Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The following table summarizes income before income taxes and equity income:

	Years Ended December 31,
	2024		2023		2022
U.S. income (loss)	$	2,407	$	2,417	$	3,499
Non-U.S. income (loss)	494		430		404
Income (loss) before income taxes and equity income (loss)	$	2,901	$	2,847	$	3,903

	Years Ended December 31,
Income Tax Expense	2024		2023		2022
Current income tax expense (benefit)
U.S. federal	$	(525)	$	341	$	342
U.S. state and local	102		144		85
Non-U.S.	146		91		80
Total current income tax expense (benefit)	(277)		576		507
Deferred income tax expense (benefit)
U.S. federal	994		112		322
U.S. state and local	45		24		85
Non-U.S.	22		28		77
Total deferred income tax expense (benefit)	1,061		165		484
Total income tax provision (benefit)	$	784	$	741	$	992

We have foreign subsidiaries with cumulative undistributed earnings that are indefinitely reinvested. Accordingly, no provision for U.S. income tax has been provided, and the unrecognized deferred tax liability is insignificant. An estimate of the undistributed earnings is $713 million and $454 million at December 31, 2024 and 2023.

A reconciliation between the U.S. federal statutory tax rate and the effective tax rate is as follows:

	Years Ended December 31,
	2024		2023		2022
U.S. federal statutory tax rate	21.0	%	21.0	%	21.0	%
Non-U.S. income taxed at other than the U.S. federal statutory rate	1.8		1.1		0.9
State and local income taxes	3.5		3.6		3.2
U.S. tax on non-U.S. earnings	0.9		3.8		0.3
Valuation allowance	—		(2.9)		0.3
Other	(0.1)		(0.6)		(0.3)
Effective tax rate	27.0	%	26.0	%	25.4	%

Deferred Income Tax Assets and Liabilities Deferred income tax assets and liabilities at December 31, 2024 and 2023 reflect the effect of temporary differences between amounts of assets, liabilities and equity for financial reporting purposes and the basis of such assets, liabilities and equity as measured by tax laws, as well as tax loss and tax credit carryforwards. The following table summarizes the components of temporary differences and carryforwards that give rise to deferred tax assets and liabilities:

	December 31, 2024		December 31, 2023
Deferred tax assets
Net operating loss carryforward - U.S.(a)	$	331	$	2
Net operating loss carryforward - non-U.S.(b)	84		115
Market value difference of loan portfolio	426		322
Accruals	135		186
Tax credits(c)	649		352
Other	210		164
Total deferred tax assets before valuation allowance	1,835		1,141
Less: valuation allowance	(235)		(236)
Total deferred tax assets	1,600		905
Deferred tax liabilities
Depreciable assets	3,637		2,354
Deferred acquisition costs	232		159
Other	153		125
Total deferred tax liabilities	4,022		2,638
Net deferred tax liability	$	(2,422)	$	(1,733)

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(a)At December 31, 2024, U.S. operating loss deferred tax assets were $331 million, of which $315 million can be carried forward indefinitely and $16 million, will expire by 2038, if not utilized.

(b)At December 31, 2024, non-U.S. operating loss deferred tax assets were $84 million, of which $17 million can be carried forward indefinitely and $67 million will expire by 2044, if not utilized.

(c)At December 31, 2024, U.S. tax credit carryforwards were $649 million, expiring through 2044, if not utilized.

As of December 31, 2024, we have $235 million in valuation allowances against deferred tax assets in U.S. jurisdictions.

Uncertain Tax Positions The following table summarizes activity of the total amounts of unrecognized tax benefits:

	Years Ended December 31,
	2024		2023		2022
Beginning balance	$	86	$	63	$	70
Additions to prior years' tax positions	—		22		—
Reductions to prior years' tax positions	(8)		—		(6)
Additions to current year tax positions	6		9		—
Changes in tax positions due to lapse of statutory limitations	(4)		(8)		(2)
Foreign currency translation	(2)		—		1
Ending balance	$	78	$	86	$	63

At December 31, 2024, 2023 and 2022, there were $62 million, $67 million and $51 million of net unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate.

We recognize accrued interest and penalties associated with uncertain tax positions as a component of the income tax provision. Accrued interest and penalties are included within other liabilities on the consolidated balance sheets. At December 31, 2024 and 2023, we had liabilities of $60 million and $62 million for income tax-related interest and penalties.

At December 31, 2024, it is not possible to reasonably estimate the expected change to the total amount of unrecognized tax benefits in the next twelve months.

Other Matters We are included in GM's consolidated U.S. federal income tax returns and certain U.S. state returns, and we are obligated to pay GM for our share of these tax liabilities. During 2024, we moved from a taxes payable position of $384 million to a taxes receivable position of $70 million, primarily due to a change in our tax depreciation method. The receivable will offset future related party taxes for federal and state tax liabilities.

Income tax returns are filed in multiple jurisdictions and are subject to examination by taxing authorities throughout the world. We have open tax years from 2010 to 2024 with various tax jurisdictions. These open years contain matters that could be subject to differing interpretations of applicable tax laws and regulations as they relate to the amount, character, timing or inclusion of revenue and/or recognition of expenses, or the sustainability of income tax credits. Certain of our state and foreign tax returns are currently under examination in various jurisdictions.