INCOME TAXES

12 Months Ended

Dec. 31, 2025

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Income before income taxes consisted of the following (in millions):

Year Ended December 31,	2025		2024		1	2023		1
United States	$	5,678	$	2,499		$	1,991
International	10,320		10,587			10,961
Total	$	15,998	$	13,086		$	12,952

1The Company reclassified income before income taxes related to its Puerto Rico operations in 2024 and 2023 from United States to International to align with the jurisdictional disaggregation requirements of ASU 2023‑09.

Income taxes consisted of the following (in millions):

	United States		State and Local		International		Total
2025
Current	$	86	$	178	$	2,080	$	2,344
Deferred	220		123		174		517
2024
Current	$	324	$	143	$	1,981	$	2,448
Deferred	(254)		(134)		377		(11)
2023
Current	$	83	$	129	$	2,039	$	2,251
Deferred	(135)		(78)		211		(2)

Net income tax payments after the prospective adoption of ASU 2023-09, as described in Note 1, consisted of the following (in millions):

Year Ended December 31,	2025
United States — federal1	$	1,291
United States — state and local	127
International:
Brazil	238
India	265
Mexico	280
Other foreign	672
Total income taxes paid, net of refunds	$	2,873

1The Company’s U.S. federal payments were reduced by foreign tax credits, general business credits and prior year overpayments. These general business credits include tax credits related to the Company’s investments in limited partnerships constructing, owning and operating alternative energy generation facilities in 2025.

We made income tax payments of $3,262 million and $2,580 million in 2024 and 2023, respectively, which included $964 million and $723 million, respectively, of the one-time transition tax required by the Tax Reform Act. The 2024 amount does not include $6.0 billion paid in relation to invoices the IRS issued for the 2007 through 2009 tax years resulting from the Tax Court’s decision. Refer to Note 12.

In 2025, the Company invested $306 million in limited partnerships that receive tax credits and other tax benefits by constructing, owning and operating alternative energy generation facilities. During 2025, the Company received tax credits and other income tax benefits of $241 million and recognized amortization expense of $224 million related to these investments. The amount of non-income tax-related activity and other returns related to these investments was not material during 2025. As of December 31, 2025, the carrying value of these investments was $32 million. The Company expects to fulfill $32 million of unfunded commitments related to these investments in the first quarter of 2026.

In 2024, the Company invested $226 million in limited partnerships that receive tax credits and other tax benefits by constructing, owning and operating alternative energy generation facilities. During 2024, the Company received tax credits and other income tax benefits of $323 million and recognized amortization expense of $308 million related to these investments. The amount of non-income tax-related activity and other returns related to these investments was not material during 2024. As of December 31, 2024, the carrying value of these investments was $41 million. The Company recorded $123 million of unfunded commitments related to these investments in the line item accounts payable and accrued expenses in our consolidated balance sheet as of December 31, 2024.

Our effective tax rate reflects the tax impact of having significant operations outside the United States, which are generally taxed at rates different than the statutory U.S. federal tax rate. As a result of employment actions and capital investments made by the Company, certain tax jurisdictions provide income tax incentive grants, including Brazil, Costa Rica, Singapore and Eswatini. The terms of these grants expire from 2031 to 2045. We anticipate that we will be able to extend or renew the grants in these locations. The decision of whether we decide to pursue the renewal of these grants and the impact of the grants going forward is dependent on various factors. Tax incentive grants favorably impacted our income tax expense by $383 million, $346 million and $332 million for the years ended December 31, 2025, 2024 and 2023, respectively. In addition, our effective tax rate reflects the benefits of having significant earnings generated in investments accounted for under the equity method.

Also included in our effective tax rate is the tax impact associated with several countries enacting global minimum tax regulations.

The following table reconciles the income tax provision with the amount calculated using the 21.0% U.S. federal statutory rate applied to pretax income, reflecting the adoption of ASU 2023-09 (amounts in millions):

	Year Ended December 31, 2025
	Amount		Percent
Statutory U.S. federal tax rate	$	3,360	21.0	%
State and local income taxes — net of federal benefit1	203		1.3
Foreign tax effects:
Ireland
Tax rate differential	(172)		(1.1)
Other	192		1.2
Puerto Rico
Tax rate differential2	(253)		(1.6)
Other	30		0.2
Other jurisdictions	320		2.0
Effect of cross-border tax laws:
U.S. tax on foreign branches2	167		1.1
Subpart F	(315)		(2.0)
Other	(92)		(0.6)
Tax credits	(176)		(1.1)
Change in unrecognized tax benefits	(204)		(1.3)
Other:
Equity income or loss	(222)		(1.4)
Other	23		0.2
Effective tax rate	$	2,861	17.9	%

1State taxes in California, Florida and Minnesota comprised greater than 50% of the tax effect in this category.

2This tax rate differential is offset in the U.S. tax on foreign branches line item, which reflects the full U.S. income tax expense of the same amount on income earned in Puerto Rico. The U.S. tax on foreign branches line item also includes impacts for other U.S. branches.

The following table provides the disclosures required before adopting ASU 2023-09 and reconciles our effective tax rate with the U.S. federal tax rate:

Year Ended December 31,	2024			2023
Statutory U.S. federal tax rate	21.0	%		21.0	%
State and local income taxes — net of federal benefit	1.1			1.1
Earnings in jurisdictions taxed at rates different from the statutory U.S. federal tax rate	1.0		1	(0.3)
Equity income or loss	(2.6)			(2.1)
Excess tax benefits on stock-based compensation	(0.5)			(0.3)
Other — net	(1.4)			(2.0)		2
Effective tax rate	18.6	%		17.4	%

1Includes net tax expense of $161 million (or a 1.2% impact on our effective tax rate) related to agreed-upon tax issues with certain foreign jurisdictions.

2Includes a net tax benefit of $118 million (or a 0.9% impact on our effective tax rate) related to domestic provision to return adjustments, as well as for various discrete tax items. Also includes a tax benefit of $88 million (or a 0.7% impact on our effective tax rate) associated with the change in the Company’s indefinite reinvestment assertion for our Philippines and Bangladesh bottling operations.

As of December 31, 2025, we have not recorded incremental income taxes for additional outside basis differences in our investments in foreign subsidiaries, as these amounts continue to be indefinitely reinvested in foreign operations.

The Global Intangible Low-Taxed Income (“GILTI”) provisions of the Tax Reform Act require the Company to include in its U.S. income tax return each foreign subsidiary’s earnings in excess of an allowable return on the foreign subsidiary’s tangible

assets. An accounting policy election is available to either account for the tax effects of GILTI in the period that is subject to such taxes or to provide deferred taxes for book and tax basis differences that upon reversal may be subject to such taxes. We have elected to account for the tax effects of these provisions in the period that is subject to such tax and the impact is reflected in our full year provision.

The Company and its subsidiaries file income tax returns in all applicable jurisdictions, including the U.S. federal jurisdiction, U.S. state jurisdictions and foreign jurisdictions. U.S. tax authorities have completed their federal income tax examinations for all years prior to 2007. With respect to U.S. state jurisdictions and foreign jurisdictions, with limited exceptions, the Company and its subsidiaries are no longer subject to income tax audits for years prior to 2007. For U.S. federal and state tax purposes, the net operating losses and tax credit carryovers that were acquired in connection with our acquisition of Coca‑Cola Enterprises Inc.’s former North America business and that were generated from 1990 through 2010 are subject to adjustments until the year in which they are utilized is no longer subject to examination. Although the outcome of tax audits is always uncertain, the Company believes that adequate amounts of tax, including interest and penalties, have been provided for in accordance with the applicable accounting guidance.

We are currently in litigation with the IRS for tax years 2007 through 2009. Refer to Note 12.

As of December 31, 2025, the gross amount of unrecognized tax benefits was $857 million. If the Company were to prevail on all uncertain tax positions, the net effect would be a benefit of $581 million, exclusive of any benefits related to interest and penalties. The remaining $276 million primarily represents tax benefits that would be received in different tax jurisdictions in the event the Company did not prevail on all uncertain tax positions.

A reconciliation of the changes in the gross amount of unrecognized tax benefits is as follows (in millions):

Year Ended December 31,	2025		2024		2023
Balance of unrecognized tax benefits at beginning of year	$	880	$	929	$	926
Increase related to prior period tax positions	19		33		2
Decrease related to prior period tax positions	(46)		(52)		(25)
Increase related to current period tax positions	31		30		32
Decrease related to settlements with taxing authorities	—		(57)		—
Decrease due to lapse of the applicable statute of limitations	(13)		—		(2)
Effect of foreign currency translation	(14)		(3)		(4)
Balance of unrecognized tax benefits at end of year	$	857	$	880	$	929

The Company recognizes interest and penalties related to unrecognized tax benefits in the line item income taxes in our consolidated statement of income. The Company had $708 million, $631 million and $544 million in interest and penalties related to unrecognized tax benefits accrued as of December 31, 2025, 2024 and 2023, respectively. Of these amounts, expense of $77 million, $87 million and $48 million was recognized in 2025, 2024 and 2023, respectively. If the Company were to prevail on all uncertain tax positions, the reversal of this accrual would be a benefit to the Company’s effective tax rate.

The tax effects of temporary differences and carryforwards that give rise to deferred tax assets and liabilities consisted of the following (in millions):

December 31,	2025		2024
Deferred tax assets:
Property, plant and equipment	$	28	$	23
Goodwill and intangible assets	2,204		1,133
Equity method investments (including net foreign currency translation adjustments)	293		503
Derivative financial instruments	403		332
Other liabilities	1,020		2,650
Benefit plans	428		483
Net operating loss, and other carryforwards	534		874
Other	604		325
Gross deferred tax assets	5,514		6,323
Valuation allowances	(388)		(485)
Total deferred tax assets	$	5,126	$	5,838
Deferred tax liabilities:
Property, plant and equipment	$	(869)	$	(777)
Goodwill and intangible assets	(1,571)		(1,750)
Equity method investments (including net foreign currency translation adjustments)	(1,649)		(1,649)
Derivative financial instruments	(459)		(877)
Other liabilities	(228)		(443)
Benefit plans	(454)		(441)
Other1	(1,096)		(1,051)
Total deferred tax liabilities	$	(6,326)	$	(6,988)
Net deferred tax assets (liabilities)	$	(1,200)	$	(1,150)

1Includes deferred tax associated with timing differences related to the IRS Tax Litigation Deposit. Refer to Note 12.

As of December 31, 2025, we had $1,600 million of loss carryforwards available to reduce future taxable income. Loss carryforwards of $340 million must be utilized within the next five years, and the remainder can be utilized over a period greater than five years. In addition, we had $1,096 million of Internal Revenue Code 163(j) interest carryforwards, which will carry forward indefinitely. As of December 31, 2025, we also had foreign tax credit carryforwards of $34 million, which must be utilized within the next ten years.

An analysis of our deferred tax asset valuation allowances is as follows (in millions):

Year Ended December 31,	2025		2024		2023
Balance at beginning of year	$	485	$	396	$	424
Additions	42		141		28
Deductions	(139)		(52)		(56)
Balance at end of year	$	388	$	485	$	396

The Company’s deferred tax asset valuation allowances are primarily the result of uncertainties regarding the future realization of recorded tax benefits on tax loss carryforwards and foreign tax credit carryforwards from operations in various jurisdictions and basis differences in certain equity investments. Current evidence does not suggest that we will realize sufficient taxable income of the appropriate character within the carryforward period to allow us to realize these deferred tax benefits. If we were to identify and implement tax planning strategies to recover these deferred tax assets or generate sufficient income of the appropriate character in these jurisdictions in the future, it could lead to the reversal of these valuation allowances and a reduction of income tax expense. The Company believes that it will generate sufficient future taxable income to realize the tax benefits related to the remaining net deferred tax assets in our consolidated balance sheet.

In 2025, the Company recognized a net decrease of $97 million in its valuation allowances, primarily due to decreases in the deferred tax assets and related valuation allowances associated with the utilization of excess foreign tax credits. The decrease

was partially offset by increases in the deferred tax assets and related valuation allowances on a certain equity method investment and the changes in net operating losses in the normal course of business.

In 2024, the Company recognized a net increase of $89 million in its valuation allowances, primarily due to significant negative evidence on the utilization of excess foreign tax credits. The increase was partially offset by decreases in the deferred tax assets and related valuation allowances on a certain equity method investment and the changes in net operating losses in the normal course of business.

In 2023, the Company recognized a net decrease of $28 million in its valuation allowances, primarily due to net decreases in the deferred tax assets and related valuation allowances on a certain equity method investment, certain excess foreign tax credit carryforwards and the changes in net operating losses in the normal course of business.