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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2024

The components of income tax expense for the years ended December 31 included in the Consolidated Statements of Income were as follows:

TABLE 20.1: COMPONENTS OF INCOME TAX EXPENSE


(Millions)	2024		2023		2022
Current income tax expense:
U.S. federal	$	2,368	$	2,455	$	2,445
U.S. state and local	494		351		339
Non-U.S.	894		662		476
Total current income tax expense	3,756		3,468		3,260
Deferred income tax (benefit) expense:
U.S. federal	(797)		(952)		(763)
U.S. state and local	(146)		(139)		(117)
Non-U.S.	(47)		(238)		(309)
Total deferred income tax (benefit) expense	(990)		(1,329)		(1,189)
Total income tax expense	$	2,766	$	2,139	$	2,071

Effective income tax rate reconciliation

A reconciliation of the U.S. federal statutory rate of 21 percent as of December 31, 2024, 2023 and 2022, to our actual income tax rate was as follows:

TABLE 20.2: RECONCILIATION OF ACTUAL INCOME TAX RATE


	2024		2023		2022
U.S. statutory federal income tax rate	21.0	%	21.0	%	21.0	%
(Decrease) increase in taxes resulting from:
Tax credits and tax-exempt income	(0.7)		(0.7)		(0.9)
State and local income taxes, net of federal benefit	2.5		2.4		3.1
Non-U.S. subsidiaries’ earnings (a)	(1.0)		(0.8)		(0.1)
Tax settlements and lapse of statute of limitations	(0.5)		(2.0)		(2.1)


Valuation allowances	—		0.1		(0.1)
Other	0.2		0.3		0.7
Actual tax rates	21.5	%	20.3	%	21.6	%

(a)In certain jurisdictions outside the United States, we benefit from agreements that temporarily lower our income tax expense. The impact of these agreements was not material to our Consolidated Statements of Income.

Components of deferred tax assets and liabilities

The significant components of deferred tax assets and liabilities as of December 31 are reflected in the following table:

TABLE 20.3: COMPONENTS OF DEFERRED TAX ASSETS AND LIABILITIES


(Millions)	2024		2023
Deferred tax assets:
Reserves not yet deducted for tax purposes	$	4,950	$	4,552
Employee compensation and benefits	343		335
Net operating loss and tax credit carryforwards	464		466
Capitalized developed software	1,084		743
Other	853		723
Gross deferred tax assets	7,694		6,819
Valuation allowance	(655)		(614)
Deferred tax assets after valuation allowance	7,039		6,205
Deferred tax liabilities:
Intangibles and fixed assets	673		683
Deferred revenue	—		62
Deferred interest	113		114

Other	579		566
Gross deferred tax liabilities	1,365		1,425
Net deferred tax assets	$	5,674	$	4,780

Changes in unrecognized tax benefits

The following table presents changes in unrecognized tax benefits:

TABLE 20.4: ROLLFORWARD OF UNRECOGNIZED TAX BENEFITS


(Millions)	2024		2023		2022
Balance, January 1	$	875	$	962	$	1,024
Increases:
Current year tax positions	161		132		119
Tax positions related to prior years	47		40		30

Decreases:
Tax positions related to prior years	(4)		(50)		(30)
Settlements with tax authorities	(39)		(160)		(74)
Lapse of statute of limitations	(21)		(49)		(104)
Effects of foreign currency translations	(13)		—		(3)
Balance, December 31	$	1,006	$	875	$	962