Airbnb, Inc.ABNB
Airbnb, Inc. Income Taxes Disclosure
Income Taxes
The domestic and foreign components of Income before income taxes were as follows (in millions):
| Year Ended December 31, | |||||||||||
| 2023 | 2024 | 2025 | |||||||||
| Domestic | $ | 1,913 | $ | 3,047 | $ | 2,719 | |||||
| Foreign | 189 | 284 | 418 | ||||||||
| Income before income taxes | $ | 2,102 | $ | 3,331 | $ | 3,137 | |||||
The components of the provision for (benefit from) income taxes were as follows (in millions):
| Year Ended December 31, | |||||||||||
| 2023 | 2024 | 2025 | |||||||||
| Current | |||||||||||
| Federal | $ | 19 | $ | 103 | $ | 80 | |||||
| State | 8 | 23 | 25 | ||||||||
| Foreign | 158 | 124 | 145 | ||||||||
| Total current provision for income taxes | 185 | 250 | 250 | ||||||||
| Deferred | |||||||||||
| Federal | (2,410) | 397 | 348 | ||||||||
| State | (461) | 36 | 35 | ||||||||
| Foreign | (4) | — | (7) | ||||||||
| Total deferred provision for (benefit from) income taxes | (2,875) | 433 | 376 | ||||||||
| Total provision for (benefit from) income taxes | $ | (2,690) | $ | 683 | $ | 626 | |||||
As further described in Note 2. Significant Accounting Policies, the Company has elected to prospectively adopt ASU 2023-09.
The following table is a reconciliation of the U.S. federal statutory rate to the Company’s effective rate for the year ended December 31, 2025 (in millions, except percentages) in accordance with ASU 2023-09:
| Year Ended December 31, 2025 | ||||||||
$ | % | |||||||
| Provision for income taxes at U.S. federal statutory rate | $ | 659 | 21.0 | % | ||||
State and local income taxes, net of federal benefit(1) | 33 | 1.1 | ||||||
Foreign tax effects | 28 | 0.9 | ||||||
Effect of cross-border tax laws: | ||||||||
Foreign derived intangible income | (166) | (5.3) | ||||||
| Other | (49) | (1.6) | ||||||
Tax Credits: | ||||||||
| Research and development (“R&D”) credits | (121) | (3.9) | ||||||
| Valuation allowance | 221 | 7.0 | ||||||
Non-taxable or non-deductible items: | ||||||||
Stock-based compensation | 36 | 1.2 | ||||||
Other | 27 | 0.9 | ||||||
Uncertain tax positions | (42) | (1.3) | ||||||
| Provision for income taxes effective tax rate | $ | 626 | 20.0 | % | ||||
(1)The jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category include New York, New York City, and Illinois.
On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was signed into law. Included in this legislation are provisions that allow for the immediate expensing of domestic U.S. research and development expenses and changes to the U.S. taxation of foreign derived intangible income. Following the enactment of the OBBBA, management concluded it is no longer more-likely-than-not that the Company will be able to utilize its federal corporate alternative minimum tax (“CAMT”) credits. No prudent and feasible tax-planning strategies are currently available that would allow the Company to utilize its historic CAMT credits, and consequently recorded a $213 million valuation allowance. The Company's policy is to not consider the impact of future years’ CAMT in its valuation allowance assessment for regular deferred tax assets. The amount of the valuation allowance may be adjusted in future quarters if estimates of future taxable income change. The Company will continue to evaluate the full impact of legislative changes as more guidance becomes available.
The following table is a reconciliation of the U.S. federal statutory rate to the Company’s effective rate for the years ended December 31, 2024 and 2023, as previously disclosed, prior to the adoption of ASU 2023-09:
| Year Ended December 31, | ||||||||
| 2023 | 2024 | |||||||
Expected income tax expense at U.S. federal statutory rate | 21.0 | % | 21.0 | % | ||||
| State taxes, net of federal benefits | 0.3 | 1.3 | ||||||
| Foreign tax rate differential | 2.9 | 0.8 | ||||||
| Stock-based compensation | (16.7) | (0.2) | ||||||
| Other statutorily non-deductible expenses | 0.1 | 0.1 | ||||||
| Research and development credits | (5.5) | (2.2) | ||||||
| Uncertain tax positions—prior year positions | 1.8 | — | ||||||
| Uncertain tax positions—current year positions | 1.7 | 1.4 | ||||||
| U.S. tax on foreign income, net of allowable credits and deductions | 3.9 | — | ||||||
| Foreign-derived intangible income deduction | (1.0) | (2.0) | ||||||
Change in valuation allowance | (136.6) | 0.3 | ||||||
Other, net | 0.1 | — | ||||||
| Effective tax rate | (128.0) | % | 20.5 | % | ||||
The components of deferred tax assets and liabilities consisted of the following (in millions):
| December 31, | ||||||||
| 2024 | 2025 | |||||||
| Deferred tax assets: | ||||||||
Loss carryforwards | $ | 462 | $ | 253 | ||||
| Tax credit carryforwards | 999 | 806 | ||||||
| Accruals and reserves | 122 | 153 | ||||||
| Non-income tax accruals | 84 | 81 | ||||||
| Stock-based compensation | 70 | 75 | ||||||
| Operating lease liabilities | 61 | 51 | ||||||
| Intangible assets | 140 | 111 | ||||||
| Capitalized research and development costs | 882 | 1,049 | ||||||
Other, net | 62 | 187 | ||||||
| Gross deferred tax assets | 2,882 | 2,766 | ||||||
| Valuation allowance | (395) | (626) | ||||||
| Total deferred tax assets | 2,487 | 2,140 | ||||||
| Deferred tax liabilities: | ||||||||
| Property and equipment basis differences | (20) | (7) | ||||||
| Operating lease assets | (25) | (25) | ||||||
Other, net | (7) | (9) | ||||||
| Total deferred tax liabilities | (52) | (41) | ||||||
| Total net deferred tax assets | $ | 2,435 | $ | 2,099 | ||||
The Company regularly assesses the need for a valuation allowance against its deferred tax assets each quarter. In making that assessment, the Company considers both positive and negative evidence in the various jurisdictions in which it operates related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized. As of December 31, 2025, based on all available positive and negative evidence, having demonstrated sustained profitability which is objective and verifiable, and taking into account anticipated future earnings, the Company concluded that it is more likely than not that its U.S. federal and state deferred tax assets will be realizable, with the exception of California research and development credits, capital loss carryovers, certain losses subject to the dual consolidated loss rules, and CAMT credits. The Company will continue to monitor the need for a valuation allowance against its deferred tax assets on a quarterly basis.
The Company’s policy with respect to its undistributed foreign subsidiaries’ earnings is to consider those earnings to be indefinitely reinvested. The Company has not provided for the tax effect, if any, of limited outside basis differences of its foreign subsidiaries. The determination of the future tax consequences of the remittance of these earnings is not practicable.
As of December 31, 2025, the Company had no remaining net operating loss carryforwards for federal income tax purposes. As of December 31, 2025, the Company had federal research and development tax credit carryforwards of $489 million, which will begin to expire in 2042 if not utilized. As of December 31, 2025, the Company had CAMT credit carryforwards of $400 million, which do not have an expiration date and may be claimed against regular tax in future years.
As of December 31, 2025, the Company had net operating loss carryforwards for state income tax purposes of $3.4 billion. Some of the Company’s state net operating loss carryforwards will expire, if not utilized, beginning in 2035. As of December 31, 2025, the Company had state research and development tax credit carryforwards of $526 million, which do not have an expiration date.
The Tax Reform Act of 1986 and similar California legislation impose substantial restrictions on the utilization of net operating losses and tax credit carryforwards in the event that there is a change in ownership as provided by Section 382 of the Internal Revenue Code and similar state provisions. Such a limitation could result in the expiration of the net operating loss carryforwards and tax credits before utilization, which could result in increased future tax liabilities.
A reconciliation of the beginning and ending amount of the Company’s total gross unrecognized tax benefits was as follows (in millions):
| Year Ended December 31, | |||||||||||
| 2023 | 2024 | 2025 | |||||||||
| Balance at beginning of year | $ | 650 | $ | 780 | $ | 869 | |||||
| Gross increases related to prior year tax positions | 52 | 1 | 18 | ||||||||
| Gross decreases related to prior year tax positions | (8) | (1) | (105) | ||||||||
| Gross increases related to current year tax positions | 103 | 106 | 74 | ||||||||
| Reductions due to settlements with taxing authorities | (12) | (14) | (15) | ||||||||
| Reduction due to lapse in statute of limitations | (5) | (3) | (6) | ||||||||
| Balance at end of year | $ | 780 | $ | 869 | $ | 835 | |||||
The Company is in various stages of examination in connection with its ongoing tax audits globally, and it is difficult to determine when these examinations will be settled. The Company believes that an adequate provision has been recorded for any adjustments that may result from tax audits. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with management’s expectations, the Company may be required to record an adjustment to the provision for (benefit from) income taxes on the consolidated statements of operations in the period such resolution occurs. Changes in tax laws, regulations, administrative practices, principles, and interpretations may impact the Company’s tax contingencies. The timing of the resolution of income tax examinations is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ from the amounts accrued.
As of December 31, 2025, unrecognized tax benefits totaled $693 million, which, if recognized, would impact the Company’s effective income tax rate. The Company’s accrual for interest and penalties was $100 million as of both December 31, 2024 and 2025, as presented on the consolidated balance sheets.
The Company’s significant tax jurisdictions include the United States, California, and Ireland. The Company’s 2008 to 2025 tax years remain subject to examination in the United States and various states due to tax attributes and statutes of limitations, and its 2021 to 2025 tax years remain subject to examination in Ireland. There are other ongoing audits in various other jurisdictions that are immaterial to the Company’s consolidated financial statements. The Company remains subject to possible examination in various other jurisdictions that are not expected to result in material tax adjustments.
The Company is currently under examination for income taxes by the Internal Revenue Service (“IRS”) for the 2013, 2016, 2017, and 2018 tax years. The primary issue under examination in the 2013 audit is the valuation of the Company’s international intellectual property which was sold to a subsidiary in 2013. In December 2020, the Company received a Notice of Proposed Adjustment (“NOPA”) from the IRS which proposed an increase to the Company’s U.S. taxable income that could result in additional income tax expense and cash liability of $1.3 billion plus penalties and interest, which exceeds the current reserve recorded in its consolidated financial statements by more than $1.0 billion. The Company strongly disagrees with the proposed adjustment and continues to vigorously contest it. The Company entered into an administrative dispute process with IRS Appeals, however an acceptable outcome was not reached. In May 2024, the Company received a Statutory Notice of Deficiency (“Notice”) from the IRS related to the aforementioned valuation of its international intellectual property. The Notice claimed that the Company owes $1.3 billion in tax, plus penalties and interest. The Company will continue to pursue all available remedies to resolve this dispute. In July 2024, the Company petitioned the U.S. Tax Court (“Tax Court”) for redetermination, and if necessary, the Company will appeal the Tax Court’s decision to the appropriate appellate court. The Company believes that adequate amounts have been reserved for any adjustments that may ultimately result from these examinations. If the IRS prevails in the assessment of additional tax due based on its position and such tax and related interest and penalties, if any, exceeds the Company’s current reserves, such outcome could have a material adverse impact on the Company’s financial position and results of operations, and any assessment of additional tax could require a significant cash payment and have a material adverse impact on the Company’s consolidated statements of cash flows.
Free Sentinel
Track for freeWant the next Airbnb, Inc. income taxes disclosure the moment it drops?
Set a Sentinel and we'll alert you the moment Airbnb, Inc.'s next filing hits EDGAR. No credit card, your email never gets sold.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 12, 2026 | Showing above |
| 2024 | Feb 13, 2025 | |
| 2023 | Feb 16, 2024 | |
| 2022 | Feb 17, 2023 | |
| 2021 | Feb 25, 2022 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.