INCOME TAXES (Notes)

12 Months Ended

Dec. 31, 2025

INCOME TAXES


Geographic Allocation of Income and Provision for Income Taxes
In millions	2025		2024		2023
Income (loss) before income taxes
Domestic	$	518	$	297	$	455
Foreign	—		—		(1)
Income before income taxes	$	518	$	297	$	454
Current tax expense (benefit)
Federal	$	(6)	$	45	$	96
State and local	1		(3)		(6)
Foreign	10		1		1
Total current tax expense	$	5	$	43	$	91
Deferred tax expense (benefit)
Federal	$	(39)	$	7	$	(19)
State and local	(8)		(3)		1

Total deferred tax expense (benefit)	$	(47)	$	4	$	(18)
Provision (credit) for income taxes	$	(42)	$	47	$	73
Net income	$	560	$	250	$	381


Reconciliation to U.S. Statutory Rate 1	2025
Amounts in millions	Amount		Percent
U.S. federal statutory tax rate	$	109	21.0	%
State and local income taxes, net of federal income tax effect	(9)		(1.8)
Foreign tax effects
Puerto Rico 2	9		1.8




Tax credits	(9)		(1.8)

Changes in valuation allowances	9		1.8
Nontaxable or nondeductible items
Nontaxable distribution	(155)		(29.9)


Other adjustments	4		0.8
Effective tax rate	$	(42)	(8.1)	%

1.Disaggregated in accordance with ASU 2023-09, which was adopted prospectively in 2025.

2.Related to branch profits tax paid on a distribution received from a subsidiary.


Reconciliation to U.S. Statutory Rate 1	2024		2023
Statutory U.S. federal income tax rate	21.0	%	21.0	%

Unrecognized tax benefits and related interest	(1.1)		(2.7)

Federal tax accrual adjustments	(2.1)		—



State and local tax impact	(2.1)		(1.2)
Other - net	0.1		(1.0)
Effective tax rate	15.8	%	16.1	%

1.As presented prior to adoption of ASU 2023-09, which was adopted prospectively in 2025.


Deferred Tax Balances at Dec 31	2025				2024
In millions	Assets		Liabilities		Assets		Liabilities
Property	$	—	$	116	$	—	$	109
Tax loss and credit carryforwards	89		—		13		—
Postretirement benefit obligations	98		—		95		—
Other accruals and reserves	226		—		251		—
Inventory	1		—		1		—
Other - net	10		—		12		—
Subtotal	$	424	$	116	$	372	$	109
Valuation allowances	(19)		—		(10)		—
Total	$	405	$	116	$	362	$	109


Operating Loss and Tax Credit Carryforwards at Dec 31	2025		2024
In millions	Assets		Assets
Operating loss carryforwards
Expire within 5 years	$	3	$	4
Expire after 5 years or indefinite expiration	69		4
Total operating loss carryforwards	$	72	$	8
Tax credit carryforwards
Expire within 5 years	$	1	$	2
Expire after 5 years or indefinite expiration	16		3
Total tax credit carryforwards	$	17	$	5
Total tax loss and tax credit carryforwards	$	89	$	13

Undistributed earnings of foreign subsidiaries and related companies that are deemed to be permanently invested were zero at December 31, 2025 and December 31, 2024. Accordingly, there are no unrecognized deferred tax liabilities related to such earnings.

The Corporation is included in TDCC's consolidated federal income tax group. Current and deferred tax expenses are calculated for the Corporation as a stand-alone group and are allocated to the group from the consolidated totals, consistent with the TDCC-UCC Tax Sharing Agreement. The amounts reported as income taxes payable or receivable represent the Corporation's payment obligation (or refundable amount) to TDCC based on a theoretical tax liability calculated on a separate return method.

Under this method, the U.S. Gulf Coast Infrastructure Assets transactions and sale of UCC's ownership interest in Dow Technology Investments LLC, as discussed in Note 17, resulted in the recognition of a $31 million tax payable at December 31, 2025 ($299 million at December 31, 2024), included in “Other noncurrent obligations” in the consolidated balance sheets.

The following table provides a reconciliation of the Corporation's unrecognized tax benefits:


Total Gross Unrecognized Tax Benefits
In millions	2025		2024		2023
Total unrecognized tax benefits at Jan 1	$	8	$	8	$	8
Decreases related to positions taken on items from prior years	—		—		—
Increases related to positions taken on items from prior years	—		—		—



Total unrecognized tax benefits at Dec 31	$	8	$	8	$	8
Total unrecognized tax benefits that, if recognized, would impact the effective tax rate	$	8	$	8	$	8
Total amount of interest and penalties (benefit) recognized in "Provision (credit) for income taxes"	$	1	$	(4)	$	(12)
Total accrual for interest and penalties recognized in the consolidated balance sheets	$	12	$	11	$	11

The Corporation is currently under examination in a number of tax jurisdictions, including the U.S. federal and various state jurisdictions. The earliest open tax years are 2004 for state income taxes and 2012 for federal income taxes in the United States.

On July 4, 2025, U.S. legislation formally titled "An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14” (“the Act”) and commonly referred to as the One Big Beautiful Bill Act was signed into law. The Act, among other things, extended key provisions of the 2017 Tax Cuts and Jobs Act and introduced targeted changes to the U.S. federal income tax regime. The Act has not materially impacted the Corporation's effective tax rate.

- Definition

The entire disclosure for income tax.

+ References

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+ Details

UNION CARBIDE CORP /NEW/ 10-K