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INCOME TAXES
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Income Tax Provision

Components of income tax provision
Year Ended December 31,
(in millions)202520242023
Current tax provision:
Federal$(10)$— $— 
State and local(17)(35)(8)
International(44)(11)(11)
Deferred tax provision:
Federal(970)(1,038)(896)
State and local(139)(117)(84)
Income tax provision$(1,180)$(1,201)$(999)
The following table presents the principal reasons for the difference between the effective tax rate and the U.S. federal statutory income tax rate:

Reconciliation of statutory federal income tax rate to the effective income tax rate
Year Ended December 31,
202520242023
(in millions, except for percentages)AmountPercentAmountPercentAmountPercent
U.S. federal statutory income tax rate$1,299 21.0 %$978 21.0 %$1,178 21.0 %
State and local income tax, net of federal income tax effect(1)
123 2.0 115 2.5 112 2.0 
Nontaxable or nondeductible items41 0.7 59 1.3 46 0.8 
Changes in valuation allowances(272)(4.4)89 1.9 (274)(4.9)
Other(11)(0.2)(40)(0.9)(63)(1.1)
Effective income tax rate$1,180 19.1 %$1,201 25.8 %$999 17.8 %
(1)New York City, New York, Georgia and California make up the majority (greater than 50%) of the tax effect in this category in 2024 and 2025. Georgia, New York City, New York and New Jersey make up the majority (greater than 50%) of the tax effect in this category in 2023.

Taxes paid across all jurisdictions were immaterial for all periods presented.

Deferred Taxes

We account for deferred income taxes under the asset and liability method. We recognize deferred tax assets and liabilities based on the tax effects of temporary differences between the financial statement and tax basis of assets and liabilities, as measured by current enacted tax rates. Deferred tax assets and liabilities are net by jurisdiction and are recorded as noncurrent on the balance sheets.

We have elected to recognize Global Intangible Low-Taxed Income ("GILTI") in the period it arises and do not recognize deferred taxes for basis differences that may reverse in future years.

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes.
Significant components of deferred income tax assets and liabilities
December 31,
(in millions)20252024
Deferred tax assets:
Net operating loss carryforwards$694 $799 
Pension, postretirement and other benefits916 1,205 
Investments593 936 
Deferred revenue2,254 2,158 
Lease liabilities2,660 2,816 
Other488 608 
Valuation allowance(643)(951)
Total deferred tax assets$6,962 $7,571 
Deferred tax liabilities:
Depreciation$7,839 $7,040 
Operating lease assets1,264 1,369 
Intangible assets1,188 1,165 
Other114 78 
Total deferred tax liabilities$10,405 $9,652 
Balance Sheet Position:
Other noncurrent assets$1 $95 
Deferred income taxes, net3,444 2,176 
Net deferred tax liabilities
$3,443 $2,081 

Valuation Allowance

A valuation allowance is recorded to reduce deferred tax assets when necessary. We periodically assess whether it is more likely than not that we will generate sufficient taxable income to realize our deferred income tax assets. We establish valuation allowances if it is more likely than not that we will be unable to realize our deferred income tax assets. In making this determination, we consider available positive and negative evidence and make certain assumptions. We consider, among other things, projected future taxable income, scheduled reversals of deferred tax liabilities, the overall business environment, our historical financial results and tax planning strategies.

At December 31, 2025 our net deferred tax liability balance was $3.4 billion, including a $643 million valuation allowance primarily related to certain net realized and unrealized capital losses and certain state net operating losses.

As of December 31, 2025, we had approximately $2.4 billion of U.S. federal pre-tax net operating loss carryforwards which we are expecting to utilize during 2026. These net operating loss carryforwards were primarily generated in 2020 and do not expire. Therefore, we have not recorded a valuation allowance on our deferred tax assets other than the certain net realized and unrealized capital losses and certain state net operating losses that have short expiration periods.

The following table presents the balance of our valuation allowance on our deferred income tax assets and the associated activity:

Valuation allowance activity
(in millions)20252024
Balance at January 1$951 $877 
Tax provision(308)74 
Balance at December 31$643 $951 
Other

The amount of, and changes to, our uncertain tax positions were not material in any of the years presented. We are currently under audit by the IRS for the 2025 and 2024 tax years.

On July 4, 2025, the One Big Beautiful Bill Act was signed into law. The legislation did not have a material impact on our income tax expense or effective income tax rate for the year ended December 31, 2025.