Annual report [Section 13 and 15(d), not S-K Item 405]

Income Taxes (Tables)

v3.25.4
Income Taxes (Tables)
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Schedule of Income Before Income Tax The table below presents income before income tax expense disaggregated by U.S. and Non-U.S. jurisdictions for 2025, 2024 and 2023.
Income Before Income Tax Expense
December 31
(Dollars in millions) 2025 2024 2023
U.S. $ 28,813  $ 24,251  $ 23,978 
Non-U.S. (1)
8,882  8,972  8,552 
Income before income tax expense $ 37,695  $ 33,223  $ 32,530 
(1) Income is related to the tax jurisdiction of the legal entity’s principal place of business.
Schedule of Components of Income Tax Expense (Benefit)
The components of income tax expense for 2025, 2024 and 2023 are presented in the table below.
Income Tax Expense
(Dollars in millions) 2025 2024 2023
Current income tax expense      
U.S. federal $ 4,202  $ 4,709  $ 4,760 
U.S. state and local 442  603  559 
Non-U.S.  2,247  2,065  1,918 
Total current expense 6,891  7,377  7,237 
Deferred income tax expense (benefit)
  
U.S. federal (114) (1,679) (1,233)
U.S. state and local 239  153  (62)
Non-U.S.  170  399  283 
Total deferred expense (benefit)
 295  (1,127) (1,012)
Total income tax expense $ 7,186  $ 6,250  $ 6,225 
Schedule of Effective Income Tax Rate Reconciliation A reconciliation of the expected U.S. federal income tax expense, calculated by applying the federal statutory tax rate, to the Corporation’s actual income tax expense, and the effective tax rates for 2025, 2024 and 2023 are presented in the following table.
Reconciliation of Income Tax Expense
  Amount Percent Amount Percent Amount Percent
(Dollars in millions) 2025 2024 2023
Expected U.S. federal income tax expense $ 7,916  21.0  % $ 6,976  21.0  % $ 6,831  21.0  %
Increase (decrease) in taxes resulting from:
State and local income tax, net of federal income tax deduction 726  2.0  690  2.1  331  1.0 
Tax credits
PTCs and LIHTCs accounted for under PAM (633) (1.7) (587) (1.8) (600) (1.8)
ITCs and other PTCs (705) (1.9) (924) (2.8) (568) (1.7)
Other (216) (0.6) (307) (0.9) (227) (0.7)
Nontaxable or nondeductible items
Tax-exempt income, including dividends (405) (1.1) (477) (1.4) (411) (1.3)
Nondeductible expenses 419  1.1  426  1.2  405  1.2 
Other (215) (0.6) (15) —  (24) (0.1)
Changes in unrecognized tax benefits (187) (0.5) (99) (0.3) (26) (0.1)
Foreign tax effects 550  1.5  586  1.7  381  1.2 
Effect of cross-border tax laws (205) (0.5) (175) (0.5) (83) (0.3)
Changes in valuation allowances 149  0.4  224  0.7  303  0.9 
Other (8) —  (68) (0.2) (87) (0.2)
Total income tax expense (benefit) $ 7,186  19.1  % $ 6,250  18.8  % $ 6,225  19.1  %
Reconciliation of Change in Unrecognized Tax Benefits
The reconciliation of the beginning unrecognized tax benefits (UTB) balance to the ending balance is presented in the table below.
Reconciliation of the Change in Unrecognized Tax Benefits
(Dollars in millions) 2025 2024 2023
Balance, January 1 $ 684  $ 811  $ 1,056 
Increases related to positions taken during the current year
 54  55  76 
Increases related to positions taken during prior years (1)
24  39  139 
Decreases related to positions taken during prior years (1)
(214) (134) (32)
Settlements (46) (62) (380)
Expiration of statute of limitations (19) (25) (48)
Balance, December 31 $ 483  $ 684  $ 811 
(1)    The sum of the positions taken during prior years differs from the $(187) million, $(99) million and $(26) million in the Reconciliation of Income Tax Expense table due to temporary items, state items and jurisdictional offsets, as well as the inclusion of interest in the Reconciliation of Income Tax Expense table.
Summary of Income Tax Examinations The table below summarizes the status of examinations by major jurisdiction for the Corporation and various subsidiaries at December 31, 2025.
Tax Examination Status
Years under
Examination (1)
Status at
December 31, 2025
United States 2017-2023 Field Examination
California 2018-2021 Field Examination
New York 2022-2024 Field Examination
New York City 2022-2024 To begin in 2026
United Kingdom (2)
2021-2023 Field Examination
(1)    All tax years subsequent to the years shown remain subject to examination.
(2) Field examination for tax year 2024 to begin in 2026.
Schedule of Deferred Tax Assets and Liabilities
Significant components of the Corporation’s net deferred tax assets and liabilities at December 31, 2025 and 2024 are presented in the following table.
Deferred Tax Assets and Liabilities
  December 31
(Dollars in millions) 2025 2024
Deferred tax assets    
Tax attribute carryforwards $ 12,875  11,898 
Allowance for credit losses 3,415  3,463 
Lease liability 2,025  2,169 
Employee compensation and retirement benefits 1,807  1,760 
Accrued expenses 1,030  1,379 
Security, loan and debt valuations 559  2,680 
Other 2,469  2,339 
Gross deferred tax assets 24,180  25,688 
Valuation allowance (2,310) (2,361)
Total deferred tax assets, net of valuation
   allowance		 21,870  23,327 
 
Deferred tax liabilities
Equipment lease financing 3,246  3,021 
Right-of-use asset 1,873  2,025 
Other 1,747  1,920 
Gross deferred tax liabilities 6,866  6,966 
Net deferred tax assets $ 15,004  16,361 
Schedule of Operating Loss Carryforwards
The table below summarizes the deferred tax assets and related valuation allowances recognized for the net operating loss (NOL) and tax credit carryforwards at December 31, 2025.
Net Operating Loss and Tax Credit Carryforward Deferred Tax Assets
(Dollars in millions) Deferred
Tax Asset		 Valuation
Allowance		 Net
Deferred
Tax Asset		 First Year
Expiring
Net operating losses - U.K. (1)
$ 7,447  $ —  $ 7,447  None
Net operating losses - other non-U.S. 
 67  (25) 42  Various
Net operating losses - U.S. states (2)
389  (242) 147  Various
General business credits 3,920  —  3,920  After 2045
Foreign tax credits 1,052  (1,052) —  After 2028
(1)Represents U.K. broker-dealer net operating losses that may be carried forward indefinitely.
(2)The net operating losses and related valuation allowances for U.S. states before considering the benefit of federal deductions were $492 million and $307 million.
Summary of Tax Credit Carryforwards
The table below summarizes the deferred tax assets and related valuation allowances recognized for the net operating loss (NOL) and tax credit carryforwards at December 31, 2025.
Net Operating Loss and Tax Credit Carryforward Deferred Tax Assets
(Dollars in millions) Deferred
Tax Asset		 Valuation
Allowance		 Net
Deferred
Tax Asset		 First Year
Expiring
Net operating losses - U.K. (1)
$ 7,447  $ —  $ 7,447  None
Net operating losses - other non-U.S. 
 67  (25) 42  Various
Net operating losses - U.S. states (2)
389  (242) 147  Various
General business credits 3,920  —  3,920  After 2045
Foreign tax credits 1,052  (1,052) —  After 2028
(1)Represents U.K. broker-dealer net operating losses that may be carried forward indefinitely.
(2)The net operating losses and related valuation allowances for U.S. states before considering the benefit of federal deductions were $492 million and $307 million.
Schedule of Income Taxes Paid, Net
The following table summarizes cash taxes paid, net of refunds received, for jurisdictions that represented five percent or more of total income taxes paid, net of refunds received.
Income Taxes Paid
(Dollars in millions) 2025 2024 2023
Taxes paid by jurisdiction
U.S. federal
 $ 1,050  $ 1,143  $ 775 
U.S. state and local
California (1)
not required not required 230 
Other 651  569  525 
   Total U.S. state and local
 651  569  755 
Non-U.S.
United Kingdom 433  578  519 
India 272  292  266 
Other 1,524  1,240  1,090 
   Total Non-U.S.
 2,229  2,110  1,875 
   Total income taxes paid
 $ 3,930  $ 3,822  $ 3,405 
(1)Amounts are not required as the total for the periods presented is less than five percent of the total income taxes paid.