v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes
Note 14 – Income Taxes

Our sources of Income before income taxes were as follows:
Year Ended December 31,
(in millions)202520242023
U.S. income$14,018 $14,607 $10,943 
Foreign income263 105 56 
Income before income taxes$14,281 $14,712 $10,999 

Income tax expense is summarized as follows:
Year Ended December 31,
(in millions)202520242023
Current tax expense
Federal$(54)$(57)$(42)
State(295)(179)(28)
Foreign(76)(17)(12)
Total current tax expense(425)(253)(82)
Deferred tax expense
Federal(2,608)(2,743)(2,150)
State(216)(348)(417)
Foreign(40)(29)(33)
Total deferred tax expense(2,864)(3,120)(2,600)
Total income tax expense$(3,289)$(3,373)$(2,682)
The following table summarizes income tax expense and the calculation of the effective income tax rate:
Year Ended December 31, 2025Year Ended December 31, 2024Year Ended December 31, 2023
(in millions, except percentages)Income Tax ExpenseEffective Tax RateIncome Tax ExpenseEffective Tax RateIncome Tax ExpenseEffective Tax Rate
Pre-tax income$14,281 $14,712 $10,999 
Income tax expense3,289 3,373 2,682 
Effective income tax rate23.0 %22.9 %24.4 %
US federal statutory income tax rate2,999 21.0 %3,089 21.0 %2,310 21.0 %
Domestic federal
Tax credits(286)(2.0)%(141)(1.0)%(130)(1.2)%
Non-taxable or non-deductible items(34)(0.2)%35 0.2 %(5)— %
Cross-border tax laws55 0.3 %21 0.2 %19 0.2 %
Changes in valuation allowances(1)— %(14)(0.1)%(12)(0.1)%
Other15 0.1 %(26)(0.2)%(6)— %
Domestic state & local income tax, net of federal income tax effect 421 3.0 %451 3.1 %422 3.8 %
Foreign tax effects67 0.5 %26 0.2 %26 0.2 %
Changes in unrecognized tax benefits53 0.3 %(68)(0.5)%58 0.5 %
Effective income tax rate$3,289 23.0 %$3,373 22.9 %$2,682 24.4 %

In 2025, state and local income taxes in California, Illinois, Iowa, Texas and Wisconsin comprise the majority of the domestic state and local income taxes, net of federal income tax effect category. In 2024, state and local income taxes in California, Florida, Illinois, New Jersey and Texas comprise the majority of that same category. In 2023, state and local income taxes in California, Florida, Illinois, New Jersey, New York and New York City comprise the majority of that same category.

Significant components of deferred income tax assets and liabilities, tax effected, are as follows:
(in millions)December 31,
2025		December 31,
2024
Deferred tax assets
Loss carryforwards$2,537 $3,844 
Lease liabilities7,814 7,781 
Reserves and accruals1,160 958 
Other2,932 3,959 
Deferred tax assets, gross14,443 16,542 
Valuation allowance(240)(259)
Deferred tax assets, net14,203 16,283 
Deferred tax liabilities
Spectrum licenses20,105 19,527 
Property and equipment6,399 5,874 
Lease right-of-use assets6,543 6,508 
Other739 1,074 
Total deferred tax liabilities33,786 32,983 
Net deferred tax liabilities$19,583 $16,700 
Classified on the consolidated balance sheets as:
Deferred tax liabilities$19,583 $16,700 

As of December 31, 2025, we have tax effected federal net operating loss (“NOL”) carryforwards of $1.8 billion, state NOL carryforwards of $1.4 billion and foreign NOL carryforwards of $8 million, expiring through 2045. Federal and certain state NOLs of $1.7 billion generated in and after 2018 do not expire. As of December 31, 2025, our tax effected federal, state and foreign NOL carryforwards for financial reporting purposes were approximately $167 million, $682 million and $8 million, respectively, less than our NOL carryforwards for federal, state and foreign income tax purposes, due to unrecognized tax benefits of the same amount. The unrecognized tax benefit amounts exclude offsetting tax effects of $180 million in other jurisdictions.
As of December 31, 2025, we have research and development, corporate alternative minimum tax, investment and other general business credit carryforwards with a combined value of $648 million for federal income tax purposes, an immaterial amount of which begins to expire in 2042.

As of December 31, 2025, 2024 and 2023, our valuation allowance was $240 million, $259 million and $306 million, respectively. The change from December 31, 2024, to December 31, 2025 primarily related to the release of valuation allowance on state NOLs due to the expiration of those attributes. The change from December 31, 2023, to December 31, 2024 primarily related to a reduction in the valuation allowance against federal and state deferred tax assets resulting from a change in expected utilization of accumulated capital losses.

We file income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. We are currently under examination by various states. Management does not believe the resolution of any of the audits will result in a material change to our financial condition, results of operations or cash flows. The IRS has concluded audits of certain of our federal tax returns, most recently the 2020 tax year; however, NOL and other carryforwards for certain prior periods remain open for examination. U.S. federal, state and foreign examination for years prior to 2006 are generally closed.

A reconciliation of the beginning and ending amount of unrecognized tax benefits were as follows:
Year Ended December 31,
(in millions)202520242023
Unrecognized tax benefits, beginning of year$1,470 $1,477 $1,254 
Gross increases to tax positions in prior periods70 140 19 
Gross decreases to tax positions in prior periods(147)(201)(39)
Gross increases to current period tax positions166 132 256 
Gross decreases due to settlements with taxing authorities(62)(11)— 
Gross decreases due to statute of limitations lapse(18)(67)(13)
Unrecognized tax benefits, end of year$1,479 $1,470 $1,477 

As of December 31, 2025, 2024 and 2023, we had $1.3 billion in unrecognized tax benefits that, if recognized, would affect our annual effective tax rate. Penalties and interest on income tax assessments are included in Selling, general and administrative and Interest expense, respectively, on our Consolidated Statements of Comprehensive Income. The accrued interest and penalties associated with unrecognized tax benefits are insignificant.

Income taxes paid, net of refunds received, were as follows:
Year Ended December 31,
(in millions)202520242023
Federal$97 $113 $10 
State & local
Texas34 27 26 
Illinois42 NM18 
California190 (10)(10)
Other65 40 26 
Total state & local331 57 60 
Foreign
Puerto RicoNMNM35 
Other23 9 3 
Total foreign23 9 38 
Total income taxes paid, net$451 $179 $108 
NM - Not meaningful, the amount of income taxes paid does not meet the 5% disaggregation threshold for reporting.