FREEPORT-MCMORAN INCFCX
FREEPORT-MCMORAN INC Income Taxes Disclosure
INCOME TAXES
Geographic sources of income (loss) before income taxes and equity in affiliated companies’ net earnings for the years ended December 31 follow:
| 2025 | 2024 | 2023 | |||||||||||||||
| U.S. | $ | 405 | $ | (547) | $ | 68 | |||||||||||
| Foreign | 5,967 | 7,454 | 5,938 | ||||||||||||||
| Total | $ | 6,372 | $ | 6,907 | $ | 6,006 | |||||||||||
Income taxes are provided on the earnings of FCX’s material foreign subsidiaries under the assumption that these earnings will be distributed. FCX has not provided deferred income taxes for other differences between the book and tax carrying amounts of its investments in material foreign subsidiaries as FCX considers its ownership positions to be permanent in duration, and quantification of the related deferred tax liability is not practicable.
FCX’s provision for income taxes for the years ended December 31 follows:
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Current income taxes: | ||||||||||||||||||||
| U.S. federal | $ | — | $ | 36 | $ | 5 | ||||||||||||||
| U.S. state | (6) | (1) | (6) | |||||||||||||||||
| Foreign | (1,967) | (2,635) | (2,087) | |||||||||||||||||
| Total current | (1,973) | (2,600) | (2,088) | |||||||||||||||||
| Deferred income taxes: | ||||||||||||||||||||
| U.S. federal | — | 1 | (50) | |||||||||||||||||
| U.S. state | (3) | (1) | (3) | |||||||||||||||||
| Foreign | (250) | 74 | (320) | |||||||||||||||||
| Total deferred | (253) | 74 | (373) | |||||||||||||||||
| Adjustments | 1 | — | 6 | |||||||||||||||||
| Operating loss carryforwards | 4 | 3 | 185 | |||||||||||||||||
| Provision for income taxes | $ | (2,221) | $ | (2,523) | $ | (2,270) | ||||||||||||||
A reconciliation of the U.S. federal statutory tax rate to FCX’s effective income tax rate for the years ended December 31 follows:
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Amount | % | Amount | % | Amount | % | ||||||||||||||||||||||||||||||
| U.S. federal statutory tax rate | $ | (1,338) | (21) | % | $ | (1,450) | (21) | % | $ | (1,261) | (21) | % | |||||||||||||||||||||||
U.S. state and local income taxes, net of federal income tax effecta | 9 | — | — | — | (3) | — | |||||||||||||||||||||||||||||
| Foreign tax effects: | |||||||||||||||||||||||||||||||||||
Indonesiab | |||||||||||||||||||||||||||||||||||
| Statutory tax rate difference between Indonesia and U.S. | (154) | (2) | (228) | (3) | (192) | (3) | |||||||||||||||||||||||||||||
| Mining taxes | (290) | (5) | (453) | (7) | (357) | (6) | |||||||||||||||||||||||||||||
| Withholding taxes | (128) | (2) | (208) | (3) | (162) | (3) | |||||||||||||||||||||||||||||
| Other | (27) | — | (20) | — | (28) | — | |||||||||||||||||||||||||||||
Peruc | |||||||||||||||||||||||||||||||||||
| Statutory tax rate difference between Peru and U.S. | (205) | (3) | (144) | (2) | (130) | (2) | |||||||||||||||||||||||||||||
| Mining taxes | (110) | (2) | (81) | (1) | (76) | (2) | |||||||||||||||||||||||||||||
| Withholding taxes | (33) | — | (21) | — | (16) | — | |||||||||||||||||||||||||||||
| Other | 31 | — | (12) | — | (41) | (1) | |||||||||||||||||||||||||||||
| Other foreign jurisdictions | (50) | (1) | (47) | (1) | 2 | — | |||||||||||||||||||||||||||||
| Effect of changes in tax laws or rates enacted in the current period | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Effect of cross-border tax laws | (2) | — | (10) | — | (2) | — | |||||||||||||||||||||||||||||
| Tax credits: | |||||||||||||||||||||||||||||||||||
| Foreign tax credit expiration/limitation | (32) | (1) | (1,043) | (15) | (287) | (5) | |||||||||||||||||||||||||||||
| Other | (25) | — | (14) | — | — | — | |||||||||||||||||||||||||||||
| Changes in valuation allowance | (50) | (1) | 861 | 12 | 128 | 2 | |||||||||||||||||||||||||||||
| Nontaxable or nondeductible items: | |||||||||||||||||||||||||||||||||||
| Depletion | 210 | 3 | 88 | 1 | 204 | 3 | |||||||||||||||||||||||||||||
| Other | (13) | — | (9) | — | (2) | — | |||||||||||||||||||||||||||||
| Changes in unrecognized tax benefits | (6) | — | 228 | b | 3 | (28) | — | ||||||||||||||||||||||||||||
| Other adjustments | (8) | — | 40 | — | (19) | — | |||||||||||||||||||||||||||||
| Provision for income taxes | $ | (2,221) | (35) | % | $ | (2,523) | (37) | % | $ | (2,270) | (38) | % | |||||||||||||||||||||||
a.New York state taxes in 2025 and Texas state taxes in 2023 contributed to the majority of the tax effect in this category.
b.Refer to “Indonesia Tax Matters” below.
c.Refer to “Peru Tax Matters” below.
Income taxes paid (net of refunds) are as follows for the years ended December 31:
| 2025 | 2024 | 2023 | |||||||||||||||
| U.S. federal | $ | — | $ | — | $ | — | |||||||||||
| U.S. state | — | 1 | — | ||||||||||||||
| Foreign: | |||||||||||||||||
| Indonesia | 2,194 | 1,971 | 1,350 | ||||||||||||||
| Peru | 632 | 560 | 630 | ||||||||||||||
| Other foreign jurisdictions | 72 | 20 | 27 | ||||||||||||||
| Total foreign | 2,898 | 2,551 | 2,007 | ||||||||||||||
| Total income taxes paid, net | $ | 2,898 | $ | 2,552 | $ | 2,007 | |||||||||||
The components of deferred taxes follow:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Accrued expenses | $ | 1,845 | $ | 1,657 | |||||||
| Net operating losses | 1,805 | 1,814 | |||||||||
| Foreign tax credits | 159 | 184 | |||||||||
| Employee benefit plans | 72 | 76 | |||||||||
| Other | 199 | 214 | |||||||||
| Deferred tax assets | 4,080 | 3,945 | |||||||||
| Valuation allowances | (3,079) | (2,984) | |||||||||
| Net deferred tax assets | 1,001 | 961 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Property, plant, equipment and mine development costs | (4,335) | (4,193) | |||||||||
| Undistributed earnings | (1,037) | (981) | |||||||||
| Other | (241) | (155) | |||||||||
| Total deferred tax liabilities | (5,613) | (5,329) | |||||||||
| Net deferred tax liabilities | $ | (4,612) | $ | (4,368) | |||||||
Tax Attributes. At December 31, 2025, FCX had (i) U.S. state net operating losses (NOLs) of $10.6 billion, of which $3.6 billion can be carried forward indefinitely, with the remainder primarily expiring between 2026 and 2045, (ii) U.S. federal NOLs of $6.1 billion, of which $0.8 billion can be carried forward indefinitely, with the remainder primarily expiring between 2036 and 2037, (iii) U.S. foreign tax credits of $0.2 billion that will expire between 2026 and 2034 and (iv) Atlantic Copper NOLs of $0.4 billion that can be carried forward indefinitely.
Valuation Allowances. On the basis of available information at December 31, 2025, including positive and negative evidence, FCX has provided valuation allowances for certain of its deferred tax assets where it believes it is more-likely-than-not that some portion or all of such assets will not be realized. Valuation allowances totaled $3.1 billion at December 31, 2025, and covered all of FCX’s U.S. federal NOLs and foreign tax credits, substantially all of its U.S. state and foreign NOLs, as well as a portion of its U.S. federal, state and foreign deferred tax assets.
The valuation allowance related to FCX’s U.S. foreign tax credits totaled $0.2 billion at December 31, 2025. FCX has operations in tax jurisdictions where statutory income taxes and withholding taxes are in excess of the U.S. federal income tax rate. Valuation allowances are recognized on foreign tax credits for which no benefit is expected to be realized.
The valuation allowance related to FCX’s U.S. federal, state and foreign NOLs totaled $1.8 billion and other deferred tax assets totaled $1.1 billion at December 31, 2025. NOLs and deferred tax assets represent future deductions for which a benefit will only be realized to the extent these deductions offset future income. FCX develops an estimate of which future tax deductions will be realized and recognizes a valuation allowance to the extent these deductions are not expected to be realized in future periods.
Valuation allowances will continue to be carried on U.S. foreign tax credits, U.S. federal, state and foreign NOLs and U.S. federal, state and foreign deferred tax assets, until such time that (i) FCX generates taxable income against which any of the assets, credits or NOLs can be used, (ii) forecasts of future taxable income provide sufficient positive evidence to support reversal of the valuation allowances or (iii) FCX identifies a prudent and feasible means of securing the benefit of the assets, credits or NOLs that can be implemented.
The $0.1 billion net increase in the valuation allowances during 2025 is primarily related to a $0.2 billion increase in U.S. federal temporary differences related to current year activity, partially offset by a $0.1 billion decrease in valuation allowances against outstanding Section 163(j) deferred tax assets.
U.S. Tax Matters
One Big Beautiful Bill Act. On July 4, 2025, the President signed into law H.R.1 (also referred to as the One Big Beautiful Bill Act), which includes a broad range of tax reform provisions affecting businesses, including extending and modifying certain provisions of the Tax Cuts & Jobs Act of 2017. H.R.1 did not have a material impact on FCX’s consolidated financial results for the year 2025.
Inflation Reduction Act of 2022. The provisions of the U.S. Inflation Reduction Act of 2022 (the Act), which became applicable to FCX on January 1, 2023, include, among other provisions, a new Corporate Alternative Minimum Tax (CAMT) of 15% on the adjusted financial statement income (AFSI) of corporations with average annual AFSI exceeding $1.0 billion over a three-year period.
Based on current guidance, FCX has determined that the provisions of the Act did not impact its financial results for the three years ended December 31, 2025. However, the proposed and interim guidance released by the Internal Revenue Service relating to the calculation of CAMT is not final and is subject to change.
Pillar Two of the Global Anti-Base Erosion Rules. In 2021, the Organisation for Economic Co-operation and Development (OECD) published a framework for Pillar Two of the Global Anti-Base Erosion Rules, which was designed to coordinate participating jurisdictions in updating the international tax system to ensure that large multinational companies pay a 15% minimum level of income tax. In January 2026, the OECD published additional guidance on the framework, including safe harbor provisions that would minimize or eliminate application of the 15% global minimum income tax on domestic operations of U.S.-parent multinational companies.
Recommendations from the OECD regarding the 15% global minimum income tax, the safe harbor provisions and other changes are being considered and/or implemented in jurisdictions where FCX operates. At current metals market prices, FCX does not expect enactment of the recommended framework in jurisdictions where it operates to materially impact its financial results.
Indonesia Tax Matters. Under the terms of its special mining business license (IUPK), PTFI is subject to a 25% corporate income tax rate and a 10% profits tax on net income.
During 2024, in conjunction with closure of PTFI’s 2021 corporate income tax audit and resolution of Indonesia disputed tax matters, PTFI recorded credits to net income of $215 million, including $199 million to provision for income taxes, $8 million to production and delivery costs and $8 million to interest expense, net.
Peru Tax Matters. Cerro Verde’s current mining stability agreement subjects it to a stable income tax rate of 32% through the expiration of the agreement on December 31, 2028. The enacted tax rate on dividend distributions, which is not stabilized by the agreement, is 5%.
During 2025, in conjunction with closure of Cerro Verde’s 2020 corporate income tax audit, Cerro Verde recorded credits to net income of $27 million, including $54 million to provision for income taxes and $2 million to other income, net, partially offset by charges of $29 million to production and delivery costs.
Chile Tax Matters. Under the US-Chilean Tax Treaty, which became effective in 2024, FCX’s share of income from El Abra is subject to an income tax rate of 35%.
Effective January 1, 2024, mining royalty taxes in Chile consist of two main components: (i) profitability-based mining royalty rates on a sliding scale of 8% to 26% (depending on a defined operational margin) and (ii) an additional ad valorem royalty tax based on 1% of sales.
Uncertain Tax Positions. Tax positions reflected in the consolidated financial statements are, based on their technical merits, more-likely-than-not to be sustained upon examination by taxing authorities or have otherwise been effectively settled. Such tax positions reflect the largest amount of benefit, determined on a cumulative probability basis, that is more-likely-than-not to be realized upon settlement with the applicable taxing authority with full knowledge of all relevant information. FCX’s policy associated with uncertain tax positions is to record accrued interest in interest expense and accrued penalties in other income, net, rather than in the provision for income taxes.
A summary of the activities associated with FCX’s reserve for unrecognized tax benefits for the years ended December 31 follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance at beginning of year | $ | 161 | $ | 720 | $ | 810 | |||||||||||
| Additions: | |||||||||||||||||
| Prior year tax positions | 24 | 13 | 27 | ||||||||||||||
| Current year tax positions | 10 | 10 | 28 | ||||||||||||||
| Decreases: | |||||||||||||||||
| Prior year tax positions | (20) | (54) | (13) | ||||||||||||||
| Settlements with taxing authorities | (4) | (492) | (132) | ||||||||||||||
| Lapse of statute of limitations | (2) | (36) | — | ||||||||||||||
| Balance at end of year | $ | 169 | $ | 161 | $ | 720 | |||||||||||
The total amount of accrued interest and penalties associated with unrecognized tax benefits was $275 million at December 31, 2025, primarily relating to unrecognized tax benefits associated with royalties and the timing of advance payments, $264 million at December 31, 2024, and $536 million at December 31, 2023. Amounts include unpaid items on the consolidated balance sheet of $28 million at December 31, 2025, $26 million at December 31, 2024, and $33 million at December 31, 2023. (Charges) benefits for interest and penalties related to unrecognized tax benefits totaled $(3) million in 2025, $8 million in 2024 and $(153) million in 2023.
The reserve for unrecognized tax benefits of $169 million at December 31, 2025, included $58 million net of income tax benefits and valuation allowances that, if recognized, would reduce FCX’s provision for income taxes. Changes in the reserve for unrecognized tax benefits associated with current and prior-year tax positions were primarily related to uncertainties associated with FCX’s tax treatment of cost recovery methods and various non-deductible costs.
FCX or its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The tax years for FCX’s major tax jurisdictions that remain subject to examination are as follows:
| Jurisdiction | Years Subject to Examination | Open Years | ||||||||||||
| U.S. Federal | — | 2022-2025 | ||||||||||||
| Indonesia | 2017, 2022 | 2023-2025 | ||||||||||||
| Peru | 2021 | 2017-2020, 2022-2025 | ||||||||||||
| Chile | 2023-2024 | 2022, 2025 | ||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 13, 2026 | Showing above |
| 2023 | Feb 16, 2024 | |
| 2022 | Feb 15, 2023 | |
| 2021 | Feb 15, 2022 | |
| 2020 | Feb 16, 2021 | |
| 2019 | Feb 14, 2020 | |
| 2018 | Feb 15, 2019 | |
| 2017 | Feb 20, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Feb 26, 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.