Huntsman CORP Income Taxes Disclosure

20. INCOME TAXES 

 

The following is a summary of U.S. and non-U.S. provisions for current and deferred income tax expense from continuing operations (dollars in millions):

 

Huntsman Corporation

 

		Year ended December 31,
		2025				2024				2023
Current:
U.S. federal		$	—			$	1			$	7
U.S. state and local			1				—				1
Foreign			57				75				66
Deferred:
U.S. federal			(58	)			(32	)			(33	)
U.S. state and local			—				(6	)			(2	)
Foreign			26				23				25
Total		$	26			$	61			$	64

 

Huntsman International

 

		Year ended December 31,
		2025				2024				2023
Current:
U.S. federal		$	—			$	3			$	8
U.S. state and local			1				—				1
Foreign			57				75				66
Deferred:
U.S. federal			(57	)			(33	)			(33	)
U.S. state and local			—				(6	)			(2	)
Foreign			26				23				25
Total		$	27			$	62			$	65

 

 

We have elected to prospectively adopt ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. 

 

The following provides a disaggregation of income taxes paid, net of refunds received, by U.S. federal and state income taxes and foreign income taxes for the year ended December 31, 2025 in accordance with the guidance in ASU No. 2023-09 (dollars in millions):

 

		Year ended December 31,
		2025
Income taxes paid (net of refunds) by jurisdiction:
U.S. federal		$	13
U.S. state and local			—
Foreign:
China			39
Germany			19
Saudi Arabia			8
All other foreign jurisdictions			19
Total		$	98

 

The following schedules reconcile the differences between U.S. federal income taxes at the U.S. statutory rate to our provision for income taxes from continuing operations for the year ended December 31, 2025 in accordance with the guidance in ASU No. 2023-09 (dollars in millions):

 

Huntsman Corporation

		Year ended December 31, 2025
		Amount				Percent
Loss from continuing operations before income taxes		$	(192	)
Expected income tax benefit at U.S. statutory rate of 21%		$	(40	)			21	%
Change resulting from:
State tax benefit, net of federal effect(1)			—				—
Foreign tax effects:
China:
Statutory tax rate difference			6				(3	)%
Withholding tax on repatriated earnings, interest and royalties			5				(3	)%
Other			1				(1	)%
Germany:
Statutory tax rate difference			6				(3	)%
Deferred tax effect of non-U.S. tax rate changes			2				(1	)%
State trade tax benefit			(19	)			10	%
State trade tax changes in valuation allowances			17				(9	)%
Changes in valuation allowances			14				(7	)%
Luxembourg:
Nondeductible currency exchange losses			4				(2	)%
Changes in valuation allowances			(4	)			2	%
Other			2				(1	)%
Netherlands:
Statutory tax rate difference			(7	)			4	%
Nontaxable currency exchange gains			(5	)			3	%
Changes in valuation allowances			39				(20	)%
Other			4				(2	)%
Saudi Arabia:
Nontaxable minority partner share of income			(5	)			3	%
Other			(1	)			1	%
Switzerland:
Statutory tax rate difference			(8	)			4	%
Cantonal tax expense			4				(2	)%
Turkey:
Changes in valuation allowances			2				(1	)%
U.K.:
Changes in valuation allowances			2				(1	)%
Other			(1	)			1	%
Other foreign jurisdictions:
Other			2				(3	)%
Effect of changes in tax laws or rates enacted in the current period			—				—
Effect of cross-border tax laws			—				—
Tax credits—research and development credits			(3	)			2	%
Changes in valuation allowances			(2	)			1	%
Nontaxable or nondeductible items:
Other U.S. tax effects, including nondeductible expenses and other items			1				(1	)%
Stock-based compensation			5				(3	)%
Changes in unrecognized tax benefits			5				(3	)%
Income tax expense and effective income tax rate		$	26				(14	)%

 

Huntsman International

		Year ended December 31, 2025
		Amount				Percent
Loss from continuing operations before income taxes		$	(189	)
Expected income tax benefit at U.S. statutory rate of 21%		$	(39	)			21	%
Change resulting from:
State tax benefit, net of federal effect(1)			—				—
Foreign tax effects:
China:
Statutory tax rate difference			6				(3	)%
Withholding tax on repatriated earnings, interest and royalties			5				(3	)%
Other			1				(1	)%
Germany:
Statutory tax rate difference			6				(3	)%
Deferred tax effect of non-U.S. tax rate changes			2				(1	)%
State trade tax benefit			(19	)			10	%
State trade tax changes in valuation allowances			17				(9	)%
Changes in valuation allowances			14				(7	)%
Luxembourg:
Nondeductible currency exchange losses			4				(2	)%
Changes in valuation allowances			(4	)			2	%
Other			2				(1	)%
Netherlands:
Statutory tax rate difference			(7	)			4	%
Nontaxable currency exchange gains			(5	)			3	%
Changes in valuation allowances			39				(21	)%
Other			4				(2	)%
Saudi Arabia:
Nontaxable minority partner share of income			(5	)			3	%
Other			(1	)			1	%
Switzerland:
Statutory tax rate difference			(8	)			4	%
Cantonal tax expense			4				(2	)%
Turkey:
Changes in valuation allowances			2				(1	)%
U.K.:
Changes in valuation allowances			2				(1	)%
Other			(1	)			1	%
Other foreign jurisdictions:
Other			2				(2	)%
Effect of changes in tax laws or rates enacted in the current period			—				—
Effect of cross-border tax laws			—				—
Tax credits—research and development credits			(3	)			2	%
Changes in valuation allowances			(2	)			1	%
Nontaxable or nondeductible items:
Other U.S. tax effects, including nondeductible expenses and other items			1				(1	)%
Stock-based compensation			5				(3	)%
Changes in unrecognized tax benefits			5				(3	)%
Income tax expense and effective income tax rate		$	27				(14	)%

---

(1)

Our state tax benefit, net of federal effect is zero due to a mix of jurisdictions with and without valuation allowances and other impacts. However, the jurisdictions that make up the majority (greater than 50%) of our composite state tax (apportioned tax-effected pre-tax loss) used in computing the state tax provision are Illinois, Georgia, Minnesota, Wisconsin, Michigan, South Carolina, California, Indiana and Pennsylvania.

 

 

The following schedules reconcile the differences between U.S. federal income taxes at the U.S. statutory rate to our provision for income taxes from continuing operations for the years ended December 31, 2024 and 2023 in accordance with the guidance prior to the adoption of ASU No. 2023-09 (dollars in millions):

 

Huntsman Corporation

		Year ended December 31,
		2024				2023
(Loss) income from continuing operations before income taxes		$	(39	)		$	99
Expected tax (benefit) expense at U.S. statutory rate of 21%		$	(8	)		$	21
Change resulting from:
State tax expense, net of federal benefit			(7	)			(1	)
Non-U.S. tax rate differentials			(4	)			—
Income tax settlement related to 2017 U.S. Tax Reform Act			5				—
Loss from liquidation of subsidiaries			10				—
Gain on acquisition of assets, net			(13	)			—
Impact of equity method investments			(17	)			(28	)
Non-U.S. withholding tax on repatriated earnings, interest and royalties, net of U.S. foreign tax credits			14				12
Tax authority audits and dispute resolutions			4				5
Non-U.S. income subject to U.S. tax not offset by U.S. foreign tax credits			(6	)			3
Deferred tax effect of non-U.S. tax rate changes			(2	)			—
Stock-based compensation			3				—
Other non-U.S. tax effects, including nondeductible expenses and transfer pricing adjustments			8				5
Other U.S. tax effects, including nondeductible expenses and other credits			(1	)			2
Change in valuation allowance			75				45
Total income tax expense		$	61			$	64

 

Huntsman International

		Year ended December 31,
		2024				2023
(Loss) income from continuing operations before income taxes		$	(36	)		$	102
Expected tax (benefit) expense at U.S. statutory rate of 21%		$	(7	)		$	22
Change resulting from:
State tax expense, net of federal benefit			(7	)			(1	)
Non-U.S. tax rate differentials			(4	)			—
Income tax settlement related to 2017 U.S. Tax Reform Act			5				—
Loss from liquidation of subsidiaries			10				—
Gain on acquisition of assets, net			(13	)			—
Impact of equity method investments			(17	)			(28	)
Non-U.S. withholding tax on repatriated earnings, interest and royalties, net of U.S. foreign tax credits			14				12
Tax authority audits and dispute resolutions			4				5
Non-U.S. income subject to U.S. tax not offset by U.S. foreign tax credits			(6	)			3
Deferred tax effect of non-U.S. tax rate changes			(2	)			—
Stock-based compensation			3				—
Other non-U.S. tax effects, including nondeductible expenses and transfer pricing adjustments			8				5
Other U.S. tax effects, including nondeductible expenses and other credits			(1	)			2
Change in valuation allowance			75				45
Total income tax expense		$	62			$	65

 

During 2024, the weighted average statutory rate for countries with pre-tax income (primarily our operations in China (25% statutory rate) and Luxembourg (25% statutory rate)) was offset by the weighted average statutory rate for countries with pre-tax losses, resulting in a net tax benefit of $4 million as compared to the 21% U.S. statutory rate reflected in the reconciliation above. During 2023, the weighted average statutory rate for countries with pre-tax income (primarily our operations in China (25% statutory rate), Germany (30% statutory rate) and Luxembourg (25% statutory rate)) was offset by the weighted average statutory rate for countries with pre-tax losses, resulting in an immaterial difference as compared to the 21% U.S. statutory rate reflected in the reconciliation above. The amounts for 2025 are reflected in the reconciliations of 2025 above.

 

Under the U.S. Tax Reform Act’s global intangible low-taxed income (“GILTI”) provision, our non-U.S. operations are generally subject to U.S. tax. We have elected to treat the GILTI as a current-period expense when incurred. The stated purpose of the GILTI rules is to generate additional U.S. tax related to income in non-U.S. jurisdictions, which incur less than a blended 14% (13.125% for years before 2025) non-U.S. tax rate. Our non-U.S. income is subject to a blended rate greater than 14% and 13.125%; however, in practice, the GILTI regulations result in additional tax liability from expense allocations which limit our ability to utilize foreign tax credits against the GILTI inclusion. For 2024 and 2023, we incurred a tax benefit of $6 million and tax expense of $3 million, respectively, resulting from these expense allocations, net of other U.S. taxation on foreign operations and foreign tax credits. The amounts for 2025 are reflected in the reconciliations of 2025 above.

 

On July 4, 2025, the U.S. enacted tax reform legislation through the One Big Beautiful Bill Act (“OBBBA”). Included in this legislation are provisions that allow for the immediate expensing of domestic U.S. research and development expenses, immediate expensing of certain capital expenditures, changes to the interest expense limitation and other changes to the U.S. taxation of profits derived from foreign operations. OBBBA did not have a material impact on our consolidated financial statements.

 

The components of (loss) income from continuing operations before income taxes were as follows (dollars in millions):

 

Huntsman Corporation

 

		Year ended December 31,
		2025				2024				2023
U.S.		$	(283	)		$	(176	)		$	(155	)
Non-U.S.			91				137				254
Total		$	(192	)		$	(39	)		$	99

 

 

 

Huntsman International

 

		Year ended December 31,
		2025				2024				2023
U.S.		$	(280	)		$	(173	)		$	(152	)
Non-U.S.			91				137				254
Total		$	(189	)		$	(36	)		$	102

 

 

Components of deferred income tax assets and liabilities were as follows (dollars in millions):

 

Huntsman Corporation

 

		December 31,
		2025				2024
Deferred income tax assets:
Net operating loss carryforwards		$	435			$	289
Operating leases			93				95
Pension and other employee compensation			45				57
Deferred interest			133				104
Capitalized research and development costs			23				56
Property, plant and equipment			21				25
Intangible assets			2				9
Intercompany prepayments			—				4
Other, net			63				49
Total		$	815			$	688
Deferred income tax liabilities:
Property, plant and equipment		$	(292	)		$	(284	)
Operating leases			(89	)			(95	)
Intangible assets			(66	)			(74	)
Pension and other employee compensation			(75	)			(52	)
Outside basis difference in subsidiaries			(47	)			(42	)
Unrealized currency gains			(5	)			(16	)
Other, net			(8	)			(5	)
Total		$	(582	)		$	(568	)
Net deferred tax asset before valuation allowance		$	233			$	120
Valuation allowance—net operating losses, deferred interest and other			(340	)			(255	)
Net deferred tax liability		$	(107	)		$	(135	)
Non-current deferred tax asset		$	49			$	69
Non-current deferred tax liability			(156	)			(204	)
Net deferred tax liability		$	(107	)		$	(135	)

 

Huntsman International

 

		December 31,
		2025				2024
Deferred income tax assets:
Net operating loss carryforwards		$	433			$	288
Operating leases			93				95
Pension and other employee compensation			44				56
Deferred interest			133				104
Capitalized research and development costs			22				55
Property, plant and equipment			21				25
Intangible assets			2				9
Intercompany prepayments			—				4
Other, net			63				49
Total		$	811			$	685
Deferred income tax liabilities:
Property, plant and equipment		$	(292	)		$	(284	)
Operating leases			(89	)			(95	)
Intangible assets			(66	)			(74	)
Pension and other employee compensation			(75	)			(52	)
Outside basis difference in subsidiaries			(47	)			(42	)
Unrealized currency gains			(5	)			(16	)
Other, net			(8	)			(5	)
Total		$	(582	)		$	(568	)
Net deferred tax asset before valuation allowance		$	229			$	117
Valuation allowance—net operating losses, deferred interest and other			(340	)			(255	)
Net deferred tax liability		$	(111	)		$	(138	)
Non-current deferred tax asset			49				69
Non-current deferred tax liability			(160	)			(207	)
Net deferred tax liability		$	(111	)		$	(138	)

 

 

We evaluate deferred tax assets to determine whether it is more likely than not that they will be realized. Valuation allowances are reviewed each period on a tax jurisdiction basis and analyzed to determine whether there is sufficient positive or negative evidence to support a change in judgment about the realizability of the related deferred tax assets. These conclusions require significant judgment. In evaluating the objective evidence that historical results provide, we consider cumulative income or losses during the applicable three-year period. Cumulative losses incurred over the three-year period limit our ability to consider other evidence such as our projections for the future. Our judgments regarding valuation allowances are also influenced by factors outside of business results, including the costs and risks associated with any tax planning associated with utilizing a deferred tax asset.

 

During 2025, we recorded a discrete release of valuation allowances of approximately $8 million following the announced closure of our Moers, Germany facility. As a result of our Moers facility closure, there is sufficient positive evidence that the applicable Germany tax filing group (without our Moers facility) is more likely than not to realize the group deferred tax assets. We anticipate that the losses from our Moers facility closure will more likely than not be unavailable to any of our continuing German tax filing groups and we continue to have a full valuation allowance against these net deferred tax assets. The valuation allowance of $10 million on the entire net deferred tax asset of the German tax filing group that included our Moers, Germany facility, was established in 2024 due to the negative economic conditions that led to the facility closure. During 2025 and 2024, we also established $9 million and $13 million of significant valuation allowances, respectively, on certain net deferred tax assets in Luxembourg as a result of changes in estimated future taxable income resulting from decreased intercompany receivables and, therefore, decreased income in Luxembourg, our primary treasury center outside of the U.S. We also had miscellaneous non-significant valuation allowance establishments totaling $4 million in 2025 and $6 million in 2024. We established a $14 million valuation allowance against the entire net deferred tax asset in the U.K. as of December 31, 2023.

 

We have gross net operating losses (“NOLs”) of $1,344 million ($319 million tax-effected) in various non-U.S. jurisdictions. While the majority of the non-U.S. NOLs have no expiration date, $62 million ($11 million tax-effected) have a limited life (of which $11 million ($3 million tax-effected) are subject to a valuation allowance), of which none are scheduled to expire in 2026. We had no NOLs expire unused in 2025. 

 

We have gross U.S. federal NOLs of $440 million ($92 million tax-effected), the majority of which are not subject to expiration. We expect to be able to utilize all of these NOLs, and therefore they are not subject to a valuation allowance.

 

Included in the $1,344 million of gross non-U.S. NOLs is $151 million ($36 million tax-effected) attributable to our Luxembourg entities. As of December 31, 2025, due to the uncertainty surrounding the realization of the benefits of these losses, there is a valuation allowance of $24 million against these net tax-effected NOLs of $36 million.

 

We have $9 million tax-effected federal and state capital loss carryovers, all of which are subject to a valuation allowance. Our capital loss carryovers may only be utilized against capital gains and have a 5-year carryforward period, generally expiring at the end of 2028. 

 

We have gross U.S. federal deferred interest deductions of $219 million ($46 million tax-effected), which are limited to deduction of 30% of taxable EBITDA and do not expire. We expect to be able to utilize all of these deferred interest deductions and, therefore, they are not subject to a valuation allowance. We also have deferred interest deductions in the Netherlands of $80 million tax-effected, which are limited to a deduction of 24.5% of taxable EBITDA, and which are subject to a full valuation allowance.

 

Uncertainties regarding expected future income in certain jurisdictions could affect the realization of deferred tax assets in those jurisdictions and result in additional valuation allowances in future periods, or, in the case of unexpected pre-tax earnings, the release of valuation allowances in future periods.

 

The following is a summary of changes in our valuation allowances (dollars in millions):

 

Huntsman Corporation

 

		2025				2024				2023
Valuation allowances as of January 1		$	255			$	221			$	169
Valuation allowances as of December 31			340				255				221
Net increase			(85	)			(34	)			(52	)
Foreign currency movements			26				(13	)			3
Decrease to deferred tax assets with no impact on operating tax expense, including an offsetting (decrease) increase to valuation allowances			(10	)			(28	)			4
Change in valuation allowances per rate reconciliation		$	(69	)		$	(75	)		$	(45	)
Components of change in valuation allowances affecting tax expense:
Pre-tax income and losses in jurisdictions with valuation allowances resulting in no tax expense or benefit		$	(64	)		$	(46	)		$	(30	)
Releases of valuation allowances in various jurisdictions			8				—				1
Establishments of valuation allowances in various jurisdictions			(13	)			(29	)			(16	)
Change in valuation allowances per rate reconciliation		$	(69	)		$	(75	)		$	(45	)

 

 

Huntsman International

 

		2025				2024				2023
Valuation allowances as of January 1		$	255			$	221			$	169
Valuation allowances as of December 31			340				255				221
Net increase			(85	)			(34	)			(52	)
Foreign currency movements			26				(13	)			3
Decrease to deferred tax assets with no impact on operating tax expense, including an offsetting (decrease) increase to valuation allowances			(10	)			(28	)			4
Change in valuation allowances per rate reconciliation		$	(69	)		$	(75	)		$	(45	)
Components of change in valuation allowances affecting tax expense:
Pre-tax income and losses in jurisdictions with valuation allowances resulting in no tax expense or benefit		$	(64	)		$	(46	)		$	(30	)
Releases of valuation allowances in various jurisdictions			8				—				1
Establishments of valuation allowances in various jurisdictions			(13	)			(29	)			(16	)
Change in valuation allowances per rate reconciliation		$	(69	)		$	(75	)		$	(45	)

 

 

The following is a reconciliation of our unrecognized tax benefits (dollars in millions):

 

		2025				2024
Unrecognized tax benefits as of January 1		$	5			$	5
Gross increases and decreases—tax positions taken during a prior period			1				—
Gross increases and decreases—tax positions taken during the current period			2				1
Reductions resulting from the lapse of statues of limitations			—				(1	)
Foreign currency movements			1				—
Unrecognized tax benefits as of December 31		$	9			$	5

 

 

As of December 31, 2025 and 2024, the amount of unrecognized tax benefits (not including interest and penalties) which, if recognized, would affect the effective tax rate is $5 million and $2 million, respectively. 

 

During 2025, we concluded and settled tax examinations in the U.S. (federal and various states), China, France, Germany and Hong Kong. During 2024, we concluded and settled tax examinations in the U.S. (federal and various states), Belgium, China, Germany and Italy. During 2023, we concluded and settled tax examinations in the U.S. (federal and various states), Germany, Indonesia, Singapore and Thailand.

 

During 2025, for unrecognized tax benefits that impact tax expense, we recorded a net increase in unrecognized tax benefits with a corresponding income tax expense (not including interest and penalties) of $3 million. During 2024, for unrecognized tax benefits that impact tax expense, we recorded no net change. During 2023, for unrecognized tax benefits that impact tax expense, we recorded a net decrease in unrecognized tax benefits with a corresponding income tax benefit (not including interest and penalties) of $1 million.

 

We recognized accrued interest related to unrecognized tax benefits in income tax expense as provided below (dollars in millions):

 

		Year ended December 31,
		2025				2024				2023
Interest included in tax expense		$	2			$	2			$	3

 

 

		December 31,
		2025				2024
Accrued liability for interest		$	10			$	8

 

 

We conduct business globally, and as a result, we file income tax returns in U.S. federal, various U.S. state and various non-U.S. jurisdictions. The following table summarizes the tax years that remain subject to examination by major tax jurisdictions:

 

Tax jurisdiction		Open tax years
Belgium		2024 and later
China		2015 and later
Germany		2018 and later
Hong Kong		2019 and later
India		2022 and later
Mexico		2022 and later
Switzerland		2017 and later
The Netherlands		2021 and later
United Kingdom		2023 and later
United States federal		2017 and later

 

Certain of our U.S. and non-U.S. income tax returns are currently under various stages of audit by applicable tax authorities and the amounts ultimately agreed upon in resolution of the issues raised may differ materially from the amounts accrued.

 

In connection with the provisions of U.S. Tax Reform, all non-U.S. earnings have generally been subject to U.S. tax and may be repatriated without incurring additional U.S. tax liability. Such repatriation may potentially be subject to limited foreign withholding taxes. We have accrued withholding taxes in countries where we do intend to repatriate some or all of the local retained earnings. For all other amounts and countries, we intend to continue to invest our retained earnings indefinitely and therefore not incur any significant additional taxes on those amounts.