CHEVRON CORPCVX

CHEVRON CORP Income Taxes Disclosure

10-KFiled Feb 24, 20268 min read
Taxes
Income Taxes
Year ended December 31
202520242023
Income tax expense (benefit)
U.S. federal
Current$444 $854 $895 
Deferred885 748 666 
State and local
Current309 275 211 
Deferred(88)10 1 
Total United States1,550 1,887 1,773 
International
Current5,520 7,388 6,745 
Deferred188 482 (345)
Total International5,708 7,870 6,400 
Total income tax expense (benefit)$7,258 $9,757 $8,173 

For 2025, ASU 2023-09 requires an expanded view of the rate reconciliation as well as a summary of income taxes paid for material jurisdictions. Chevron has elected a prospective presentation. The tables below represent the new standard for 2025 and revert to prior guidance for comparable years.
The reconciliation between the U.S. statutory federal income tax rate and the company’s effective income tax rate for the year ended December 31, 2025, in accordance with ASU 2023-09 guidance, is detailed in the following table:
Taxes On IncomeYear ended December 31
2025
$%
Income (loss) before income taxes
United States$5,979 
International13,764 
Total income (loss) before income taxes19,743 
U.S. Federal statutory income tax4,146 21.0 %
State and local income tax, net of federal income tax effect1
142 0.7 %
Foreign tax effects
Australia
Statutory tax rate difference 334 1.7 %
Additional non-U.S. income taxes2
287 1.5 %
Foreign exchange356 1.8 %
Other14 0.1 %
Kazakhstan
Additional non-U.S. income taxes2
624 3.2 %
Equity affiliate accounting effect3
(353)(1.8)%
Other128 0.6 %
Nigeria - primarily additional non-U.S. income taxes368 1.9 %
Saudi Arabia - primarily statutory tax rate difference583 3.0 %
Other foreign jurisdictions345 1.7 %
Total foreign tax effects2,686 13.6 %
Effect of cross-border tax laws - primarily surplus foreign tax credits4
(2,477)(12.5)%
Changes in valuation allowances4
2,773 14.0 %
Other adjustments5
(12)(0.1)%
Total income tax expense and effective tax rate$7,258 36.8 %
1 State taxes in California and New Mexico make up the majority (greater than 50%) of the tax effect in this category.
2 Includes items such as withholding taxes and oil profit taxes.
3 After‑tax equity affiliate income is included in pretax earnings, which results in a negative adjustment in the rate reconciliation.
4 Surplus foreign tax credits and their related valuation allowances are shown gross but largely offset.
5 Tax credits, nontaxable and nondeductible items and changes in unrecognized tax benefits were all immaterial and included in other adjustments.

The reconciliation between the U.S. statutory federal income tax rate and the company’s effective income tax rate for the years ended December 31, 2024 and 2023, as previously reported, is detailed in the following table:
Year ended December 31
20242023
Income (loss) before income taxes
 United States$8,056$8,565
 International19,45021,019
Total income (loss) before income taxes27,50629,584
Theoretical tax (at U.S. statutory rate of 21%)5,7766,213
Equity affiliate accounting effect(845)(1,072)
Effect of income taxes from international operations4,7423,001
State and local taxes on income, net of U.S. federal income tax benefit
214252
Prior year tax adjustments, claims and settlements1
(30)(32)
Tax credits(28)(20)
Other U.S.1, 2
(72)(169)
Total income tax expense (benefit)$9,757$8,173
Effective income tax rate35.5 %27.6 %
1 Includes one-time tax costs (benefits) associated with changes in uncertain tax positions.
2 Includes one-time tax costs (benefits) associated with changes in valuation allowances (2024 - $(12); 2023 - $(84)).
The 2025 decrease in income tax expense of $2,499 was driven by the decrease in total income before tax of $7,763, along with the absence of the tax impacts from the prior year asset sales in Canada. The change in the company’s effective tax rate from 35.5 percent in 2024 to 36.8 percent in 2025 was primarily a result of unfavorable foreign exchange impacts.
The reconciliation of income taxes paid in the U.S. and other significant international jurisdictions for the year ended December 31, 2025, is detailed in the following table:
Income Taxes PaidYear ended December 31
2025
U.S. Federal1
$143 
U.S. state and local224 
All other jurisdictions
    Australia1,592 
    Canada2
1,782 
    Guyana3
406 
    Kazakhstan4
755 
    Nigeria593 
    Saudi Arabia611 
    All others1,198 
Income taxes paid$7,304 
1 U.S. Federal taxes paid are affected by accelerated depreciation and the immediate expensing of research and development costs provided by the One Big Beautiful Bill Act of 2025, as well as net operating loss carryforwards, tax credits from biofuels production and other lower carbon activities, and prior year overpayments.
2 Includes taxes associated with the Canada asset sale in 2024 that were paid in 2025.
3 Taxes settled with the government in the form of crude oil barrels.
4 Includes withholding tax and excludes taxes paid by the company’s equity affiliate, TCO.
The company records its deferred taxes on a tax-jurisdiction basis. The reported deferred tax balances are composed of the following:
At December 31
20252024
Deferred tax liabilities
Properties, plant and equipment$34,149 $20,648 
Investments and other6,668 5,254 
Total deferred tax liabilities40,817 25,902 
Deferred tax assets
Foreign tax credits(18,932)(15,261)
Asset retirement obligations/environmental reserves(4,993)(4,220)
Employee benefits(1,924)(2,050)
Tax credits(430)(292)
Tax loss carryforwards(7,141)(3,034)
Other accrued liabilities(909)(1,137)
Operating leases (1,886)(1,352)
Miscellaneous(4,311)(4,248)
Total deferred tax assets(40,526)(31,594)
Deferred tax assets valuation allowance26,861 21,313 
Total deferred income taxes, net$27,152 $15,621 
Deferred tax liabilities increased by $14,915 from year-end 2024, driven by the acquisition of Hess. Deferred tax assets increased by $8,932 from year-end 2024, primarily related to increases in foreign tax credits and tax loss carryforwards from the acquisition of Hess.
The overall valuation allowance, which increased by $5,548 from year-end 2024, relates to deferred tax assets for U.S. foreign tax credit carryforwards, tax loss carryforwards and temporary differences. The valuation allowance reduces the deferred tax assets to amounts that are, in management’s assessment, more likely than not to be realized. At the end of 2025, the company had gross tax loss carryforwards of approximately $29,161 and tax credit carryforwards of approximately $430, primarily related to various international tax jurisdictions. Whereas some of these tax loss carryforwards do not have an expiration date, others expire at various times from 2026 through 2044. U.S. foreign tax credit carryforwards of $18,932 will expire between 2026 and 2035.
At December 31, 2025 and 2024, deferred taxes were classified on the Consolidated Balance Sheet as follows:
At December 31
20252024
Deferred charges and other assets$(2,862)$(3,516)
Noncurrent deferred income taxes30,014 19,137 
Total deferred income taxes, net$27,152 $15,621 
Income taxes, including U.S. state and foreign withholding taxes, are not accrued for unremitted earnings of international operations that have been or are intended to be reinvested indefinitely, or where no taxable temporary differences exist that are attributable to an investment in a foreign entity. The indefinite reinvestment assertion continues to apply for the purpose of determining deferred tax liabilities for U.S. state and foreign withholding tax purposes. It is not practicable to estimate the amount of state and foreign withholding taxes that might be payable on the possible remittance of earnings that are intended to be reinvested indefinitely. The company does not anticipate incurring significant additional taxes on remittances of earnings that are not indefinitely reinvested.
Uncertain Income Tax Positions The company recognizes a tax benefit in the financial statements for an uncertain tax position only if management’s assessment is that the position is more likely than not (i.e., a likelihood greater than 50 percent) to be allowed by the tax jurisdiction based solely on the technical merits of the position. The term “tax position” in the accounting standards for income taxes refers to a position in a previously filed tax return or a position expected to be taken in a future tax return that is reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods.
The following table indicates the changes to the company’s unrecognized tax benefits for the years ended December 31, 2025, 2024 and 2023. The term “unrecognized tax benefits” in the accounting standards for income taxes refers to the differences between a tax position taken or expected to be taken in a tax return and the benefit measured and recognized in the financial statements. Interest and penalties are not included.
202520242023
Balance at January 1$4,852 $5,452 $5,323 
Foreign currency effects— — (27)
Additions based on tax positions taken in current year632 236 248 
Additions for tax positions taken in prior years
546 101 265 
Reductions based on tax positions taken in current year(29)(54)(104)
Reductions for tax positions taken in prior years
(3,390)(883)(251)
 Settlements with taxing authorities in current year — — (2)
Balance at December 31$2,611 $4,852 $5,452 
Approximately 81 percent of the $2,611 of unrecognized tax benefits at December 31, 2025, would have an impact on the effective tax rate if subsequently recognized. Certain of these unrecognized tax benefits relate to tax carryforwards that may require a full valuation allowance at the time of any such recognition.
The company and its subsidiaries are subject to income taxation and audits throughout the world. With certain exceptions, income tax examinations are completed through 2019 for the United States and 2007 for other major jurisdictions.
On the Consolidated Statement of Income, the company reports interest and penalties related to liabilities for uncertain tax positions as “Income Tax Expense (Benefit).” As of December 31, 2025, accrued expense of $306 for anticipated interest and penalties was included on the Consolidated Balance Sheet, compared with accrued expense of $268 as of year-end 2024. Income tax expense (benefit) associated with interest and penalties was $37, $40 and $124 in 2025, 2024 and 2023, respectively.
Taxes Other Than on Income
Year ended December 31
202520242023
United States
Import duties and other levies$7 $8 $(9)
Property and other miscellaneous taxes
1,129 977 818 
Payroll taxes308 296 286 
Taxes on production816 842 801 
Total United States2,260 2,123 1,896 
International
Import duties and other levies121 90 72 
Property and other miscellaneous taxes
2,608 2,283 2,004 
Payroll taxes135 125 121 
Taxes on production106 95 127 
Total International2,970 2,593 2,324 
Total taxes other than on income$5,230 $4,716 $4,220 

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Historical Timeline

Fiscal YearFiled
2025Feb 24, 2026Showing above
2024Feb 21, 2025

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.

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