Expedia Group, Inc.EXPE

Expedia Group, Inc. Income Taxes Disclosure

10-KFiled Feb 13, 20267 min read
Income Taxes
The following table summarizes our U.S. and foreign income (loss) before income taxes:
 Year Ended December 31,
 202520242023
 (In millions)
U.S.$1,307 $1,280 $935 
Foreign284 262 83 
Total$1,591 $1,542 $1,018 
Provision for Income Taxes
The following table summarizes our provision for income taxes:
 Year Ended December 31,
 202520242023
  (In millions) 
Current income tax expense:
U.S. federal$7 $68 $106 
State28 30 36 
Foreign177 146 126 
Current income tax expense212 244 268 
Deferred income tax (benefit) expense:
U.S. federal78 77 75 
State10 18 (4)
Foreign(10)(21)(9)
Deferred income tax expense78 74 62 
Income tax expense:
U.S. federal85 145 181 
State38 48 32 
Foreign167 125 117 
Income tax expense$290 $318 $330 
We reduced our current income tax payable by $39 million, $24 million, and $17 million for the years ended December 31, 2025, 2024 and 2023 for tax deductions attributable to stock-based compensation.
Deferred Income Taxes
As of December 31, 2025 and 2024, the significant components of our deferred tax assets and deferred tax liabilities were as follows:
 December 31,
 20252024
 (In millions)
Deferred tax assets:
Provision for accrued expenses$54 $47 
Deferred loyalty rewards253 217 
Net operating loss and tax credit carryforwards196 130 
Capitalized research and development207 391 
Operating lease liabilities113 118 
Long-term investments119 108 
Other133 84 
Total deferred tax assets1,075 1,095 
Less valuation allowance(206)(176)
Net deferred tax assets$869 $919 
Deferred tax liabilities:
Goodwill and intangible assets$(315)$(308)
Anticipatory foreign tax credits(32)(17)
Operating lease ROU assets(109)(115)
Other(1)(2)
Total deferred tax liabilities$(457)$(442)
Net deferred tax assets$412 $477 
As of December 31, 2025, we had state net operating loss carryforwards (“NOLs”) of approximately $121 million and foreign NOLs of approximately $298 million. State NOLs of $33 million may be carried forward indefinitely, and state NOLs of $88 million expire at various times starting from 2035. Foreign NOLs of $198 million may be carried forward indefinitely, and foreign NOLs of $100 million expire at various times starting from 2027. As of December 31, 2025, we had tax credit carryforwards of approximately $135 million, which expire at various times starting from 2039.
As of December 31, 2025, we had a valuation allowance of approximately $206 million related to certain tax attribute carryforwards for which it is more likely than not the tax benefits will not be realized. The valuation allowance increased by $30 million from the amount recorded as of December 31, 2024, primarily due to the realized and unrealized capital losses on investments.
Most of our foreign undistributed earnings have already been subject to U.S. federal income tax. We do not assert indefinite reinvestment on the undistributed earnings of our foreign subsidiaries.
Reconciliation of U.S. Federal Statutory Income Tax Rate to Effective Income Tax Rate
A reconciliation of amounts computed by applying the U.S. federal statutory income tax rate to income before income taxes to total income tax expense is as follows:
 Year Ended December 31,
 202520242023
  ($ in millions)
U.S. federal statutory tax rate$334 21.0 %$324 21.0 %$214 21.0 %
State and local income tax, net of federal income tax effect (1)
32 2.0 43 2.8 28 2.8 
Foreign tax effects:
     United Kingdom:
          Nontaxable or nondeductible items18 1.1 10 0.6 6 0.6 
          Other1 0.1 1 0.1 3 0.3 
     Germany:
          Tax rate differential(1)(0.1)2 0.1 16 1.6 
          Nondeductible goodwill impairment— — — — 44 4.3 
          Other(6)(0.4)(1)(0.1)6 0.6 
     Brazil:
          Withholding tax76 4.8 50 3.2 17 1.7 
          Other(1)(0.1)(3)(0.2)(1)(0.1)
     Other foreign jurisdictions20 1.3 12 0.8 10 1.0 
Effect of cross-border tax laws:
     Foreign-derived intangible income(6)(0.4)(27)(1.8)(33)(3.2)
     Other(4)(0.3)4 0.3 (3)(0.3)
Tax credits:
     Research and development tax credits(69)(4.3)(48)(3.1)(63)(6.2)
     Foreign tax credits(94)(5.9)(56)(3.6)(58)(5.7)
Changes in valuation allowances35 2.2 (60)(3.9)— — 
Nontaxable or nondeductible items:
     Nondeductible compensation13 0.8 28 1.8 25 2.5 
     Excess tax benefits related to stock-based compensation(45)(2.8)(7)(0.5)9 0.9 
     Other25 1.6 2 0.1 3 0.3 
Changes in unrecognized tax benefits(40)(2.5)34 2.2 41 4.0 
Other adjustments:
     Divestitures and entity restructuring— — — — 55 5.4 
     Other2 0.1 10 0.8 11 0.9 
Effective tax rate$290 18.2 %$318 20.6 %$330 32.4 %
(1)The majority of state and local income tax expense for the period ended December 31, 2025 related to California, Michigan, New Jersey, and the State and City of New York, for the period ended December 31, 2024 related to California, Massachusetts, the State and City of New York, and North Carolina and for the period ended December 31, 2023 related to California, Illinois, New Jersey, and the State and City of New York.
Income Taxes Paid (Net of Refunds Received)
A reconciliation of the supplemental information related to income taxes paid (net of refunds received) as presented on the consolidated statement of cash flows is as follows:
202520242023
  (In millions) 
U.S. federal$23 $32 $126 
State25 35 40 
Foreign:
     Brazil73 49 13 
     Germany(2)(3)35 
     India17 13 8 
     Switzerland26 6 11 
     United Kingdom27 17 30 
     Other foreign29 35 18 
Total foreign170 117 115 
Income tax payments, net$218 $184 $281 
Unrecognized Tax Benefits
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:
202520242023
  (In millions) 
Balance, beginning of year$351 $335 $313 
Additions for tax positions related to the current year12 18 19 
Additions for tax positions of prior years13 4 4 
Reductions for tax positions of prior years(64)(3)— 
Settlements (22)(3)(1)
Balance, end of year$290 $351 $335 
As of December 31, 2025, we had $290 million of gross unrecognized tax benefits, $107 million of which, if recognized, would affect the effective tax rate. As of December 31, 2024, we had $351 million of gross unrecognized tax benefits, $161 million of which, if recognized, would affect the effective tax rate. As of December 31, 2023, we had $335 million of gross unrecognized tax benefits, $165 million of which, if recognized, would affect the effective tax rate.
We recognize interest and penalties related to unrecognized tax benefits in the provision for income taxes in our consolidated statement of operations. Accrued interest and penalties of $133 million and $117 million were reflected in our consolidated balance sheets as of December 31, 2025 and 2024.
The Company is routinely audited by U.S. federal, state, local and foreign income tax authorities. These audits include questioning the timing and amount of income and deductions, and the allocation of income and deductions among various tax jurisdictions. The IRS is currently examining Expedia Group’s U.S. consolidated federal income tax returns for the periods ended December 31, 2011 through December 31, 2020. The Company has consented to an extension of the statute of limitations, until June 30, 2027 for the 2011 through 2022 tax years. As of December 31, 2025, for the Expedia Group, Inc. and Subsidiaries group, statutes of limitations for tax years 2011 through 2024 remain open to examination in the U.S. federal jurisdiction and most state jurisdictions. For the HomeAway and Orbitz groups, statutes of limitations for tax years 2007 through 2015 remain open to examination in the U.S. federal and most state jurisdictions due to NOL carryforwards.
For tax years 2011 to 2013 and 2014 to 2016, the IRS issued final adjustments related to transfer pricing with our foreign subsidiaries. The 2011 to 2013 adjustments would result in federal income tax of approximately $244 million, subject to interest. The 2014 to 2016 adjustments would result in federal income tax of approximately $431 million, subject to interest. We do not agree with these adjustments and will continue to vigorously defend our position through administrative procedures.
On December 20, 2011, we completed a spin-off of TripAdvisor into a separate publicly-traded corporation. Pursuant to the tax sharing agreement between Expedia Group and TripAdvisor, TripAdvisor is responsible for its potential income tax liabilities in connection with any consolidated income tax returns filed as a part of Expedia Group’s consolidated income tax
return prior to or in connection with the spin-off. TripAdvisor is required to indemnify Expedia Group for any such taxes, including interest, penalties, legal, and professional fees.
In 2023, TripAdvisor agreed in principle with the IRS to an assessed amount of $120 million, inclusive of interest and state tax effects, for transfer pricing adjustments with its foreign subsidiaries for the 2009 to 2011 tax years. The assessment is a tax liability for tax years when TripAdvisor was part of Expedia Group's consolidated income tax return and is covered by the indemnification pursuant to the tax sharing agreement. In May 2023, Expedia Group received from the IRS the final assessment for the 2009 through 2011 tax years related to the TripAdvisor matter. Expedia Group remitted $113 million in settlement payments to the IRS, as the primary obligor for this assessment, and received the reimbursement required from TripAdvisor in settlement of the indemnification receivable for this matter. During 2023, we recorded $67 million of additional income tax expense and a corresponding tax indemnification adjustment in other, net in our consolidated statements of operations representing the estimate of the incremental assessed payment to the IRS, including state tax effects. During 2024, we recorded an additional $6 million of income tax expense related to interest adjustments for the 2010-2011 tax years.

Historical Timeline

Fiscal YearFiled
2025Feb 13, 2026Showing above
2024Feb 7, 2025
2023Feb 9, 2024
2022Feb 10, 2023
2021Feb 11, 2022
2020Feb 12, 2021
2019Feb 14, 2020
2018Feb 8, 2019
2017Feb 9, 2018
2016Feb 10, 2017
2015Feb 11, 2016

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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