EXPEDITORS INTERNATIONAL OF WASHINGTON INC Income Taxes Disclosure

NOTE 7. TAXES

Income Taxes

On January 1, 2025, the Company prospectively adopted ASU 2023-09. Following the new ASU required disclosures for the year ended December 31, 2025, the reconciling items between the income tax expense computed by applying the U.S. Federal income tax rate of 21% and reported income tax expense are as follows:

1State taxes in California, Illinois, New York and Pennsylvania made up the majority (greater than 50 percent) of the tax effect in this category.

In 2025, 2024 and 2023, the Company benefited from U.S. Federal tax credits totaling $31.0 million, $32.5 million and $24.1 million, respectively, principally because of withholding taxes related to the Company's foreign operations, as well as U.S. income tax benefits for FDII of $21.1 million, $21.6 million, $16.2 million, respectively. These amounts were offset by the effect of higher foreign tax rates of the Company's international subsidiaries, when compared to the U.S. Federal income tax rate of 21%, as well as certain expenses that are no longer deductible under the 2017 Tax Act, including certain executive compensation in excess of amounts allowed. For the years 2025, 2024, and 2023 there was no BEAT expense and GILTI expense was insignificant.

Based on management’s review of the Company’s tax positions, the Company had no significant unrecognized tax benefits as of December 31, 2025 and 2024.

On July 4, 2025, the United States enacted into law the 2025 Tax Act which provides for several corporate tax changes including, but not limited to, restoring an election to recognize full expensing of domestic research and development costs, restoring immediate deductibility of certain capital expenditures, and changes to the computations of U.S. taxation on international earnings. The 2025 Tax Act does not have a material impact to consolidated tax expense and cash flows for 2025.

Elements of enacted tax laws and regulations could be impacted by further legislative action as well as additional interpretations and guidance issued by the Internal Revenue Service or the U.S. Department of the Treasury and by similar governmental bodies in jurisdictions outside of the U.S. Such changes could impact the estimates of the amounts the Company has recorded.

The Company is subject to taxation in various states and many foreign jurisdictions around the world. The Company believes that its tax positions, including intercompany transfer pricing policies, are reasonable and consistent with established tax laws and regulations. The Company is under, or may be subject to, audit or examination and assessments by relevant authorities for years 2005 and thereafter where the ultimate resolution could require significant additional tax, penalties and interest payments. The Indian tax authority (ITA) has asserted that additional income tax applies on transactions between and amongst the Company and its Indian subsidiary, as well as additional service tax applicable to ocean and air imports and exports. We believe that ITA’s positions are without merit and we have thus far been successful in defending our position in Indian courts. However, if these matters are adversely resolved, we would recognize significant additional tax expense, including interest and penalties. The Company establishes liabilities when, despite its belief that the tax filing positions are appropriate and consistent with tax law, it concludes that it may not be successful in realizing the tax position. In evaluating a tax position, the Company determines whether it is more likely than not that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position and in consultation with qualified legal and tax advisors.

The total amount of the Company’s tax contingencies may increase in the future. In addition, changes in state, federal, and foreign tax laws, including transfer pricing and changes in interpretations of these laws may increase the Company’s tax contingencies. The timing of the resolution of income tax examinations can be highly uncertain, and the amounts ultimately paid including interest and penalties, if any, upon resolution of the issues raised by the taxing authorities may differ significantly from the amounts recorded. It is reasonably possible that within the next twelve months the Company or its subsidiaries will undergo further audits and examinations by various tax authorities and possibly may reach resolution related to income tax and indirect tax examinations in one or more jurisdictions. These assessments or settlements could result in changes to the Company’s contingencies related to positions on tax filings in future years. The estimate of any ultimate tax liability contains assumptions based on experiences, judgments about potential actions by taxing jurisdictions as well as judgments about the likely outcome of issues that have been raised by the taxing jurisdiction. The Company cannot currently provide an estimate of the range of possible outcomes. Any interest and penalties expensed in relation to the underpayment of income taxes were insignificant for the years ended December 31, 2025, 2024, and 2023. The Company has no liability as of December 31, 2025, for the 15% corporate alternative minimum tax (CAMT), which became effective in 2023 in the U.S. under the Inflation Reduction Act. For the year ended December 31, 2025 and 2024, the amount of Pillar Two income tax expense was insignificant.

Other Taxes

The Company is subject to multiple examinations for value added, service, payroll, or other non-income taxes in various jurisdictions. In certain cases, the Company has received assessments from the authorities. Possible losses or range of possible losses associated with these matters are either immaterial or remote. If certain matters or a group of matters were to be decided adversely to the Company, it could result in a charge that might be material to the results of operations.