Income Taxes (Tables)

12 Months Ended

Dec. 31, 2025

Our income tax expense consisted of the following for the year ended December 31 (in millions):


		2025			2024			2023
Current:
Federal		$	193		$	419		$	477
State			121			133			151
Foreign			40			37			34
			354			589			662
Deferred:
Federal			308			98			73
State			64			19			2
Foreign			(9)			7			8
			363			124			83
Income tax expense:		$	717		$	713		$	745

U.S. Federal Statutory Income Tax Rate Reconciled to Effective Rate

The U.S. federal statutory income tax rate is reconciled to the effective income tax rate for the year ended December 31 as follows (in millions, except percentages):


		2025				2024				2023
		Tax Expense		Rate		Tax Expense		Rate		Tax Expense		Rate
Income tax expense at U.S. federal statutory rate		$	720	21.0	%	$	726	21.0	%	$	634	21.0	%
State and local income tax, net of federal income tax effect (a)			146	4.3			135	3.9			123	4.1
Foreign tax effects			6	0.2			16	0.5			12	0.4
Tax credits
Investment tax credits			(184)	(5.4)			(137)	(4.0)			(8)	(0.2)
Low income housing tax credits			(117)	(3.4)			(90)	(2.6)			(88)	(2.9)
Other tax credits			(2)	(0.1)			(3)	(0.1)			(2)	(0.1)
Changes in valuation allowances			(5)	(0.2)			(7)	(0.2)			41	1.4
Nontaxable or nondeductible items			34	1.0			17	0.5			35	1.1
Changes in unrecognized tax benefits			—	—			(20)	(0.6)			1	0.0
Other adjustments
Proportional amortization method			96	2.8			78	2.3			—	—
Other			23	0.7			(2)	(0.1)			(3)	(0.1)
		$	717	20.9	%	$	713	20.6	%	$	745	24.7	%

Summary of income source

Income before income taxes by source for the year ended December 31 was as follows (in millions):


		2025			2024			2023
Domestic		$	3,307		$	3,325		$	2,878
Foreign			119			133			143
Income before income taxes		$	3,426		$	3,458		$	3,021

Components of Net Deferred Tax Assets (Liabilities)

The components of net deferred tax liabilities as of December 31 are as follows (in millions):


		2025			2024
Deferred tax assets:
Net operating loss, capital loss and tax credit carry-forwards		$	160		$	159
Landfill and environmental remediation liabilities			146			162
Operating lease liabilities			258			276
Miscellaneous and other reserves, net			176			258
Total deferred tax assets			740			855
Valuation allowance			(180)			(199)
Deferred tax liabilities:
Property and equipment			(1,614)			(1,308)
Goodwill and other intangibles			(1,844)			(1,895)
Operating lease right-of-use assets			(245)			(263)
Net deferred tax liabilities		$	(3,143)		$	(2,810)

Summary of unrecognized tax benefits

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits, including accrued interest, is as follows (in millions):


		2025			2024			2023
Balance as of January 1		$	43		$	66		$	64
Additions based on tax positions related to the current year			6			4			6
Accrued interest			2			2			2
Acquisitions			—			2			—
Settlements			—			(21)			—
Lapse of statute of limitations			(8)			(10)			(6)
Balance as of December 31		$	43		$	43		$	66

WASTE MANAGEMENT INC 10-K