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Income Taxes (Note)
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes
The components of International Paper’s earnings from continuing operations before income taxes and equity earnings by taxing jurisdiction were as follows:
 
In millions202420232022
Earnings (loss)
U.S.$(140)$129 $1,469 
Non-U.S.287 253 42 
Earnings (loss) from continuing operations before income taxes and equity earnings (losses)$147 $382 $1,511 
The provision (benefit) for income taxes from continuing operations (excluding noncontrolling interests) by taxing jurisdiction was as follows:
In millions202420232022
Current tax provision (benefit)
U.S. federal$(4)$157 $454 
U.S. state and local20 16 56 
Non-U.S.42 42 27 
 $58 $215 $537 
Deferred tax provision (benefit)
U.S. federal$(367)$(164)$(775)
U.S. state and local(98)3 (39)
Non-U.S.(8)5 41 
 $(473)$(156)$(773)
Income tax provision (benefit)$(415)$59 $(236)

The Company’s deferred income tax provision (benefit) includes a $1 million expense, a $6 million benefit and an $3 million benefit for 2024, 2023 and 2022, respectively, for the effect of various changes in non-U.S. and U.S. federal and state tax rates.

International Paper made income tax payments, net of refunds, of $394 million, $340 million and $345 million in 2024, 2023 and 2022, respectively.
A reconciliation of income tax expense using the statutory U.S. income tax rate compared with the actual income tax provision follows: 

In millions202420232022
Earnings (loss) from continuing
operations before income taxes
and equity earnings		$147 $382 $1,511 
Statutory U.S. income tax rate21 %21 %21 %
Tax expense (benefit) using statutory U.S. income tax rate31 80 317 
State and local income taxes(62)2 44 
Impact of rate differential on non-U.S. permanent differences and earnings(26)(10)1 
Foreign valuation allowance— — 45 
Tax expense (benefit) on exchange of Sylvamo shares— — (56)
Non-taxable income(4)(2)(2)
Non-deductible business expenses21 7 2 
Non-deductible impairments— — 16 
Non-deductible compensation8 7 13 
Tax audits— (4)6 
Timber Monetization Audit Settlement— — (604)
Foreign derived intangible income deduction— 2 (8)
US tax on non-U.S. earnings (GILTI and Subpart F)32 — 27 
Foreign tax credits7 8 8 
General business and other tax credits(31)(38)(43)
Tax expense (benefit) on equity earnings(1)(4)(1)
Legal entity restructuring expense (benefit)(391)4 — 
Other, net1 7 (1)
Income tax provision (benefit)$(415)$59 $(236)
Effective income tax rate(282)%15 %(16)%

The tax effects of significant temporary differences, representing deferred income tax assets and liabilities at December 31, 2024 and 2023, were as follows: 

In millions20242023
Deferred income tax assets:
Postretirement benefit accruals$72 $67 
Pension obligations63 61 
Tax credits183 182 
Net operating and capital loss carryforwards1,181 699 
Compensation reserves224 146 
Lease obligations112 116 
Environmental reserves131 114 
Investments4 — 
Research and development expenditures240 162 
Other203 157 
Gross deferred income tax assets$2,413 $1,704 
Less: valuation allowance (a)(1,201)(848)
Net deferred income tax asset$1,212 $856 
Deferred income tax liabilities:
Intangibles$(133)$(141)
Investments— 3 
Right of use assets(112)(116)
Plants, properties and equipment(1,528)(1,650)
Forestlands, related installment sales, and investment in subsidiary(486)(485)
Gross deferred income tax liabilities$(2,259)$(2,389)
Net deferred income tax liability$(1,047)$(1,533)
(a) The net change in the total valuation allowance for the years ended December 31, 2024 and 2023 was an increase of $353 million and a increase of $171 million, respectively.

Deferred income tax assets and liabilities are recorded in the accompanying consolidated balance sheet under the captions Deferred charges and other assets and Deferred income taxes, respectively. The $486 million of deferred tax liabilities for forestlands, related installment sales, and investment in subsidiary is attributable to a 2007 Temple-Inland installment sale of forestlands (see Note 14 - Variable Interest Entities).

During 2024, the Company completed an internal legal entity restructuring for which a capital loss was recognized for U.S. federal and state income tax purposes resulting in a tax benefit of $416 million. The Company intends to carry back a portion of the loss to prior years and has set up a non-current receivable in the amount of $279 million. The remaining capital loss will be carried forward to offset future capital gains, and, as such, the Company recorded a deferred tax asset in the amount of $137 million for the year ended December 31, 2024.

A reconciliation of the beginning and ending amount of unrecognized tax benefits recorded in Other Liabilities in the accompanying consolidated balance
sheet for the years ended December 31, 2024, 2023 and 2022 is as follows: 

In millions202420232022
Balance at January 1$(173)$(177)$(166)
(Additions) reductions for tax positions related to current year(10)(13)(7)
(Additions) for tax positions related to prior years(40)(11)(10)
Reductions for tax positions related to prior years7 1 3 
Settlements4 17 1 
Expiration of statutes of
limitations		6 11 1 
Currency translation adjustment2 (1)1 
Balance at December 31$(204)$(173)$(177)

If the Company were to prevail on the unrecognized tax benefits recorded, substantially all of the balances at December 31, 2024, 2023 and 2022 would benefit the effective tax rate. Pending audit settlements and the expiration of statutes of limitation are not expected to reduce uncertain tax positions during the next twelve months.

The Company accrues interest on unrecognized tax benefits as a component of interest expense. Penalties, if incurred, are recognized as a component of income tax expense. The Company had approximately $50 million and $34 million accrued for the payment of estimated interest and penalties associated with unrecognized tax benefits at December 31, 2024 and 2023, respectively.

The Company is currently subject to audits in the United States and other taxing jurisdictions around the world. Generally, tax years 2012 through 2023 remain open and subject to examination by the relevant tax authorities. The Company frequently faces challenges regarding the amount of taxes due. These challenges include positions taken by the Company related to the timing, nature, and amount of deductions and the allocation of income among various tax jurisdictions.

On September 3, 2024, the Company received the Unagreed Revenue Agent Report from the Internal Revenue Service relating to investment tax credits for the 2017-2019 years that currently are under examination. The estimated net incremental tax liability associated with the proposed adjustments would be approximately $50 million. The Company disagrees with the proposed adjustments and initiated the administrative appeals process on October 30, 2024 with the filing of our Protest of the proposed adjustments. An unfavorable resolution in the administrative appeals process or future tax litigation could result in cash tax payments and could adversely impact the effective tax rate.
The Organization for Economic Cooperation and Development has proposed a 15% global minimum tax applied on a country-by-country basis (the "Pillar Two rule"), and many countries, including countries in which we operate, have enacted or begun the process of enacting laws adopting the Pillar Two rule. The first component of the Pillar Two rule became effective as of January 1, 2024 and did not have a material impact on the Company’s effective tax rate. The second component is expected to go into effect in 2025.

The Company provides for foreign withholding taxes and any applicable U.S. state income taxes on earnings intended to be repatriated from non-U.S. subsidiaries, which we believe will be limited in the future to each year's current earnings. No provision for these taxes on approximately $1.1 billion of undistributed earnings of non-U.S. subsidiaries as of December 31, 2024 has been made, as these earnings are considered indefinitely invested. Determination of the amount of taxes that might be paid on these undistributed earnings if eventually remitted in a taxable manner is not practicable.

If management decided to monetize the Company’s foreign investments, we would recognize the tax cost related to the excess of the book value over the tax basis of those investments. This would include foreign withholding taxes and any applicable U.S. Federal and state income taxes. Determination of the
tax cost that would be incurred upon monetization of the Company’s foreign investments is not practicable; however, we do not believe it would be material.

The following details the scheduled expiration dates of the Company’s net operating loss and income tax credit and capital loss carryforwards:
 
In millions2025
Through
2034		2035
Through
2044		IndefiniteTotal
U.S. federal and non-U.S. NOLs$3 $603 $397 $1,003 
State taxing jurisdiction NOLs (a)28 9 — 37 
U.S. federal, non-
U.S. and state tax credit carryforwards (a)		73 14 96 183 
U.S. federal and state capital loss carryforwards (a)141 — — 141 
Total$245 $626 $493 $1,364 
Less: valuation allowance (a)(58)(612)(449)(1,119)
Total, net$187 $14 $44 $245 
(a) State amounts are presented net of federal benefit.