Income Taxes (Tables)

12 Months Ended

Dec. 31, 2025

Income Tax Disclosure [Abstract]

Income tax expense

Federal and foreign income tax expense consisted of the following:

	Year Ended December 31
$ in millions	2025		2024		2023
Federal income tax expense:
Current	$	298	$	628	$	949
Deferred	555		204		(670)
Total federal income tax expense	853		832		279
Foreign income tax expense:
Current	22		13		15
Deferred	11		(3)		(4)
Total foreign income tax expense	33		10		11
Total federal and foreign income taxes	$	886	$	842	$	290

Income tax reconciliation

Income tax expense differs from the amount computed by multiplying earnings before income taxes by the statutory federal income tax rate due to the following:

$ in millions	Year Ended December 31, 2025
U.S. federal statutory tax rate	$	1,064	21.0	%
Foreign tax effects	15		0.3
Enactment of new tax laws	—		—
Effect of cross-border tax laws:
Foreign derived intangible income, net of reserve	(49)		(1.0)
Other	1		—
Tax credits:
Research and development, net of reserve	(242)		(4.7)
Other	(2)		—
Changes in valuation allowances	—		—
Nontaxable or nondeductible items	11		0.2
Changes in unrecognized tax benefits:
Net interest expense	69		1.4
Other	17		0.3
Other adjustments	2		—
Total federal and foreign income taxes	$	886	17.5	%

	Year ended December 31
$ in millions	2024				2023
Income tax expense at statutory rate	$	1,053	21.0	%	$	493	21.0	%
Research credit	(361)		(7.2)		(210)		(8.9)
Foreign derived intangible income	13		0.3		(63)		(2.7)
Net interest expense	145		2.9		69		2.9
Other, net	(8)		(0.2)		1		0.1
Total federal and foreign income taxes	$	842	16.8	%	$	290	12.4	%

Income taxes paid

Income taxes paid, net of refunds received, consisted of the following:

$ in millions	Year Ended December 31, 2025
Federal	$	412
State and local
California	151
Other	150
Foreign	18
Income taxes paid, net of refunds received	$	731

Unrecognized tax benefit rollforward

The company’s unrecognized tax benefits, excluding accrued interest and penalties of $514 million, $373 million and $305 million as of December 31, 2025, 2024 and 2023, respectively, are presented below:

	December 31
$ in millions	2025		2024		2023
Unrecognized tax benefits at beginning of the year	$	1,447	$	1,994	$	1,663
Additions based on tax positions related to the current year	133		236		276
Additions for tax positions of prior years	125		90		254
Reductions for tax positions of prior years	(15)		(106)		(9)
Settlements with taxing authorities	(2)		(766)		(189)
Decreases from lapse in statutes of limitations	(48)		(1)		(1)
Net change in unrecognized tax benefits	193		(547)		331
Unrecognized tax benefits at end of the year	$	1,640	$	1,447	$	1,994

Components of deferred tax assets and liabilities

The tax effects of temporary differences and carryforwards that gave rise to year-end deferred federal, state and foreign tax balances, as presented in the consolidated statements of financial position, are as follows:

	December 31
$ in millions	2025		2024
Deferred Tax Assets
Capitalized research and experimental expenditures	$	3,473	$	4,816
Accrued employee compensation	378		386
Provisions for accrued liabilities	488		468
Inventory	11		36
Stock-based compensation	45		37
Operating lease liabilities	569		557
Tax credits	829		562
Other	301		241
Gross deferred tax assets	6,094		7,103
Less: valuation allowance	(582)		(526)
Net deferred tax assets	5,512		6,577
Deferred Tax Liabilities
Retiree benefits	409		153
Goodwill	535		534
Purchased intangibles	58		69
Property, plant and equipment, net	983		827
Operating lease right-of-use assets	582		554
Contract accounting differences	1,760		2,714
Other	134		127
Deferred tax liabilities	4,461		4,978
Total net deferred tax assets	$	1,051	$	1,599