LINDE PLCLIN
LINDE PLC Income Taxes Disclosure
INCOME TAXES
Pre-tax income applicable to U.S. and non-U.S. operations is as follows:
(Millions of dollars) Year Ended December 31, | 2025 | 2024 | 2023 | ||||||||||||||
| United States | $ | 2,934 | $ | 2,717 | $ | 2,859 | |||||||||||
| Non-U.S. | 5,963 | 5,852 | 5,129 | ||||||||||||||
| Total income before income taxes | $ | 8,897 | $ | 8,569 | $ | 7,988 | |||||||||||
Provision for Income Taxes
The following is an analysis of the provision for income taxes:
(Millions of dollars) Year Ended December 31, | 2025 | 2024 | 2023 | ||||||||||||||
| Current tax expense (benefit) | |||||||||||||||||
| U.S. federal | $ | 475 | $ | 436 | $ | 260 | |||||||||||
| State and local | 114 | 106 | 116 | ||||||||||||||
| Non-U.S. | 1,865 | 1,602 | 1,522 | ||||||||||||||
| 2,454 | 2,144 | 1,898 | |||||||||||||||
| Deferred tax expense (benefit) | |||||||||||||||||
| U.S. federal | 46 | 3 | 57 | ||||||||||||||
| State and local | (15) | 11 | 5 | ||||||||||||||
| Non-U.S. | (496) | (156) | (146) | ||||||||||||||
| (465) | (142) | (84) | |||||||||||||||
| Total income taxes | $ | 1,989 | $ | 2,002 | $ | 1,814 | |||||||||||
Effective Tax Rate Reconciliation
Linde plc is not subject to tax in Ireland, its country of incorporation. For purposes of the effective tax rate reconciliation, the company utilizes the U.S. statutory income tax rate of 21%. An analysis of the difference between the provision for income taxes and the amount computed by applying the U.S. statutory income tax rate to pre-tax income follows:
(Dollar amounts in millions) Year Ended December 31, | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||
| U.S. Federal statutory income tax | $ | 1,868 | 21.0 | % | $ | 1,800 | 21.0 | % | $ | 1,677 | 21.0 | % | |||||||||||||||||||||||
| State and local income taxes, net of Federal income tax effect (a) | 88 | 1.0 | % | 102 | 1.2 | % | 105 | 1.3 | % | ||||||||||||||||||||||||||
| Foreign tax effects | |||||||||||||||||||||||||||||||||||
| Germany | |||||||||||||||||||||||||||||||||||
| Changes in tax laws or rates | (158) | (1.8) | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
| Other | 60 | 0.7 | % | 49 | 0.6 | % | 60 | 0.8 | % | ||||||||||||||||||||||||||
| Other foreign jurisdictions | 201 | 2.2 | % | 172 | 2.0 | % | 148 | 1.9 | % | ||||||||||||||||||||||||||
| Share-based compensation | (60) | (0.7) | % | (63) | (0.7) | % | (63) | (0.8) | % | ||||||||||||||||||||||||||
| Tax credits | (42) | (0.5) | % | (45) | (0.5) | % | (20) | (0.3) | % | ||||||||||||||||||||||||||
| Changes in unrecognized tax benefits | 10 | 0.2 | % | 2 | — | % | (54) | (0.7) | % | ||||||||||||||||||||||||||
| Other adjustments | 22 | 0.3 | % | (15) | (0.2) | % | (39) | (0.5) | % | ||||||||||||||||||||||||||
| Provision for income taxes | $ | 1,989 | 22.4 | % | $ | 2,002 | 23.4 | % | $ | 1,814 | 22.7 | % | |||||||||||||||||||||||
| (a) In 2025, 2024, and 2023, state taxes in California, Illinois, Indiana, New Jersey, Michigan, Pennsylvania, Texas, Florida, Minnesota, and Oregon made up the majority (greater than 50 percent) of the tax effect in this category. | |||||||||||||||||||||||||||||||||||
Income Taxes Paid
Income taxes paid by federal, state/local, and foreign:
| (Millions of dollars) Year Ended December 31, | 2025 | 2024 | 2023 | ||||||||||||||
| U.S. Federal | $ | 544 | $ | 503 | $ | 483 | |||||||||||
| State and local | 100 | 106 | 121 | ||||||||||||||
| Non-U.S. | 1,630 | 1,607 | 1,351 | ||||||||||||||
| Total | $ | 2,274 | $ | 2,216 | $ | 1,955 | |||||||||||
Income taxes paid by jurisdiction:
| (Millions of dollars) Year Ended December 31, | 2025 | 2024 | 2023 | ||||||||||||||
| United States | $ | 644 | $ | 609 | $ | 604 | |||||||||||
| Germany | 82 | 224 | 236 | ||||||||||||||
| China | 199 | 201 | 187 | ||||||||||||||
| Mexico | 237 | 158 | 138 | ||||||||||||||
| Others | 1,112 | 1,024 | 790 | ||||||||||||||
| Total | $ | 2,274 | $ | 2,216 | $ | 1,955 | |||||||||||
Net Deferred Tax Liabilities
Net deferred tax liabilities included in the consolidated balance sheets are comprised of the following:
(Millions of dollars) December 31, | 2025 | 2024 | |||||||||
| Deferred tax liabilities | |||||||||||
| Fixed assets | $ | 2,462 | $ | 2,378 | |||||||
| Goodwill | 263 | 233 | |||||||||
| Other intangible assets | 2,672 | 2,638 | |||||||||
| Subsidiary/equity investments | 492 | 535 | |||||||||
| Benefit plans and related (b)(c) | 40 | — | |||||||||
| Other (a) | 488 | 736 | |||||||||
| $ | 6,417 | $ | 6,520 | ||||||||
| Deferred tax assets | |||||||||||
| Carryforwards | $ | 380 | $ | 505 | |||||||
| Benefit plans and related (b)(c) | — | 16 | |||||||||
| Inventory | 87 | 87 | |||||||||
| Accruals and other (d) | 968 | 827 | |||||||||
| $ | 1,435 | $ | 1,435 | ||||||||
| Less: Valuation allowances (e) | (151) | (146) | |||||||||
| $ | 1,284 | $ | 1,289 | ||||||||
| Net deferred tax liabilities | $ | 5,133 | $ | 5,231 | |||||||
Recorded in the consolidated balance sheets as (Note 7): | |||||||||||
| Other long-term assets | 423 | 428 | |||||||||
| Deferred credits | 5,556 | 5,659 | |||||||||
| $ | 5,133 | $ | 5,231 | ||||||||
(a)Includes $236 million in 2025 and $235 million in 2024 related to right-of-use lease assets and includes $82 million in 2025 and $335 million in 2024 related to timing differences regarding certain engineering projects accounted for on the cost incurred input method.
(b)Includes deferred tax liabilities of $102 million and $95 million in 2025 and 2024, respectively, related to pension / OPEB funded status (see Notes 7 and 16).
(c)The amounts are net of deferred tax assets of $137 million in 2025 and deferred tax liabilities of $290 million in 2024.
(d)Includes $244 million in 2025 and $244 million in 2024 related to lease liabilities.
(e)Summary of changes in valuation allowances relating to deferred tax assets follows (millions of dollars):
| (Millions of dollars) | 2025 | 2024 | 2023 | ||||||||||||||
| Balance, January 1, | $ | (146) | $ | (176) | $ | (276) | |||||||||||
| Income tax (charge) benefit | 1 | 26 | 65 | ||||||||||||||
| Other, including write-offs | — | — | 34 | ||||||||||||||
| Translation adjustments | (6) | 4 | 1 | ||||||||||||||
| Balance, December 31, | $ | (151) | $ | (146) | $ | (176) | |||||||||||
The company evaluates deferred tax assets quarterly to ensure that estimated future taxable income will be sufficient in character (e.g., capital gain versus ordinary income treatment), amount and timing to result in their recovery. After considering the positive and negative evidence, a valuation allowance is established to reduce the assets to their realizable value when management determines that it is more likely than not (i.e., greater than 50% likelihood) that a deferred tax asset will not be realized. Considerable judgment is required in establishing deferred tax valuation allowances.
As of December 31, 2025, the company had $380 million of deferred tax assets relating to net operating losses (“NOLs”) and tax credits and $151 million of valuation allowances. These deferred tax assets include $338 million relating to NOLs, of which $46 million expire within 5 years, $20 million expire after 5 years, and $272 million have no expiration. The deferred tax assets also include $42 million related to credits of which $2 million expire within 5 years, $36 million expire after 5 years, and $4 million have no expiration. The valuation allowances of $151 million primarily relate to NOLs. Management has determined, based on financial projections and available tax strategies, that it is unlikely that the benefit of these losses will be realized. If events or circumstances change, valuation allowances are adjusted at that time resulting in an income tax benefit or charge.
The company has $492 million of non-U.S income and withholding taxes accrued related to its investment in non-U.S. subsidiaries and equity investments. A provision has not been made for any additional non-U.S. income or withholding taxes at December 31, 2025 on unremitted non-U.S. earnings on which the company intends to remain indefinitely reinvested or on other outside basis differences in its investments unrelated to unremitted earnings. A determination of deferred taxes related to these items is not practicable.
Uncertain Tax Positions
Unrecognized income tax benefits represent income tax positions taken on income tax returns but not yet recognized in the consolidated financial statements. The company has unrecognized income tax benefits totaling $315 million, $292 million and $304 million as of December 31, 2025, 2024, and 2023, respectively. If recognized, the majority of the unrecognized tax benefits and related interest and penalties would be recorded as a benefit to income tax expense on the consolidated statements of income.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| (Millions of dollars) | 2025 | 2024 | 2023 | ||||||||||||||
| Unrecognized income tax benefits, January 1 | $ | 292 | $ | 304 | $ | 325 | |||||||||||
| Additions for tax positions of prior years | 9 | 19 | 108 | ||||||||||||||
| Reductions for tax positions of prior years (a) | (2) | (9) | (121) | ||||||||||||||
| Additions for current year tax positions | 22 | 11 | — | ||||||||||||||
| Reductions for settlements with taxing authorities | (4) | (12) | (1) | ||||||||||||||
| Other (b) | (2) | (21) | (7) | ||||||||||||||
| Unrecognized income tax benefits, December 31 | $ | 315 | $ | 292 | $ | 304 | |||||||||||
(a)2023 amounts are primarily related to the closure of tax audits.
(b)Other includes reductions for statute of limitation lapses and foreign currency translation.
The company classifies interest income and expense related to income taxes as tax expense in the consolidated statements of income. For the years ended December 31, 2025 and 2024, the company recognized net interest expense of $3 million. For the year ended December 31, 2023, the company recognized net interest income of $17 million. The company had $19 million and $16 million of accrued interest and penalties as of December 31, 2025 and 2024, respectively, which were recorded in other long-term liabilities in the consolidated balance sheets (See Note 7).
As of December 31, 2025, the company remained subject to examination in the following major tax jurisdictions for the tax years as indicated below:
| Major tax jurisdictions | Open Years | ||||
| Americas | |||||
| United States | 2022 through 2025 | ||||
| Canada | 2014 through 2025 | ||||
| Mexico | 2014 through 2025 | ||||
| Brazil | 2008 through 2025 | ||||
| EMEA | |||||
| Germany | 2018 through 2025 | ||||
| United Kingdom | 2022 through 2025 | ||||
| APAC | |||||
| Australia | 2021 through 2025 | ||||
| China | 2020 through 2025 | ||||
| India | 2007 through 2025 | ||||
| South Korea | 2020 through 2025 | ||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 18, 2019 | |
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.