INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2025

Schedule of Income Taxes Excluding Other Comprehensive Income/(Loss), and Equity in Net

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.	$	3,395	$	3,424	$	(11,550)
Non-U.S.	572		3,809		(280)
Total	$	3,967	$	7,233	$	(11,830)
Provision for/(Benefit from) income taxes
Current
Federal	$	62	$	78	$	71
Non-U.S.	948		791		701
State and local	229		107		99
Total current	1,239		976		871
Deferred
Federal	(413)		25		(1,405)
Non-U.S.	(1,149)		303		(2,630)
State and local	(39)		35		(504)
Total deferred	(1,601)		363		(4,539)
Total	$	(362)	$	1,339	$	(3,668)

Schedule of Effective Income Tax Rate Reconciliation

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


Reconciliation of the Company’s effective tax rate	2023		2024
U.S. federal statutory tax	21.0	%	21.0	%
Non-U.S. tax rate differential	(3.4)		2.9
U.S. state and local taxes	1.9		1.7
General business credits	(15.9)		(5.9)

Dispositions and restructurings (a)	(14.7)		—
U.S. tax on non-U.S. earnings	7.7		(0.2)
Prior year settlements and claims	1.2		0.1
Tax incentives	(3.9)		(2.2)
Enacted change in tax laws	0.1		0.4
Valuation allowances	(0.7)		(1.0)
Other	(2.4)		1.7
Effective tax rate	(9.1)	%	18.5	%

__________

(a)2023 includes benefits of $610 million associated with legal entity restructuring within our leasing operations and China.

NOTE 7. 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		$	(2,484)	21.0	%
Federal
Effect of cross-border tax laws (a)
Flow-through operations		1,313		(11.1)
Other		(46)		0.4
Tax Credits
Research and development		(341)		2.9
Changes in valuation allowances		7		(0.1)
Nontaxable or nondeductible items		23		(0.2)
Other		18		(0.2)
U.S. state and local taxes (b)		(321)		2.7
Foreign
Brazil
Change in valuation allowances		(2,809)		23.7
Other		145		(1.2)
Germany
Effect of changes in tax laws or rates		592		(5.0)
Other		82		(0.7)
India
Change in valuation allowances		(362)		3.1
Other		13		(0.1)
Mexico
Non-U.S. tax rate differential		(128)		1.1
Other		18		(0.2)
Other foreign tax effects		80		(0.6)
Changes in unrecognized tax benefits		532		(4.5)
Total		$	(3,668)	31.0	%

__________

(a) Includes the impact of foreign tax credits.

(b) For the year ended December 31, 2025, the majority of taxes were incurred in California; New Jersey; Louisville, Kentucky; Michigan; Wisconsin; Illinois; and Maryland.

Schedule of Cash Paid for Income Taxes, Net of Refunds

Cash paid for income taxes, net of refunds, for the year ended December 31, 2025, were as follows (in millions):


	2025
Cash paid for income taxes, net of refunds
U.S. federal	$	52
U.S. state and local	42
Foreign
Mexico	158
Other (a)	370
Total	$	622

__________

(a) Includes payments to numerous jurisdictions that are individually insignificant.

Supplemental cash flow information related to leases for the years ended December 31 was as follows (in millions):


	2023		2024		2025
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	581	$	663	$	751
Operating cash flows from finance leases	32		39		46
Financing cash flows from finance leases	91		110		135
Right-of-use assets obtained in exchange for lease liabilities
Operating leases	$	889	$	1,051	$	723
Finance leases	165		286		185

Schedule 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	$	7,458	$	7,196
Tax credit carryforwards	7,993		7,500
Research expenditures	4,873		5,184
Dealer and dealers’ customer allowances and claims	3,498		4,088
Employee benefit plans	2,010		1,906
Other foreign deferred tax assets	2,691		3,418
All other	1,995		3,031
Total gross deferred tax assets	30,518		32,323
Less: Valuation allowances	(3,856)		(628)
Total net deferred tax assets	26,662		31,695
Deferred tax liabilities
Leasing transactions	3,523		2,718
Depreciation and amortization (excluding leasing transactions)	3,590		1,855
Flow-through operations	891		2,370
Other foreign deferred tax liabilities	1,381		2,066
All other	1,976		2,087
Total deferred tax liabilities	11,361		11,096
Net deferred tax assets	$	15,301	$	20,599

Schedule of Unrecognized Tax Benefits

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


	2024		2025
Beginning balance	$	2,913	$	2,540
Increase – tax positions in prior periods	512		506
Increase – tax positions in current period	11		8
Decrease – tax positions in prior periods	(775)		(350)
Settlements	(13)		(7)
Lapse of statute of limitations	(5)		(3)
Foreign currency translation adjustment	(103)		147
Ending balance	$	2,540	$	2,841