HALLIBURTON COHAL
HALLIBURTON CO Income Taxes Disclosure
Income TaxesThe components of the provision for income taxes on continuing operations were as follows:
Year Ended December 31, | |||
Millions of dollars | 2025 | 2024 | 2023 |
Current income taxes: | |||
Federal | $(3) | $10 | $(21) |
Foreign | (448) | (571) | (472) |
State | (5) | (9) | (12) |
Total current income taxes | (456) | (570) | (505) |
Deferred income taxes: | |||
Federal | (66) | (167) | (123) |
Foreign | 10 | 31 | (59) |
State | 33 | (12) | (14) |
Total deferred income taxes | (23) | (148) | (196) |
Income tax provision | $(479) | $(718) | $(701) |
The United States and foreign components of income from continuing operations before income taxes were as follows:
Year Ended December 31, | |||
Millions of dollars | 2025 | 2024 | 2023 |
United States | $762 | $1,695 | $1,666 |
Foreign | 1,009 | 1,539 | 1,697 |
Total income from continuing operations before income taxes | $1,771 | $3,234 | $3,363 |
Reconciliations between the actual provision for income taxes on continuing operations and that computed by applying
the United States statutory rate to income from continuing operations before income taxes were as follows:
Year Ended December 31, | ||
Millions of dollars | 2025 | |
U.S. Federal Statutory Tax Rate | $372 | 21.0% |
State and Local Income Tax, Net of Federal Income Tax Effect (a) | (24) | (1.4) |
Foreign Tax Effects | ||
Argentina | ||
Intercompany Withholding Tax | 33 | 1.9 |
Other | 15 | 0.8 |
Brazil | 27 | 1.5 |
Cayman Islands | ||
Statutory Tax Rate Difference Between Cayman Islands and United States | 29 | 1.6 |
Mexico | ||
Foreign Exchange / Inflation Adjustment | (26) | (1.5) |
Other | 28 | 1.6 |
Norway | 23 | 1.3 |
Saudi Arabia | ||
Intercompany Withholding Tax | 32 | 1.8 |
Other | (3) | (0.2) |
Singapore | ||
Statutory Tax Rate Difference Between Singapore and United States | (35) | (2.0) |
Other | 25 | 1.4 |
United Arab Emirates | (19) | (1.1) |
Other Foreign Jurisdictions | 125 | 7.0 |
Domestic Federal Reconciling Items | ||
Effect of Cross-Border Tax Laws | ||
Foreign Derived Intangible Income Deduction | (135) | (7.6) |
Global Intangible Low-Taxed Income | 23 | 1.3 |
Other | 10 | 0.6 |
Tax Credits | ||
Foreign Tax Credit | (146) | (8.2) |
Research & Development Credit | (50) | (2.8) |
Changes in Valuation Allowances | 176 | 9.9 |
Nontaxable or Nondeductible items | 32 | 1.8 |
Other Adjustments | (5) | (0.1) |
Changes in Unrecognized Tax Benefits | (28) | (1.6) |
Effective Tax Rate | $479 | 27.0% |
(a) | During the year ended December 31, 2025, state and local income taxes in Texas comprise the majority (greater than 50 percent) of the state and local income taxes, net of federal effect category. | ||||
Year Ended December 31, | ||
2024 | 2023 | |
United States statutory rate | 21.0% | 21.0% |
Valuation allowance against tax assets | (2.1) | 0.8 |
Impact of foreign income taxed at different rates | 4.7 | 0.2 |
State income taxes | 0.6 | 0.7 |
Impact of impairments and other charges | 0.6 | 0.6 |
Adjustments of prior year taxes | (2.5) | (1.3) |
Other items, net | (0.1) | (1.2) |
Total effective tax rate on continuing operations | 22.2% | 20.8% |
During the year ended December 31, 2025, we recorded a total income tax provision of $479 million on pre-tax
income of $1.8 billion, resulting in an effective tax rate of 27.0%. The effective tax rate for 2025 was primarily impacted by our
geographic mix of earnings, tax adjustments related to the reassessment of prior year tax accruals, and changes of valuation
allowance on some of our deferred tax assets, and discrete tax benefit from the Foreign-Derived Intangible Income (FDII)
deduction attributable to a royalty prepayment.
During the year ended December 31, 2024, we recorded a total income tax provision of $718 million on pre-tax
income of $3.2 billion, resulting in an effective tax rate of 22.2%. The effective tax rate for 2024 was primarily impacted by our
geographic mix of earnings, tax adjustments related to the reassessment of prior year tax accruals, and valuation allowances on
some of our deferred tax assets.
During the year ended December 31, 2023, we recorded a total income tax provision of $701 million on pre-tax
income of $3.4 billion, resulting in an effective tax rate of 20.8%. The effective tax rate for 2023 was primarily impacted by our
geographic mix of earnings, tax adjustments related to the reassessment of prior year tax accruals, and valuation allowances on
some of our deferred tax assets.
The primary components of our deferred tax assets and liabilities were as follows:
December 31, | ||
Millions of dollars | 2025 | |
Gross deferred tax assets: | ||
Foreign tax credit carryforwards | $790 | |
Intangible assets | 679 | |
Operating and capital loss carryforwards | 629 | |
Royalty prepayment | 239 | |
Accrued liabilities | 233 | |
Employee compensation and benefits | 157 | |
Research and development tax credit carryforwards | 86 | |
Other | 813 | |
Total gross deferred tax assets | 3,626 | |
Gross deferred tax liabilities: | ||
Depreciation and amortization | 197 | |
Operating lease right-of-use assets | 133 | |
Other | 63 | |
Total gross deferred tax liabilities | 393 | |
Valuation allowances | 943 | |
Net deferred income tax asset | $2,290 | |
At December 31, 2025, we had $635 million of domestic and foreign tax-effected operating and capital loss
carryforwards, with approximately $6 million estimated to be utilized against our unrecognized tax benefits. In addition, we had
approximately $819 million of foreign tax credit carryforwards which are offset by $29 million of foreign branch deferred
activity and unrecognized tax benefits reflected in the table above. The ultimate realization of these deferred tax assets depends
on our ability to generate sufficient taxable income in the appropriate taxing jurisdiction.
Our deferred tax assets from operating and capital losses, foreign tax credits, and research and development credits
will expire as follows:
Millions of dollars | U.S. Net Operating Loss | Foreign Operating and Capital Loss | Foreign Tax Credits | Research and Development Credit | Total Deferred Tax Assets |
2026-2030 | $5 | $69 | $430 | $— | $504 |
2031-2035 | 6 | 24 | 353 | — | 383 |
2036-2045 | 13 | 68 | 36 | 85 | 202 |
Non-Expiring | 13 | 437 | — | — | 450 |
$37 | $598 | $819 | $85 | $1,539 |
We have not recorded incremental U.S. income taxes or foreign withholding taxes on the undistributed earnings of
foreign subsidiaries subsequent to December 31, 2017. Under ASC 740, income taxes are generally not provided on such
undistributed earnings to the extent they are either not expected to be subject to tax upon repatriation or are considered to be
indefinitely reinvested.
For the year ended December 31, 2025, the “One Big Beautiful Bill Act,” was introduced which included federal tax
law revisions that affected the Company’s ability to utilize Foreign Tax Credits (FTC). Companies were required to recognize
the effects of changes in tax laws in the period in which the new legislation is enacted. As a result, the Company reassessed the
realizability of its FTC carryforwards and recorded an additional valuation allowance of $125 million against its FTC deferred
tax assets.
The following table presents a rollforward of our unrecognized tax benefits and associated interest and penalties.
Millions of dollars | Unrecognized Tax Benefits | Interest and Penalties | |
Balance at January 1, 2023 | $311 | $64 | |
Change in prior year tax positions | (38) | (10) | |
Change in current year tax positions | 8 | 1 | |
Cash settlements with taxing authorities | (4) | (3) | |
Lapse of statute of limitations | (9) | (3) | |
Balance at December 31, 2023 | $268 | (a) | $49 |
Change in prior year tax positions | (68) | — | |
Change in current year tax positions | 10 | 1 | |
Cash settlements with taxing authorities | (1) | (1) | |
Lapse of statute of limitations | (13) | (4) | |
Balance at December 31, 2024 | $196 | (a) | $45 |
Change in prior year tax positions | 40 | 3 | |
Change in current year tax positions | 15 | 2 | |
Cash settlements with taxing authorities | (11) | — | |
Lapse of statute of limitations | (70) | (8) | |
Balance at December 31, 2025 | $170 | (a)(b) | $42 |
(a) | Includes $36 million as of December 31, 2025, $40 million as of December 31, 2024, and $43 million as of December 31, 2023 in foreign unrecognized tax benefits that would give rise to a United States tax credit. As of December 31, 2025, December 31, 2024, and December 31, 2023, a net $119 million, $137 million and $192 million after a net operating loss carryforward offset, respectively, of unrecognized tax benefits would positively impact the effective tax rate and be recognized as additional tax benefits in our statement of operations if resolved in our favor. |
(b) | Includes $24 million as of December 31, 2025 that we believe could be resolved within the next 12 months. |
Income taxes paid (net of refunds received) were as follows:
Year Ended December 31, | |
Million of dollars | 2025 |
US Federal | $27 |
US State and Local | 9 |
Foreign | |
Mexico | 112 |
Saudi Arabia | 76 |
Other | 415 |
Foreign Subtotal | 603 |
Total | $639 |
Our tax returns are subject to review by the taxing authorities in the jurisdictions where we file tax returns. In most
cases we are no longer subject to examination by tax authorities for years before 2014. The only significant operating
jurisdiction that has tax filings under review or subject to examination by the tax authorities is the United States. The United
States federal income tax filings for tax years 2016 through 2024 are currently under review or remain open for review by the
IRS.
As of December 31, 2025, the primary unresolved issue for the IRS audit for 2016 relates to the classification of the
$3.5 billion ordinary deduction that we claimed for the termination fee we paid to Baker Hughes in the second quarter of 2016
for which we received a NOPA from the IRS on September 28, 2023. We regularly assess the likelihood of adverse outcomes
resulting from tax examinations to determine the adequacy of our tax reserves, and we believe our income tax reserves are
appropriately provided for all open tax years. We do not expect a final resolution of this issue in the next 12 months.
Based on the information currently available, we do not anticipate a significant increase or decrease to our tax
contingencies within the next 12 months.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 6, 2026 | Showing above |
| 2024 | Feb 12, 2025 | |
| 2023 | Feb 6, 2024 | |
| 2022 | Feb 7, 2023 | |
| 2021 | Feb 4, 2022 | |
| 2020 | Feb 5, 2021 | |
| 2019 | Feb 11, 2020 | |
| 2018 | Feb 13, 2019 | |
| 2017 | Feb 9, 2018 | |
| 2016 | Feb 7, 2017 | |
| 2015 | Feb 5, 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.