Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Note I: Income Taxes

The components of the Company’s income tax expense from continuing operations are as follows:

years ended December 31 (in millions)	2024			2023			2022
Federal income taxes:
Current	$	565		$	264		$	175
Deferred		(41	)		(11	)		18
Total federal income taxes		524			253			193
State income taxes:
Current		80			43			35
Deferred		(4	)		(3	)		6
Total state income taxes		76			40			41
Total current foreign income taxes		—			—			1
Income tax expense	$	600		$	293		$	235

The Company generated foreign pretax earnings of $13 million, earnings of $8 million and a loss of $2 million for the years ended December 31, 2024, 2023 and 2022, respectively. Deferred foreign income tax expense is not material.

The Company’s effective income tax rate on continuing operations varied from the statutory United States income tax rate due to the following tax differences:

years ended December 31	2024			2023			2022
Statutory income tax rate		21.0	%		21.0	%		21.0	%
(Reduction) increase resulting from:
Effect of statutory depletion		(1.4	)		(2.3	)		(2.4	)
State income taxes, net of federal tax benefit		2.3			2.1			2.9
Goodwill write-off for divestiture		1.8			—			0.5
Federal tax credits		(0.5	)		(0.8	)		(0.9	)
Equity investments in renewable energy tax credits, net		(0.3	)		(0.2	)		—
Other items		0.2			(0.2	)		0.4
Effective income tax rate		23.1	%		19.6	%		21.5	%

The higher 2024 effective income tax rate versus 2023 was driven by the impact of the February 2024 divestiture of the South Texas cement business and certain related ready mixed concrete operations, which included the write-off of certain nondeductible goodwill. The higher 2022 effective tax rate versus 2023 was primarily driven by the impact of the divestiture of the Colorado and Central Texas ready mixed concrete businesses.

The statutory depletion deduction for all years is calculated as a percentage of revenues, subject to certain limitations. Due to these limitations, changes in the sales volumes and pretax earnings may not proportionately affect the Company’s statutory depletion deduction and the corresponding impact on the effective income tax rate. However, the impact of the depletion deduction on the estimated effective tax rate is inversely affected by increases or decreases in pretax earnings.

The Company invests in renewable energy investment entities which qualify for tax credits and other tax benefits and are accounted for under the proportional amortization method. For the year ended December 31, 2024, amortization of these investments plus income recapture, which are included in the line item Income tax expense in the consolidated statements of earnings, were $148 million and $16 million, respectively, and offset by $153 million of tax credits and $17 million of other tax benefits. For the year ended December 31, 2023, amortization plus income recapture of similar investments were $26 million and $1 million, respectively, offset by $24 million of tax credits and $2 million of other tax benefits. There was no investment amortization for the year ended December 31, 2022. As of December 31, 2024, the Company has committed to additional equity contributions of $44 million for tax equity investments related to RETC projects. These amounts, which are expected to be paid in 2025, are recorded in the line item Other current liabilities on the consolidated balance sheet.

The Internal Revenue Service has provided certain disaster tax relief for North Carolina businesses affected by Hurricanes Debby and Helene, which allows the Company to defer estimated federal and certain state income, payroll and excise tax payments for the period from August 2024 through April 2025. The deferred obligation will be due May 1, 2025. The Company deferred income tax payments of $102 million under this provision as of December 31, 2024.

The principal components of the Company’s deferred tax assets and liabilities are as follows:

December 31	Deferred Assets (Liabilities)
(in millions)	2024			2023
Deferred tax assets related to:
Inventories	$	147		$	121
Valuation and other reserves		65			34
Net operating loss carryforwards		2			3
Accumulated other comprehensive loss		41			54
Lease liabilities		147			142
Other items, net		13			4
Gross deferred tax assets		415			358
Valuation allowance on deferred tax assets		(2	)		(3	)
Total net deferred tax assets		413			355
Deferred tax liabilities related to:
Property, plant and equipment		(1,158	)		(828	)
Goodwill and other intangibles		(171	)		(168	)
Right-of-use assets		(144	)		(142	)
Partnerships and joint ventures		(47	)		(34	)
Employee benefits		(62	)		(57	)
Total deferred tax liabilities		(1,582	)		(1,229	)
Deferred income taxes, net	$	(1,169	)	$	(874	)

The Company had immaterial gross domestic federal net operating loss (NOL) carryforwards at both December 31, 2024 and 2023. The Company had gross domestic state NOL carryforwards of $24 million and $43 million at December 31, 2024 and 2023, respectively. The domestic federal and state carryforwards have various expiration dates through 2044. The Company also had immaterial domestic state tax credit carryforwards at December 31, 2024 and 2023, which have various expiration dates through 2044.

The Company expects to reinvest the earnings from its wholly-owned Canadian and Bahamian subsidiaries indefinitely, and accordingly, has not provided deferred taxes on the subsidiaries’ undistributed net earnings or basis differences. The Company believes that the tax liability that would be incurred upon repatriation of the foreign earnings was immaterial at December 31, 2024 and 2023.

The Company’s unrecognized tax benefits are immaterial for the years ended December 31, 2024, 2023 and 2022. Unrecognized tax benefits are reversed as a discrete event if an examination of applicable tax returns is not initiated by a federal or state tax authority within the statute of limitations or upon effective settlement with federal or state tax authorities. Management believes its accrual for unrecognized tax benefits is sufficient to cover uncertain tax positions reviewed during audits by taxing authorities. The Company anticipates an immaterial decrease in its unrecognized tax benefits during the twelve months ending December 31, 2025, due to the expiration of the statutes of limitations for the 2021 tax year.

The Company’s tax years subject to federal, state or foreign examinations are 2020 through 2024.