Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

INCOME TAXES

Domestic and foreign components of the income (loss) from continuing operations before income taxes and the provision for (benefit from) current and deferred tax expense (benefit) are shown below:

Geographic Allocation of Income (Loss) and Provision for (Benefit from) Income Taxes	For the Year Ended December 31,
(In millions)	2024		2023		2022
Income (loss) from continuing operations before income taxes
Domestic	$	324	$	(414)	$	(1)
Foreign	951		1,507		1,427
Income (loss) from continuing operations before income taxes	$	1,275	$	1,093	$	1,426
Current tax expense (benefit)
Federal	$	285	$	143	$	65
State and local	45		40		21
Foreign	447		407		403
Total current tax expense (benefit)	$	777	$	590	$	489
Deferred tax expense (benefit)
Federal	$	(300)	$	(326)	$	(170)
State and local	(28)		(50)		(39)
Foreign	(37)		(62)		(70)
Total deferred tax expense (benefit)	$	(365)	$	(438)	$	(279)
Provision for (benefit from) income taxes on continuing operations	412		152		210
Net income (loss) from continuing operations after taxes	$	863	$	941	$	1,216

The effective income tax rate applicable to income (loss) from continuing operations before income taxes was different from the statutory U.S. federal income tax rate due to the factors listed in the following table:

Reconciliation to U.S. Statutory Rate	For the Year Ended December 31,
	2024		2023		2022
Statutory U.S. federal income tax rate	21.0	%	21.0	%	21.0	%
Effective tax rates on international operations - net1,6	4.8		(1.8)		(1.0)
Acquisitions, divestitures and ownership restructuring activities2	(1.1)		3.6		(5.4)
U.S. research and development credit	(4.7)		(5.9)		(2.2)
Exchange gains/losses3	1.7		2.0		3.7
State and local incomes taxes - net	1.3		0.9		0.3
Impact of Swiss Tax Changes4	—		(7.9)		—
Excess tax benefits/deficiencies from stock compensation	(0.2)		(0.5)		(0.7)
Tax settlements and expiration of statute of limitations	(1.7)		(0.3)		0.1
Impact of Brazil valuation allowance6, 7	9.4		—		(2.5)
Repatriation of foreign earnings5	1.7		2.9		1.7
Other – net	0.1		(0.1)		(0.3)
Effective tax rate on income from continuing operations	32.3	%	13.9	%	14.7	%

1.    Includes the effects of local and U.S. taxes related to earnings of non-U.S. subsidiaries, changes in the amount of unrecognized tax benefits associated with these earnings, losses at non-U.S. subsidiaries without local tax benefits due to valuation allowances, and other permanent differences between tax and U.S. GAAP results.

2.     Includes net tax charge of $46 million for the year ended December 31, 2023, associated with intellectual property realignment. Includes net tax benefits of $(55) million and $(42) million for the year ended December 31, 2022, related to deferred tax assets established upon change in a U.S. entity's tax characterization, and a worthless stock deduction on Company's investment in a subsidiary after a change in the entity's legal structure, respectively.

3.    Principally reflects the impact of foreign exchange gains and losses on net monetary assets for which no corresponding tax impact is realized. Further information about the company's foreign currency hedging program is included in Note 7 - Supplementary Information, and Note 20 - Financial Instruments, under the heading Foreign Currency Risk.

4. Includes net tax benefits of $(62) million and $(24) million for the year ended December 31, 2023, related to changes in deferred taxes and a tax currency change, respectively.

5. Includes the effect of withholding tax on distribution of foreign earnings to the U.S., net of U.S. foreign tax credits.

6. Classification in "Effective tax rates on international operations-net" and "Impact of Brazil valuation allowance" for the year ended December 31, 2022 have been adjusted from their previous presentation to conform to the current year's presentation.

7. For the year ended December 31, 2024, a charge of $120 million was recorded to establish a valuation allowance against the net deferred tax asset position of

a legal entity in Brazil (Seed business). For the year ended December 31, 2022, a benefit of $(36) million was recorded to release a valuation allowance against the net deferred tax asset position of a legal entity in Brazil (Crop Protection business).

Significant components of the company's net deferred tax asset (liability) were attributable to:

Deferred Tax Balances at December 31,	2024				2023
(In millions)	Assets		Liabilities		Assets		Liabilities
Property	$	—	$	278	$	—	$	353
Operating loss and tax credit carryforwards1	552		—		539		—
Accrued employee benefits	671		—		703		—
Other accruals and reserves	590		—		603		—
Intangibles	—		1,950		—		2,153
Inventory	184		—		193		—
Research and development capitalization	761		—		607		—
Investments	69		—		39		—
Unrealized exchange gains/losses	—		50		—		38
Other – net	40		—		55		—
Subtotal	$	2,867	$	2,278	$	2,739	$	2,544
Valuation allowances2	(666)		—		(510)		—
Total	$	2,201	$	2,278	$	2,229	$	2,544
Net deferred tax asset (liability)	$	(77)			$	(315)

1.    Primarily related to tax loss and credit carryforwards from operations in the United States, Argentina, Brazil, Switzerland, and Spain.

2.    During the year ended December 31, 2024, the company established a valuation allowance recorded against the net deferred tax asset position of a legal entity in Brazil.

Details of the company’s operating loss and tax credit carryforwards are shown in the following table:

Operating Loss and Tax Credit Carryforwards	Deferred Tax Asset
(In millions)	2024		2023
Operating loss carryforwards
Expire within 5 years	$	222	$	103
Expire after 5 years or indefinite expiration	226		303
Total operating loss carryforwards	$	448	$	406
Tax credit carryforwards
Expire within 5 years	$	13	$	59
Expire after 5 years or indefinite expiration	91		74
Total tax credit carryforwards	$	104	$	133
Total operating loss and tax credit carryforwards	$	552	$	539

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:

Total Gross Unrecognized Tax Benefits	For the Year Ended December 31,
(In millions)	2024		2023		2022
Total unrecognized tax benefits as of beginning of period	$	390	$	357	$	377
Decreases related to positions taken on items from prior years	(4)		—		(3)
Increases related to positions taken on items from prior years	13		23		4
Increases related to positions taken in the current year	12		16		11
Settlement of uncertain tax positions with tax authorities	(140)		(4)		(24)
Decreases due to expiration of statutes of limitations	(5)		(2)		(5)
Exchange (gain) loss	(3)		—		(3)
Total unrecognized tax benefits as of end of period	$	263	$	390	$	357
Total unrecognized tax benefits that, if recognized, would impact the effective tax rate	$	176	$	173	$	139
Total amount of interest and penalties (benefits) recognized in provision for (benefit from) income taxes on continuing operations	$	(4)	$	1	$	1
Total accrual (receivable) for interest and penalties associated with unrecognized tax benefits at end of period	$	(2)	$	11	$	13

Each year the company files hundreds of tax returns in the various national, state and local income taxing jurisdictions in which it operates. These tax returns are subject to examination and possible challenge by the tax authorities. Positions challenged by the tax authorities may be settled or appealed by the company. As a result, there is an uncertainty in income taxes recognized in the company's financial statements in accordance with accounting for income taxes and accounting for uncertainty in income taxes. It is reasonably possible that changes to the company’s global unrecognized tax benefits could be significant; however, due to the uncertainty regarding the timing of completion of audits and possible outcomes, a current estimate of the range of increases or decreases that may occur within the next twelve months cannot be made. As of December 31, 2024 and 2023, the company has made cumulative advance deposits of $100 million and $90 million, respectively, to a foreign taxing authority, partially as a prerequisite to petition the court related to an open tax examination. These payments are accounted for as a prepaid asset, included in other assets in the Consolidated Balance Sheets.

Tax years that remain subject to examination for the company’s major tax jurisdictions are shown below:

Tax Years Subject to Examination by Major Tax Jurisdiction at December 31, 2024	Earliest Open Year
Jurisdiction
Argentina	2017
Brazil	2015
Canada	2017
China	2014
France	2021
India	2023
Italy	2019
Spain	2020
Switzerland	2020
United States:
Federal income tax	2012
State and local income tax	2012

Undistributed earnings of foreign subsidiaries and related companies that are deemed to be indefinitely invested amounted to $2,706 million at December 31, 2024. Distributions of profits from non-U.S. subsidiaries are subject to certain taxes upon repatriation, primarily where foreign withholding taxes apply; these taxes are partially offset by U.S. foreign tax credits. The company is asserting indefinite reinvestment related to certain investments in foreign subsidiaries. Determination of the amount of unrecognized deferred tax liability related to indefinitely reinvested profits is not feasible primarily due to our legal entity structure and the complexity of U.S. and local tax laws.

For periods between the Merger on August 31, 2017, and the Corteva Distribution, Corteva and its subsidiaries were included in DowDuPont's consolidated federal income tax group and consolidated tax return. Generally, the consolidated tax liability of the DowDuPont U.S. tax group for each year was apportioned among the members of the consolidated group based on each member’s separate taxable income. Corteva, DuPont and Dow intend that to the extent federal and/or state corporate income tax liabilities are reduced through the utilization of tax attributes of the other, settlement of any receivable and payable generated from the use of the other party’s sub-group attributes will be in accordance with a tax sharing agreement and/or Tax Matters Agreement. See Note 16 - Commitments and Contingent Liabilities, to the Consolidated Financial Statements for further information related to indemnifications between Corteva, DuPont and Dow.

On August 16, 2022, the U.S. federal government enacted the Inflation Reduction Act of 2022 (“the Act”). The Act includes tax provisions, among other things, which implement (i) a 15 percent minimum tax on book income of certain large corporations; (ii) a one percent excise tax on net stock repurchases; and (iii) several tax incentives to promote clean energy. The Act did not have a material impact on the company’s financial position, results of operations or cash flows.

In December 2021, the Organization for Economic Cooperation and Development ("OECD") released the Pillar Two Model rules (also referred to as the global minimum tax or Global Anti-Base Erosion "GloBE" rules), which were designed to ensure multinational enterprises pay a certain level of tax within every jurisdiction they operate. Several jurisdictions in which we operate have enacted these rules, with a January 1, 2024 effective date. For the year ended December 31, 2024, there is no material tax charge associated with these rules. The company will continue to monitor and evaluate legislative developments.