible items	(5)		(0.2)	%
Changes in unrecognized tax benefits	35		1.7	%
Other adjustments	(3)		(0.1)	%
Total tax provision and effective tax rate	$	611	29.5	%

____________

(1)State and local taxes in California, New York, New York City, Florida and Illinois made up the majority (greater than 50 percent) of the tax effect in this category.

(2)The company receives double tax relief, in the form of tax credits against its U.K. current income tax, for withholding taxes imposed by various other foreign jurisdictions.

(3)The tax effect of cross-border taxes is presented net of related foreign tax credits.

Reconciliations of the provision for income taxes at the U.S. statutory rate to the provision for income taxes for the years ended December 31, 2024 and 2023 were as follows:


	Year Ended December 31,
	2024		2023
	(in millions)
Statutory U.S. federal income tax provision	$	375	$	355
State income taxes, net of U.S. federal income tax benefit	55		45
Impact of foreign operations	90		33
Changes in deferred tax asset valuation allowances	(24)		40
Income tax rate changes	—		(9)
Provision for uncertain tax positions	26		69
Claim for increased foreign tax basis(1)	(270)		—
Excess tax benefits related to share-based compensation	(22)		(6)
Other, net	14		14
Provision for income taxes	$	244	$	541

____________

(1)Includes tax benefit for claim for increased foreign tax basis, net of $547 million tax expense for related valuation allowance increase as of December 31, 2024.

Schedule of Cash Flow, Supplemental Disclosures

Income taxes paid, net of refunds received, were as follows:


	Year Ended December 31, 2025
	(in millions)
U.S. federal	$	316
U.S. state and local	97
Foreign	110
Total	$	523

Schedule of Deferred Tax Assets and Liabilities

The tax effects of the temporary differences and carryforwards that give rise to our net deferred taxes were as follows:


	December 31,
	2025		2024
	(in millions)
Deferred tax assets:
Net tax loss carryforwards and carrybacks	$	493	$	525
Foreign brands	742		763
Compensation	115		118
Reserves	51		57
Operating and finance lease liabilities	337		282
Deferred income	753		659
Foreign tax credit carryforwards	79		70
Other	140		127
Total gross deferred tax assets	2,710		2,601
Less: valuation allowance	(1,230)		(1,200)
Deferred tax assets	1,480		1,401
Deferred tax liabilities:
U.S. brands	(1,126)		(1,124)
Operating and finance lease ROU assets	(264)		(200)
Other	(160)		(81)
Deferred tax liabilities	(1,550)		(1,405)
Net deferred taxes	$	(70)	$	(4)

Schedule of Unrecognized Tax Benefits

Reconciliations of the beginning and ending amounts of unrecognized tax benefits were as follows:


	Year Ended December 31,
	2025		2024		2023
	(in millions)
Balance at beginning of year	$	849	$	555	$	337
Additions for tax positions related to prior years	2		288		268
Additions for tax positions related to the current year	—		19		4
Reductions for tax positions related to prior years	(53)		(4)		(2)
Settlements	—		(1)		(48)
Lapse of statute of limitations	(2)		(4)		(4)
Currency translation adjustment	4		(4)		—
Balance at end of year	$	800	$	849	$	555