DuPont de Nemours, Inc.DD
DuPont de Nemours, Inc. Income Taxes Disclosure
INCOME TAXES
| Geographic Allocation of Income (Loss) and Provision for (Benefit from) Income Taxes | 2025 | 2024 | 2023 | ||||||||
| (In millions) For the years ended December 31, | |||||||||||
| Income (loss) from continuing operations before income taxes | |||||||||||
| Domestic | $ | (217) | $ | (398) | $ | (579) | |||||
| Foreign | 417 | 515 | 300 | ||||||||
| Income (loss) from continuing operations before income taxes | $ | 200 | $ | 117 | $ | (279) | |||||
| Current tax expense | |||||||||||
| Federal | $ | (23) | $ | 133 | $ | 6 | |||||
| State and local | 8 | 5 | 5 | ||||||||
| Foreign | 104 | 167 | 80 | ||||||||
| Total current tax expense | $ | 89 | $ | 305 | $ | 91 | |||||
| Deferred tax expense (benefit) | |||||||||||
| Federal | $ | 46 | $ | (103) | $ | 20 | |||||
| State and local | 5 | (25) | (22) | ||||||||
| Foreign | (38) | 36 | (306) | ||||||||
| Total deferred tax expense (benefit) | $ | 13 | $ | (92) | $ | (308) | |||||
| Provision for (benefit from) income taxes on continuing operations | 102 | 213 | (217) | ||||||||
| Net income (loss) from continuing operations | $ | 98 | $ | (96) | $ | (62) | |||||
| Reconciliation to U.S. Statutory Rate | 2025 | |||||||
| (In millions) For the year ended December 31, | Amount | Percent | ||||||
| U.S Federal Statutory Tax Rate | $ | 42 | 21.0 | % | ||||
State and Local Income Taxes, Net of Federal Income Tax Effect 1 | 10 | 5.3 | ||||||
| Foreign Tax Effects | ||||||||
| China | ||||||||
| Foreign Withholding Taxes | 17 | 8.4 | ||||||
| Other Adjustments | (3) | (1.5) | ||||||
| Germany | ||||||||
| Enacted Changes in Tax Law or Rates | 6 | 3.2 | ||||||
| Other Adjustments | 9 | 4.7 | ||||||
| Japan | ||||||||
| Statutory Rate Difference | 7 | 3.5 | ||||||
| Provision to Return | (5) | (2.5) | ||||||
| Other Adjustments | 1 | 0.6 | ||||||
| Luxembourg | ||||||||
| Changes in Valuation Allowance | (59) | (29.9) | ||||||
| Other Adjustments | 2 | 1.1 | ||||||
| Netherlands | ||||||||
| Changes in Valuation Allowance | 7 | 3.5 | ||||||
| Nontaxable Items | (6) | (3.0) | ||||||
| Provision to Return | (8) | (3.9) | ||||||
| Other Adjustments | 4 | 2.0 | ||||||
| Switzerland | ||||||||
| Statutory Rate Difference | (11) | (5.6) | ||||||
| Local Tax Effects | 6 | 3.1 | ||||||
| Other Adjustments | (2) | (0.8) | ||||||
| Other Foreign Jurisdictions | 20 | 10.1 | ||||||
Effect of Cross-Border Tax Laws 2 | ||||||||
| Subpart F | 19 | 9.4 | ||||||
| Branch Income | 8 | 4.0 | ||||||
| Tax Credits | (4) | (2.0) | ||||||
| Changes in Valuation Allowance | (52) | (26.6) | ||||||
| Nontaxable or Nondeductible Items | ||||||||
| Disallowed Deductions | 7 | 3.4 | ||||||
| Other Permanent Items | 18 | 9.0 | ||||||
| Changes in Unrecognized Tax Benefits | 16 | 8.0 | ||||||
| Other Adjustments | ||||||||
| Deferred Tax Liability on Future Branch Income | 73 | 36.9 | ||||||
Exchange Gains/(Losses) 3 | 26 | 13.0 | ||||||
| Reversal of Deferred Tax Liabilities as a Result of Entity Classification Changes | (29) | (14.7) | ||||||
| Goodwill Step-up | (10) | (4.8) | ||||||
Other Adjustments 4 | (7) | (3.9) | ||||||
| Effective Tax Rate | $ | 102 | 51.0 | % | ||||
1.State taxes in Michigan and Minnesota make up the majority (greater than 50 percent) of the tax effect in this category.
2.Effect of Cross-Border Tax Laws are presented net of any related foreign tax credits.
3.Principally reflects the impact of foreign exchange gains and losses on net monetary assets for which no corresponding tax impact is realized.
4.Includes impacts of foreign exchange/translation adjustments.
| Reconciliation to U.S. Statutory Rate | 2024 | 2023 | ||||||
| (In millions) For the years ended December 31, | ||||||||
| Statutory U.S. federal income tax rate | 21.0 | % | 21.0 | % | ||||
| Equity earnings effect | 0.9 | 0.1 | ||||||
| Foreign income taxed at rates other than the statutory U.S. federal income tax rate | 30.0 | (11.6) | ||||||
| U.S. tax effect of foreign earnings and dividends | 34.8 | (7.8) | ||||||
| Unrecognized tax benefits | (4.6) | (2.0) | ||||||
Acquisitions, divestitures and ownership restructuring activities 1 | 89.6 | 116.5 | ||||||
Exchange gains/losses 2 | 15.3 | 1.9 | ||||||
| State and local income taxes | (10.8) | 5.0 | ||||||
| Change in valuation allowance | 5.3 | — | ||||||
| Goodwill impairments | — | (50.3) | ||||||
| Stock-based compensation | 2.1 | 1.7 | ||||||
| Foreign-derived intangible income (FDII) | (7.2) | 4.1 | ||||||
| Other - net | 5.7 | (0.9) | ||||||
| Effective tax rate | 182.1 | % | 77.7 | % | ||||
1.Includes a tax expense of $103 million and a tax benefit of $324 million in connection with internal restructurings involving foreign subsidiaries for the years ended December 31, 2024 and 2023, respectively.
2. Principally reflects the impact of foreign exchange gains and losses on net monetary assets for which no corresponding tax impact is realized.
| Deferred Tax Balances at December 31, | 2025 | 2024 | ||||||
| In millions | ||||||||
| Deferred tax assets: | ||||||||
Tax losses and credit carryforwards 1 | $ | 829 | $ | 744 | ||||
| Lease liability | 51 | 60 | ||||||
| Pension and postretirement benefit obligations | 16 | 71 | ||||||
| Other accruals and reserves | 140 | 119 | ||||||
| Research and development | 219 | 186 | ||||||
| Inventory | 5 | 5 | ||||||
| Other – net | 124 | 227 | ||||||
| Gross deferred tax assets | $ | 1,384 | $ | 1,412 | ||||
Valuation allowances 1 | (664) | (748) | ||||||
| Total deferred tax assets | $ | 720 | $ | 664 | ||||
| Deferred tax liabilities: | ||||||||
| Investments | (78) | (60) | ||||||
| Unrealized exchange losses, net | (32) | (36) | ||||||
| Operating lease asset | (51) | (60) | ||||||
| Property | (255) | (250) | ||||||
| Intangibles | (427) | (545) | ||||||
| Total deferred tax liabilities | $ | (843) | $ | (951) | ||||
| Total net deferred tax liability | $ | (123) | $ | (287) | ||||
1.Primarily related to recorded tax benefits and the non-realizability of tax losses and credit carryforwards from operations in the United States, Europe and Asia Pacific.
Included in the 2025 deferred tax asset and liability amounts above is $113 million of a net deferred tax liability related to the Company’s investment in DSP Holdco, LLC, which is a partnership for U.S. federal income tax purposes. The Company and its subsidiaries owned in aggregate 100 percent of DSP Holdco, LLC and the assets and liabilities of DSP Holdco, LLC were included in the Consolidated Financial Statements of the Company. DSP Holdco, LLC is a newly formed entity in 2025.
Included in the 2024 deferred tax asset and liability amounts above is $179 million of a net deferred tax liability related to the Company’s investment in DuPont Specialty Products USA, LLC, which is a partnership for U.S. federal income tax purposes. The Company and its subsidiaries owned in aggregate 100 percent of DuPont Specialty Products USA, LLC and the assets and liabilities of DuPont Specialty Products USA, LLC were included in the Consolidated Financial Statements of the Company. At December 31, 2025, DuPont Specialty Products USA, LLC is no longer a partnership for U.S. federal income tax purposes.
| Operating Loss and Tax Credit Carryforwards | Deferred Tax Asset | |||||||
| (In millions) As of December 31, | 2025 | 2024 | ||||||
| Operating loss carryforwards | ||||||||
| Expire within 5 years | $ | 11 | $ | 5 | ||||
| Expire after 5 years or indefinite expiration | 658 | 591 | ||||||
| Total operating loss carryforwards | $ | 669 | $ | 596 | ||||
| Tax credit carryforwards | ||||||||
| Expire within 5 years | $ | 58 | $ | 40 | ||||
| Expire after 5 years or indefinite expiration | 102 | 108 | ||||||
| Total tax credit carryforwards | $ | 160 | $ | 148 | ||||
| Total Operating Loss and Tax Credit Carryforwards | $ | 829 | $ | 744 | ||||
| Total Gross Unrecognized Tax Benefits | 2025 | 2024 | 2023 | ||||||||
| In millions | |||||||||||
| Total unrecognized tax benefits at January 1, | $ | 428 | $ | 473 | $ | 470 | |||||
| Decreases related to positions taken on items from prior years | — | (32) | (4) | ||||||||
| Increases related to positions taken on items from prior years | 6 | 17 | 3 | ||||||||
| Increases related to positions taken in the current year | 22 | 5 | 18 | ||||||||
| Settlement of uncertain tax positions with tax authorities | (5) | (21) | (10) | ||||||||
| Decreases due to expiration of statutes of limitations | (9) | (5) | (9) | ||||||||
| Exchange loss (gain) | 16 | (9) | 5 | ||||||||
| Electronics Separation | (34) | — | — | ||||||||
Total unrecognized tax benefits at December 31, 1 | $ | 424 | $ | 428 | $ | 473 | |||||
| Total unrecognized tax benefits that, if recognized, would impact the effective tax rate of continuing operations | $ | 260 | $ | 259 | $ | 304 | |||||
| Total amount of interest and penalties (benefit) recognized in "Provision for (benefit from) income taxes on continuing operations" | $ | 5 | $ | 3 | $ | 8 | |||||
| Total accrual for interest and penalties associated with unrecognized tax benefits | $ | 55 | $ | 43 | $ | 28 | |||||
1.Total unrecognized tax benefits includes $160 million, $165 million and $165 million of benefits related to discontinued operations at December 31, 2025, 2024 and 2023.
Each year the Company files hundreds of tax returns in the various national, state and local income taxing jurisdictions in which it operates. These tax returns are subject to examination and possible challenge by the tax authorities. The Company has ongoing federal, state and international income tax audits in various jurisdictions and evaluates uncertain tax positions that may be challenged by local tax authorities. The impact, if any, of these audits to the Company’s unrecognized tax benefits is not estimable. Positions challenged by the tax authorities may be settled or appealed by the Company. As a result, there is an uncertainty in income taxes recognized in the Company’s financial statements in accordance with accounting for income taxes and accounting for uncertainty in income taxes. The ultimate resolution of such uncertainties is not expected to have a material impact on the Company's results of operations.
Tax years that remain subject to examination for the Company’s major tax jurisdictions are shown below:
Tax Years Subject to Examination by Major Tax Jurisdiction at December 31, 2025 | Earliest Open Year | ||||
| Jurisdiction | |||||
| Brazil | 2019 | ||||
| Canada | 2018 | ||||
| China | 2014 | ||||
| Denmark | 2022 | ||||
| Germany | 2019 | ||||
| Japan | 2018 | ||||
| The Netherlands | 2019 | ||||
| Switzerland | 2020 | ||||
| United States: | |||||
Federal income tax 1 | 2012 | ||||
| State and local income tax | 2012 | ||||
1. The U.S. Federal income tax jurisdiction is open back to 2012 with respect to EIDP pursuant to the DWDP Tax Matters Agreement.
The undistributed foreign earnings of foreign subsidiaries and related companies that deemed to be permanently reinvested at December 31, 2025 may still be subject to certain taxes upon repatriation, primarily where foreign withholding taxes apply. It is not practicable to calculate the unrecognized deferred tax liability on undistributed foreign earnings due to the complexity of the hypothetical calculation.
| Income taxes paid | Year Ended December 31, 2025 | ||||
| U.S. Federal | $ | 7 | |||
| U.S. State | 5 | ||||
| Non-U.S. | 115 | ||||
| Total income taxes paid, net | $ | 127 | |||
Income taxes paid, net, for the periods ended December 31, 2024 and 2023 were $184 million and $168 million, respectively. Income taxes paid exceeds 5% of total income taxes paid, net of refunds, in the following jurisdictions. No individual U.S. state represents 5% of the total income taxes paid.
| Income taxes paid | Year Ended December 31, 2025 | ||||
| Japan | $ | 25 | |||
| France | $ | 16 | |||
| China | $ | 10 | |||
| Switzerland | $ | 9 | |||
Electronics Separation
Certain internal distributions and reorganizations, and the distribution of Qnity on November 1, 2025 qualified as tax-free transactions under the applicable sections of the U.S. Internal Revenue Code. If the completed distribution of Qnity, together with certain related transactions, were to fail to qualify for non-recognition treatment for U.S. federal income tax purposes, then the Company could be subject to significant income tax liabilities. To the extent that the Company is responsible for any income tax liabilities related to these matters, there could be a material adverse impact on the Company's business, financial condition, results of operations and cash flows in future reporting periods.
In connection with the Qnity Distribution, Qnity and DuPont indemnify one another against certain income taxes. At December 31, 2025, DuPont had recorded related tax indemnification assets of $66 million within "Accounts and notes receivable - net" and $137 million within "Deferred charges and other assets" and accrued related indemnification liabilities of $198 million within "Accrued and other current liabilities" and $93 million within "Other noncurrent obligations" on the Consolidated Balance Sheets. See Note 4 for additional information on the Electronics Separation.
Aramids Divestiture
The Company recorded a net income tax benefit of $74 million for the year ended December 31, 2025, in connection with a change in valuation allowance. $13 million of the aforementioned tax benefit is included in “Income (loss) from discontinued operations, net of tax” in the Consolidated Statements of Operations. The remaining $61 million of the tax benefit is included in “Provision for (benefit from) income taxes on continuing operations” in the Consolidated Statements of Operations. See Note 4 for additional information on the Aramids Divestitures.
2023 Internal Restructurings
The Company recorded a deferred tax benefit of $324 million for the year ended December 31, 2023, in connection with certain internal restructurings. These restructurings in certain instances relied upon legal entity and asset valuations. The aforementioned tax benefit is included in “Provision for (benefit from) income taxes on continuing operations” in the Consolidated Statements of Operations.
M&M Divestitures
The Company recorded a net tax expense of $21 million for the year ended December 31, 2023, in connection with certain internal restructurings. These restructurings involve both legal entities within the M&M Businesses and legal entities retained by DuPont and in certain instances relied upon legal entity valuations. The aforementioned net tax expense is included in “Income (loss) from discontinued operations, net of tax” in the Consolidated Statements of Operations. See Note 4 for additional information on the M&M Divestitures.
Laird Performance Materials ("Laird PM") Acquisition
In 2021 the Company acquired Laird PM. In connection with the integration of Laird PM, the Company completed certain internal restructurings that were determined to be tax free under the applicable sections of the Internal Revenue Code. If the aforementioned transactions were to fail to qualify for non-recognition treatment for U.S. federal income tax purposes, then the Company could be subject to significant tax liability. Laird PM was part of the Electronics Business.
N&B Transaction
Certain internal distributions and reorganizations that occurred during 2021 and 2020 in preparation for the N&B Transaction and the external distribution in 2021 qualified as tax-free transactions under the applicable sections of the Internal Revenue Code. If the aforementioned transactions were to fail to qualify for non-recognition treatment for U.S. federal income tax purposes, then the Company could be subject to significant tax liability. Under the N&B Tax Matters Agreement, the Company would generally be allocated such liability and not be indemnified, unless certain non qualifying actions are undertaken by N&B or IFF. To the extent that the Company is responsible for any such liability, there could be a material adverse impact on the Company's business, financial condition, results of operations and cash flows in future reporting periods.
DWDP
For periods between the DWDP Merger and the DWDP Distributions, DuPont's consolidated federal income tax group and consolidated tax return included the Dow and Corteva entities. Generally, the consolidated tax liability of the DuPont U.S. tax group for each year was apportioned among the members of the consolidated group in accordance with the terms of the Amended and Restated DWDP Tax Matters Agreement. DuPont, Corteva and Dow intend that to the extent Federal and/or State corporate income tax liabilities are reduced through the utilization of tax attributes of the other, settlement of any receivable and payable generated from the use of the other party’s sub-group attributes will be in accordance with the Amended and Restated DWDP Tax Matters Agreement.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 17, 2026 | Showing above |
| 2024 | Feb 14, 2025 | |
| 2023 | Feb 15, 2024 | |
| 2022 | Feb 15, 2023 | |
| 2021 | Feb 11, 2022 | |
| 2020 | Feb 12, 2021 | |
| 2019 | Feb 14, 2020 | |
| 2018 | Feb 11, 2019 | |
| 2017 | Feb 15, 2018 | |
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.