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INCOME TAXES
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Ford Motor Credit Company LLC and certain of its subsidiaries are disregarded entities for United States income tax purposes. Ford’s consolidated United States federal and state income tax returns include certain of our domestic subsidiaries. Our provision for income taxes includes only income tax liabilities for Ford Credit entities recognized as taxable within a jurisdiction. Certain United States minimum taxes, such as the corporate alternative minimum tax and the tax on global intangible low-taxed income, are generally allocated to us on a separate return basis calculated as if we were a taxable entity. The net minimum tax liability allocated to us will not exceed the net liability as determined on a consolidated basis.

We recognize income tax-related penalties in Provision for/(Benefit from) income taxes on our consolidated income statements.  We recognize income tax-related interest income and expense in Other income/(loss), net on our consolidated income statements.

We account for U.S. tax on global intangible low-taxed income in the period incurred, and we account for investment tax credits using the deferral method.

Deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences that exist between the financial statement carrying value of assets and liabilities and their respective tax bases, and net operating loss carryforwards and tax credit carryforwards on a taxing jurisdiction basis. We measure deferred tax assets and liabilities using enacted tax rates that will apply in the years in which we expect the temporary differences to be recovered or paid.

Our accounting for deferred tax consequences represents our best estimate of the likely future tax consequences of events that have been recognized in our consolidated financial statements or tax returns and their future probability. In assessing the need for a valuation allowance, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets. If, based on the weight of available evidence, it is more likely than not that the deferred tax assets will not be realized, we record a valuation allowance.

As disclosed in Note 2, we have prospectively adopted the guidance in ASU 2023-09 Improvements to Income Tax Disclosures.
NOTE 10. INCOME TAXES (Continued)

Components of Income Taxes

The components of income taxes excluding other comprehensive income/(loss) and equity in net results of affiliated companies accounted for after-tax for the years ended December 31 were as follows (in millions):

202320242025
Income/(Loss) before income taxes
U.S.$797 $773 $1,763 
Non-U.S.525 881 794 
Total$1,322 $1,654 $2,557 
Provision for/(Benefit from) income taxes
Current
Federal$190 $(43)$(31)
Non-U.S.361 156 155 
State and local10 9 9 
Total current561 122 133 
Deferred
Federal65 239 170 
Non-U.S.(627)37 82 
State and local(1)— (3)
Total deferred(563)276 249 
Total$(2)$398 $382 


Reconciliation of Income Tax

The reconciliation of the Company’s effective tax rate for the years ended December 31 were as follows:

20232024
Reconciliation of the Company’s effective tax rate
U.S. federal statutory tax21.0 %21.0 %
U.S. disregarded entities4.8 0.5 
Non-U.S. tax rate differential(0.9)0.2 
U.S. state and local taxes0.5 0.4 
Nontaxable foreign currency gains and losses(1.5)(0.7)
Dispositions and restructurings (a)(25.9)— 
U.S. tax on non-U.S. earnings— 3.6 
Prior year settlements and claims(0.8)— 
Other2.6 (0.9)
Effective tax rate(0.2)%24.1 %
__________
(a)2023 includes a benefit of $343 million associated with legal entity restructuring within our leasing operations.
NOTE 10. INCOME TAXES (Continued)

2025
Reconciliation of the Company’s provision for/(benefit from) income taxes and effective tax rateAmountPercent
U.S. federal statutory tax$537 21.0 %
Federal
U.S. disregarded entities(225)(8.8)
Effect of cross-border tax laws (a)
Global intangible low-taxed income13 0.5 
Passive Income24 0.9 
Other(21)(0.8)
U.S. state and local taxes (b)6 0.2 
Foreign
Mexico
Non-taxable or nondeductible items(32)(1.3)
Other34 1.3 
United Kingdom
Non-taxable or nondeductible items33 1.3 
Other(3)(0.1)
Other foreign tax effects(11)(0.4)
Changes in unrecognized tax benefits27 1.1 
Total$382 14.9 %
__________
(a)Includes the impact of foreign tax credits.
(b)For the year ended December 31, 2025, the majority of state and local taxes were incurred in California.

Cash Paid for Income Taxes, Net of Refunds

Cash paid for income taxes, net of refunds, for the years ended December 31, 2023 and 2024 was $248 million and $166 million, respectively.

Cash paid for income taxes, net of refunds, for the year ended December 31, 2025 was $92 million. The amounts paid to each jurisdiction were insignificant.
NOTE 10. INCOME TAXES (Continued)

Components of Deferred Tax Assets and Liabilities

The components of deferred tax assets and liabilities at December 31 were as follows (in millions):
20242025
Deferred tax assets
Net operating loss carryforwards$611 $778 
Tax credit carryforwards119 224 
Provision for credit losses99 122 
Other foreign deferred tax assets111 112 
All other 68 56 
Total gross deferred tax assets$1,008 $1,292 
Less: Valuation allowances(45)(67)
Total net deferred tax assets$963 $1,225 
Deferred tax liabilities
Leasing transactions692 867 
Other foreign deferred tax liabilities431 484 
All other26 22 
Total deferred tax liabilities$1,149 $1,373 
Net deferred tax liabilities$186 $148 
Net operating loss carryforwards were $2.9 billion at December 31, 2025. These losses resulted in a deferred tax asset of $778 million, of which $39 million has no expiration date. A substantial portion of the remaining losses will expire beyond 2031. Tax credit carryforwards available to offset future tax liabilities are $224 million. These credits have a remaining carryforward period of twenty years. Tax benefits from net operating loss carryforwards and tax credit carryforwards are evaluated on an ongoing basis, including a review of historical and projected future operating results, the eligible carryforward period, and available tax planning strategies.

At December 31, 2025, we maintained earnings that are considered indefinitely reinvested in operations outside the United States, for which deferred taxes have not been provided. Quantification of the deferred tax liability, if any, associated with these earnings is not practicable.

Other

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31 was as follows (in millions):
20242025
Beginning balance$69 $65 
Increase - tax positions in prior periods14 33 
Decrease - tax positions in prior periods— (4)
Settlements(7)(7)
Lapse of statute of limitations(1)(1)
Foreign currency translation adjustment(10)9 
Ending balance$65 $95 
NOTE 10. INCOME TAXES (Continued)

The amount of unrecognized tax benefits that would affect the effective tax rate if recognized was $65 million and $95 million as of December 31, 2024 and 2025, respectively.

Examinations by tax authorities have been completed through 2008 in Germany; 2014 in the United States; 2017 in Mexico; 2018 in the United Kingdom; and 2019 in Canada. We have settled our United States federal income tax matters related to tax years prior to 2015 in accordance with our intercompany tax sharing agreement.

Net tax-related interest expense on income taxes was $12 million, $3 million, and $9 million for the years ended December 31, 2023, 2024, and 2025, respectively. At December 31, 2024 and 2025, we reported a net tax-related interest payable of $23 million and $42 million, respectively.