INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2025

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):


	2023		2024		2025
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 local	10		9		9
Total current	561		122		133
Deferred
Federal	65		239		170
Non-U.S.	(627)		37		82
State and local	(1)		—		(3)
Total deferred	(563)		276		249
Total	$	(2)	$	398	$	382

Schedule of Reconciliation of Income Tax

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


	2023		2024
Reconciliation of the Company’s effective tax rate
U.S. federal statutory tax	21.0	%	21.0	%
U.S. disregarded entities	4.8		0.5
Non-U.S. tax rate differential	(0.9)		0.2
U.S. state and local taxes	0.5		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)		—
Other	2.6		(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 rate	Amount		Percent
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 income	13		0.5
Passive Income	24		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)
Other	34		1.3
United Kingdom
Non-taxable or nondeductible items	33		1.3
Other	(3)		(0.1)
Other foreign tax effects	(11)		(0.4)
Changes in unrecognized tax benefits	27		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.

Schedule of Components of Deferred Tax Assets and Liabilities

The components of deferred tax assets and liabilities at December 31 were as follows (in millions):


	2024		2025
Deferred tax assets
Net operating loss carryforwards	$	611	$	778
Tax credit carryforwards	119		224
Provision for credit losses	99		122
Other foreign deferred tax assets	111		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 transactions	692		867
Other foreign deferred tax liabilities	431		484
All other	26		22
Total deferred tax liabilities	$	1,149	$	1,373
Net deferred tax liabilities	$	186	$	148

Schedule of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31 was as follows (in millions):


	2024		2025
Beginning balance	$	69	$	65
Increase - tax positions in prior periods	14		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)