Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

15.    INCOME TAXES

Income Statement Components

Income before income tax expense was as follows (in millions):

	Year Ended December 31,
	2024		2023		2022
U.S. operations	$	2,685	$	9,335	$	11,716
Foreign operations	1,013		2,433		3,591
Income before income tax expense	$	3,698	$	11,768	$	15,307

Statutory income tax rates applicable to the countries in which we operate were as follows:

	Year Ended December 31,
	2024		2023		2022
U.S.	21	%	21	%	21	%
Canada	15	%	15	%	15	%
U.K. (a)	25	%	25	%	19	%
Ireland	13	%	13	%	13	%
Peru	30	%	30	%	30	%
Mexico	30	%	30	%	30	%

________________________

(a)Statutory income tax rate was increased to 25 percent effective April 1, 2023.

The following is a reconciliation of income tax expense computed by applying statutory income tax rates to actual income tax expense (dollars in millions):

	U.S.				Foreign				Total
	Amount		Percent		Amount		Percent		Amount		Percent
Year ended December 31, 2024
Income tax expense at statutory rates	$	564	21.0	%	$	142	14.0	%	$	706	19.1	%
U.S. state and Canadian provincial tax expense, net of federal income tax effect	19		0.7	%	101		10.0	%	120		3.2	%
Permanent differences	(83)		(3.1)	%	2		0.2	%	(81)		(2.2)	%
GILTI tax	79		2.9	%	—		—	%	79		2.1	%
Foreign tax credits	(59)		(2.2)	%	—		—	%	(59)		(1.5)	%
Biofuels tax credits (a)	(101)		(3.7)	%	—		—	%	(101)		(2.7)	%
Repatriation withholding tax	57		2.1	%	—		—	%	57		1.5	%
Tax effects of income associated with noncontrolling interests	(50)		(1.8)	%	(6)		(0.6)	%	(56)		(1.5)	%
Valuation allowance	—		—	%	57		5.6	%	57		1.5	%
Other, net	(37)		(1.4)	%	7		0.7	%	(30)		(0.8)	%
Income tax expense	$	389	14.5	%	$	303	29.9	%	$	692	18.7	%

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(a)As permitted under Section 40(b) of the Internal Revenue Code of 1986, as amended (the Code), producers of second-generation biofuels that are registered with the Internal Revenue Service (IRS) are eligible for an income tax credit of up to $1.01 per gallon of qualified biofuel that was produced and sold in the U.S. through December 31, 2024. We recorded a gross tax benefit in December 2024 related to these tax credits for the cellulosic ethanol produced by our Ethanol segment from 2020 through 2024.

	U.S.				Foreign				Total
	Amount		Percent		Amount		Percent		Amount		Percent
Year ended December 31, 2023
Income tax expense at statutory rates	$	1,960	21.0	%	$	449	18.5	%	$	2,409	20.5	%
U.S. state and Canadian provincial tax expense, net of federal income tax effect	114		1.2	%	161		6.6	%	275		2.3	%
Permanent differences	(87)		(0.9)	%	(18)		(0.7)	%	(105)		(0.9)	%
GILTI tax	167		1.8	%	—		—		167		1.4	%
Foreign tax credits	(149)		(1.6)	%	—		—		(149)		(1.3)	%
Repatriation withholding tax	45		0.5	%	—		—		45		0.4	%
Tax effects of income associated with noncontrolling interests	(84)		(0.9)	%	30		1.2	%	(54)		(0.4)	%
Other, net	8		—	%	23		0.9	%	31		0.3	%
Income tax expense	$	1,974	21.1	%	$	645	26.5	%	$	2,619	22.3	%
Year ended December 31, 2022
Income tax expense at statutory rates	$	2,460	21.0	%	$	611	17.0	%	$	3,071	20.1	%
U.S. state and Canadian provincial tax expense, net of federal income tax effect	182		1.6	%	255		7.1	%	437		2.8	%
Permanent differences	(61)		(0.5)	%	(16)		(0.5)	%	(77)		(0.5)	%
GILTI tax	413		3.5	%	—		—		413		2.7	%
Foreign tax credits	(396)		(3.4)	%	—		—		(396)		(2.6)	%
Repatriation withholding tax	51		0.4	%	—		—		51		0.3	%
Tax effects of income associated with noncontrolling interests	(78)		(0.7)	%	25		0.7	%	(53)		(0.3)	%
Other, net	(27)		(0.2)	%	9		0.3	%	(18)		(0.1)	%
Income tax expense	$	2,544	21.7	%	$	884	24.6	%	$	3,428	22.4	%

Components of income tax expense were as follows (in millions):

	U.S.		Foreign		Total
Year ended December 31, 2024
Current:
Country	$	464	$	180	$	644
U.S. state / Canadian provincial	37		98		135
Total current	501		278		779
Deferred:
Country	(99)		23		(76)
U.S. state / Canadian provincial	(13)		2		(11)
Total deferred	(112)		25		(87)
Income tax expense	$	389	$	303	$	692
Year ended December 31, 2023
Current:
Country	$	1,804	$	415	$	2,219
U.S. state / Canadian provincial	157		140		297
Total current	1,961		555		2,516
Deferred:
Country	25		69		94
U.S. state / Canadian provincial	(12)		21		9
Total deferred	13		90		103
Income tax expense	$	1,974	$	645	$	2,619
Year ended December 31, 2022
Current:
Country	$	2,147	$	766	$	2,913
U.S. state / Canadian provincial	153		312		465
Total current	2,300		1,078		3,378
Deferred:
Country	164		(138)		26
U.S. state / Canadian provincial	80		(56)		24
Total deferred	244		(194)		50
Income tax expense	$	2,544	$	884	$	3,428

Income Taxes Paid

Income taxes paid to U.S. and foreign taxing authorities were as follows (in millions):

	Year Ended December 31,
	2024		2023		2022
U.S.	$	701	$	2,158	$	2,396
Foreign	142		1,336		892
Income taxes paid, net	$	843	$	3,494	$	3,288

Deferred Income Tax Assets and Liabilities

The tax effects of significant temporary differences representing deferred income tax assets and liabilities were as follows (in millions):

	December 31,
	2024		2023
Deferred income tax assets:
Tax credit carryforwards	$	858	$	809
Net operating losses (NOLs)	689		710
Inventories	197		237
Finance lease obligations	317		314
Operating lease liabilities	502		519
Other	195		221
Total deferred income tax assets	2,758		2,810
Valuation allowance	(1,484)		(1,383)
Net deferred income tax assets	1,274		1,427
Deferred income tax liabilities:
Property, plant, and equipment	4,875		5,121
Deferred turnaround costs	450		399
Operating lease ROU assets	467		546
Investments	417		423
Other	332		287
Total deferred income tax liabilities	6,541		6,776
Net deferred income tax liabilities	$	5,267	$	5,349

We had the following income tax credit and loss carryforwards as of December 31, 2024 (in millions):

	Amount		Expiration
U.S. state income tax credits (gross amount)	$	79	2025 through 2039
U.S. state income tax credits (gross amount)	2		Unlimited
U.S. foreign tax credits	794		2027 through 2034
U.S. state income tax NOLs (gross amount)	12,071		2025 through 2040
Foreign NOLs (gross amount)	82		2029 through 2034
Foreign NOLs (gross amount)	174		Unlimited

We have recorded a valuation allowance as of December 31, 2024 and 2023 due to uncertainties related to our ability to utilize some of our deferred income tax assets associated with our U.S. foreign tax credits, certain U.S. state income tax credits, certain foreign deferred tax assets, and certain NOLs before they expire. The valuation allowance is based on our estimates of future taxable income in the various jurisdictions in which we operate and the period over which deferred income tax assets will be recoverable. The valuation allowance increased by $101 million in 2024 due to the generation of foreign tax credits, foreign NOLs, and other foreign deferred tax assets that cannot be realized.

Unrecognized Tax Benefits

Changes in Unrecognized Tax Benefits

The following is a reconciliation of the changes in unrecognized tax benefits, excluding related interest and penalties (in millions):

	Year Ended December 31,
	2024		2023		2022
Balance as of beginning of year	$	186	$	284	$	816
Additions for tax positions related to the current year	52		18		27
Additions for tax positions related to prior years	106		4		19
Reductions for tax positions related to prior years	(19)		(73)		(573)
Reductions for tax positions related to the lapse of applicable statute of limitations	(7)		(9)		(5)
Settlements	(2)		(38)		—
Balance as of end of year	$	316	$	186	$	284

As of December 31, 2024 and 2023, there was $236 million and $126 million, respectively, of unrecognized tax benefits that if recognized would reduce our annual effective tax rate.

Interest and penalties incurred during the years ended December 31, 2024, 2023, and 2022 were not material. Accrued interest and penalties as of December 31, 2024 and 2023 were not material.

Although reasonably possible, we do not anticipate that any of our tax audits will be resolved during the next 12 months that would result in a reduction in our liability for unrecognized tax benefits either due to our tax positions being sustained or due to our agreement to their disallowance. Should any reductions occur, we do not expect that they would have a material impact on our financial statements because such reductions would not materially affect our annual effective tax rate.

Tax Returns Under Audit

U.S. Federal

In 2023, we settled the audits related to our U.S. federal income tax returns for 2012 through 2015, with the exception of one issue regarding the timing of deductibility of certain costs at our refineries. During 2024, we filed formal claims for refund with the IRS for this disagreed-upon issue. The settlement related to these audits resulted in a favorable reduction in our unrecognized tax benefits.

As of December 31, 2024, our U.S. federal income tax returns for 2017 through 2020 were under audit by the IRS. We continue to work with the IRS to resolve these audits and we believe that they will be resolved for amounts consistent with our recorded amounts of unrecognized tax benefits associated with these audits.

U.S. State

As of December 31, 2024, our California tax returns for 2011 through 2016 were under audit by the state of California. During 2024, we settled the audits related to our California income tax returns for 2017 through 2019 for amounts consistent with our recorded amounts for unrecognized tax benefits. We do not expect the ultimate disposition of the remaining audits will result in a material change to our financial position, results of operations, or liquidity. We believe these audits will be resolved for amounts consistent with our recorded amounts for unrecognized tax benefits associated with these audits.

Foreign

As of December 31, 2024, certain of our Canadian subsidiaries’ federal tax returns for 2013 through 2015 and 2017 through 2022 were under audit by the Canada Revenue Agency and our Quebec provincial tax returns for 2013 through 2015 and 2017 through 2018 were under audit by Revenue Quebec. As of December 31, 2024, the 2020 tax return for one of our Mexican subsidiaries was under audit by Servicio de Administración Tributaria, and we are protesting proposed adjustments for this tax return. We do not expect the ultimate disposition of these audits or inquiries will result in a material change to our financial position, results of operations, or liquidity.

Other Disclosures

Undistributed Earnings of Foreign Subsidiaries

As of December 31, 2024, the cumulative undistributed earnings of our foreign subsidiaries that is considered permanently reinvested in the relevant foreign countries were $6.0 billion. This amount excludes $1.2 billion of earnings that are no longer considered permanently reinvested. We are able to distribute cash via a dividend from our foreign subsidiaries with a full dividend received deduction in the U.S. However, there is a cost to repatriate the undistributed earnings of certain of our foreign subsidiaries to us, including, but not limited to, withholding taxes imposed by certain foreign jurisdictions, U.S. state income taxes, and U.S. federal income tax on foreign exchange gains. We have accrued $59 million of withholding and other taxes on the $1.2 billion of earnings previously noted, but it is not practicable to estimate the amount of additional tax that would be payable on the undistributed earnings that are considered permanently reinvested.

Repatriation Tax Liability

Our repatriation tax liability relates to our recognition of a one-time transition tax on the deemed repatriation of previously undistributed accumulated earnings and profits of our foreign subsidiaries and was previously included in other long-term liabilities. This transition tax, which is reflected in income taxes payable as of December 31, 2024 (see Note 8), will be remitted to the IRS over the eight-year period provided in the Code, with the final installment due in 2025.