ALTRIA GROUP, INC.MO
ALTRIA GROUP, INC. Income Taxes Disclosure
Income Taxes
The One Big Beautiful Bill Act (“OBBB”), which was signed into law in July 2025, included various tax law changes, including the restoration of favorable tax treatment for certain business-related provisions and modifications to the international tax law framework. The OBBB has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. These provisions and modifications have not had a material impact on our consolidated financial statements.
Earnings (losses) before income taxes and provision (benefit) for income taxes consisted of the following:
| For the Years Ended December 31, | |||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Earnings (losses) before income taxes: | |||||||||||||||||
| United States | $ | 9,382 | $ | 13,680 | $ | 10,971 | |||||||||||
| Outside United States | 7 | (22) | (43) | ||||||||||||||
| Total | $ | 9,389 | $ | 13,658 | $ | 10,928 | |||||||||||
| Provision (benefit) for income taxes: | |||||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 2,348 | $ | 927 | $ | 2,346 | |||||||||||
| State and local | 410 | 516 | 681 | ||||||||||||||
| Outside United States | — | — | 1 | ||||||||||||||
| 2,758 | 1,443 | 3,028 | |||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | (259) | 764 | (133) | ||||||||||||||
| State and local | (57) | 187 | (97) | ||||||||||||||
| (316) | 951 | (230) | |||||||||||||||
| Total provision for income taxes | $ | 2,442 | $ | 2,394 | $ | 2,798 | |||||||||||
Our U.S. subsidiaries join in the filing of a U.S. federal consolidated income tax return. The U.S. federal income tax statute of limitations remains open for the year 2017 and forward, with years 2017 through 2023 currently under examination by the Internal Revenue Service (“IRS”) as part of an audit conducted in the ordinary course of business. State statutes of limitations generally remain open for the year 2017 and forward. Certain of our state tax returns are currently under examination by various states as part of routine audits conducted in the ordinary course of business.
A reconciliation of the beginning and ending unrecognized tax benefits was as follows:
| For the Years Ended December 31, | |||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Balance at beginning of year | $ | 282 | $ | 1,608 | $ | 69 | |||||||||||
| Additions based on tax positions related to the current year | 21 | — | 1,548 | ||||||||||||||
| Additions for tax positions of prior years | 304 | 33 | — | ||||||||||||||
| Reductions for tax positions related to IRS Agreement | — | (1,343) | — | ||||||||||||||
| Reductions for tax positions of prior years | (21) | (16) | (6) | ||||||||||||||
| Tax settlements | (1) | — | (3) | ||||||||||||||
| Balance at end of year | $ | 585 | $ | 282 | $ | 1,608 | |||||||||||
The amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate at December 31, 2025, was $4 million, along with $515 million affecting deferred taxes. The amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate at December 31, 2024, was $189 million, along with $27 million affecting deferred taxes. The difference between the amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate at December 31, 2025 and December 31, 2024, is primarily related to certain cross-border taxes included in the tax reserve related to the downward attribution rules, discussed below.
In October 2024, we entered into an agreement with the IRS (“IRS Agreement”) regarding the tax treatment of a $6.4 billion ordinary loss we recognized in 2023 for cash tax purposes with respect to a portion of our tax basis associated with our former investment in JUUL. In 2023, we fully reserved for the tax benefit associated with this ordinary loss by recording an unrecognized tax benefit of $1,548 million. Consistent with the terms of the IRS Agreement, we claimed a $4.0 billion ordinary loss and a $2.4 billion capital loss on our 2023 tax return, resulting in a reduction of $1,343 million in unrecognized tax benefits in 2024. For the year ended December 31, 2024, we recorded a tax benefit of $887 million due to the reversal of the unrecognized tax benefit in our consolidated statement of earnings, resulting in the partial release of a valuation allowance against our JUUL-related losses as discussed below.
In September 2025, the U.S. District Court for the Eastern District of Virginia ruled in favor of the IRS and denied our refund claim for the 2017 tax year, based on the Tax Cuts and Jobs Act of 2017’s removal of downward attribution rules, which the IRS invoked to attribute income from certain of ABI’s foreign subsidiaries to Altria. We intend to vigorously contest the ruling by pursuing all available appellate remedies. This ruling also has a potential impact for our 2018 through 2025 tax years. Following this ruling, we reevaluated our position and concluded that it is no longer more likely than not that we will prevail at the conclusion of the appellate process.
Consequently, we reversed a receivable of $45 million for the 2017 tax year and recorded a full reserve for this uncertain tax position of $348 million for the 2018 through 2025 tax years. Additionally, we reduced a deferred tax liability by $498 million due to the resulting increase in the tax basis of our investment in ABI, partially offset by a $77 million increase to a valuation allowance associated with the indirect effect on unrealized capital losses due to the decrease of a previously anticipated capital gain on the ABI Transaction. As a result of the foregoing, we recognized a net tax benefit of $28 million for the year ended December 31, 2025 in our consolidated statement of earnings related to a favorable rate differential associated with certain cross-border taxes included in the tax reserve. Effective January 1, 2026, the OBBB reinstates this downward attribution rule, which will limit the impact of this ruling to the 2017 through 2025 tax years.
At December 31, 2025, 2024 and 2023, the amount of accrued interest and penalties on our consolidated balance sheets was $83 million, $18 million and $36 million, respectively. For the years ended December 31, 2025, 2024 and 2023, we recognized in our consolidated statements of earnings $94 million, $(24) million and $20 million, respectively, of gross interest (income) expense and penalties associated with uncertain tax positions. We recognize accrued interest and penalties associated with uncertain tax positions as part of the tax provision.
We are subject to income taxation in many jurisdictions. Unrecognized tax benefits reflect the differences between tax positions we have taken or expect to take on income tax returns and the amounts recognized in our financial statements. Resolution of the related tax positions with the relevant tax authorities may take many years to complete, and such timing is not entirely within our control.
A reconciliation between actual income taxes and amounts computed by applying the federal statutory rate to earnings before income taxes was as follows:
| For the Years Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 (1) | 2023 (1) | ||||||||||||||||||||||||||||||||||||
| (dollars in millions) | $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||||
| Provision computed at U.S. federal statutory rate | $ | 1,972 | 21.0 | % | $ | 2,868 | 21.0 | % | $ | 2,295 | 21.0 | % | ||||||||||||||||||||||||||
| Increase (decrease) resulting from: | ||||||||||||||||||||||||||||||||||||||
Domestic state and local taxes, net of federal effect (2) | 278 | 3.0 | 557 | 4.1 | 463 | 4.2 | ||||||||||||||||||||||||||||||||
| Foreign tax effects | (10) | (0.1) | 3 | — | 11 | 0.1 | ||||||||||||||||||||||||||||||||
| Cross-border tax laws | 3 | — | (46) | (0.4) | (2) | — | ||||||||||||||||||||||||||||||||
| Tax credits | (39) | (0.4) | (31) | (0.2) | (25) | (0.2) | ||||||||||||||||||||||||||||||||
| Changes in valuation allowance | 91 | 1.0 | (939) | (6.9) | 57 | 0.5 | ||||||||||||||||||||||||||||||||
| Nontaxable or nondeductible items | ||||||||||||||||||||||||||||||||||||||
| Nondeductible goodwill | 243 | 2.6 | — | — | — | — | ||||||||||||||||||||||||||||||||
| Other | 8 | — | (3) | — | (9) | (0.1) | ||||||||||||||||||||||||||||||||
| Worldwide changes in unrecognized tax benefits | (104) | (1.1) | (15) | (0.1) | 8 | 0.1 | ||||||||||||||||||||||||||||||||
| Effective tax rate | $ | 2,442 | 26.0 | % | $ | 2,394 | 17.5 | % | $ | 2,798 | 25.6 | % | ||||||||||||||||||||||||||
(1) As discussed in Note 1. Background and Basis of Presentation, we retrospectively adopted ASU No. 2023-09. As a result, 2024 and 2023 amounts are now presented in categories in accordance with ASU No. 2023-09.
(2) State taxes in Pennsylvania, Virginia, New Jersey, California, Michigan, Tennessee, Illinois, Indiana and Kentucky make up greater than 50% of the total tax effect in this category for 2025. State taxes in Pennsylvania, California, Virginia, New Jersey, Illinois, Kentucky, Michigan, Alabama and Georgia make up greater than 50% of the total tax effect in this category for 2024. State taxes in Pennsylvania, California, Illinois, New Jersey, Virginia, Kentucky, Michigan, Alabama and Florida make up greater than 50% of the total tax effect in this category for 2023.
The tax provision in 2025 included state tax expense, net of federal benefit, of $278 million and tax expense of $243 million for the non-deductible impairment of the e-vapor reporting unit goodwill, partially offset by tax benefits of $104 million related to tax reserves including a favorable rate differential associated with certain cross-border taxes relevant to our investment in ABI.
The tax provision in 2024 included tax benefits of $939 million due primarily to the release of valuation allowances recorded against a deferred tax asset related to our JUUL-related losses as a result of the IRS Agreement and the ABI Transaction, partially offset by state tax expense, net of federal benefit, of $557 million.
The tax provision in 2023 included state tax expense, net of federal benefit, of $463 million and tax expense of $53 million for a valuation allowance recorded against a deferred tax asset related to the disposition of our former investment in JUUL.
Cash taxes paid, net of refunds, consisted of the following:
| For the Years Ended December 31, | |||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Federal | $ | 1,340 | $ | 1,161 | $ | 1,219 | |||||||||||
| State and local | 354 | 547 | 654 | ||||||||||||||
| Outside United States | 1 | 1 | 1 | ||||||||||||||
| Total | $ | 1,695 | $ | 1,709 | $ | 1,874 | |||||||||||
The tax effects of temporary differences that gave rise to deferred income tax assets and liabilities consisted of the following at December 31:
| (in millions) | 2025 | 2024 | |||||||||
| Deferred income tax assets: | |||||||||||
| Accrued postretirement and postemployment benefits | $ | 264 | $ | 270 | |||||||
| Settlement charges | 520 | 585 | |||||||||
| JUUL-related losses | 290 | 207 | |||||||||
| Investment in Cronos | 410 | 404 | |||||||||
| Research and development costs | 14 | 112 | |||||||||
| Net operating losses and tax credit carryforwards | 146 | 224 | |||||||||
| Total deferred income tax assets | 1,644 | 1,802 | |||||||||
| Deferred income tax liabilities: | |||||||||||
| Property, plant and equipment | (231) | (235) | |||||||||
| Intangible assets | (2,747) | (3,032) | |||||||||
| Investment in ABI | (1,085) | (1,370) | |||||||||
| Accrued pension costs | (126) | (108) | |||||||||
| Other | (35) | (133) | |||||||||
| Total deferred income tax liabilities | (4,224) | (4,878) | |||||||||
| Valuation allowances | (779) | (668) | |||||||||
| Net deferred income tax liabilities | $ | (3,359) | $ | (3,744) | |||||||
At December 31, 2025, we had JUUL-related gross capital loss carryforwards of $1.4 billion available to offset capital gains through 2028. We had estimated gross federal, state and foreign tax net operating losses (“NOLs”) of $106 million, $1,212 million and $38 million, respectively. The federal NOLs and the foreign NOLs have indefinite carryforward periods. A majority of the state NOLs will expire between 2039 through 2043 or have indefinite carryforward periods.
After giving effect to the IRS Agreement and $1.7 billion of JUUL-related capital losses previously utilized against capital gains related to the IQOS Transaction, we have $6.1 billion (which includes a $3.5 billion outside basis difference in a domestic subsidiary, a $1.2 billion outside basis difference in a foreign subsidiary and $1.4 billion of capital loss carryforwards) of the $12.8 billion tax loss related to our former investment in JUUL remaining to offset future potential capital gains. For financial statement purposes, none of the tax benefit for the remaining $6.1 billion was recognized at December 31, 2025.
A reconciliation of the beginning and ending valuation allowances was as follows:
| For the Years Ended December 31, | ||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Balance at beginning of year | $ | 668 | $ | 2,256 | $ | 2,800 | ||||||||||||||
| Additions to valuation allowance charged to income tax expense | 124 | 244 | 114 | |||||||||||||||||
| Reductions to valuation allowance credited to income tax benefit | (15) | (1,337) | (6) | |||||||||||||||||
| (Reductions) additions to valuation allowance due to NJOY Transaction (no impact to earnings) | — | (4) | 12 | |||||||||||||||||
| Reductions to valuation allowance offset to deferred tax asset (no impact to earnings) | — | (491) | (663) | |||||||||||||||||
| Foreign currency translation | 2 | — | (1) | |||||||||||||||||
| Balance at end of year | $ | 779 | $ | 668 | $ | 2,256 | ||||||||||||||
We determine deferred tax assets and liabilities based on the differences between the financial statement and tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. We record a valuation allowance when we have determined it is more likely than not that some portion or all of a deferred tax asset will not be realized. In assessing realizability, we consider the weight of all available positive and negative evidence, including the character of the assets and the possible sources of taxable income of the appropriate character within the applicable carryback and carryforward periods available under the tax law. As has occurred in prior periods, there is a potential that sufficient positive evidence may be available in future periods to cause us to reduce or eliminate the valuation allowance on certain deferred tax assets. That change to the valuation allowance would result in the recognition of previously unrecognized deferred tax assets and a decrease in income tax expense in the period the release is recorded.
The additions to valuation allowances during 2025 were due primarily to the indirect effects of tax reserves, as discussed above, on our unrealized capital losses. The cumulative valuation allowance at December 31, 2025 was primarily attributable to deferred tax assets recorded in connection with our investment in Cronos ($405 million) and our JUUL-related capital loss carryforwards ($290 million).
The additions to valuation allowances during 2024 were due primarily to deferred tax assets recorded in connection with our JUUL-related capital loss carryforwards. The reductions to valuation allowances during 2024 were due primarily to the $4.0 billion of ordinary losses recognized as part of the IRS Agreement, the reduction of a deferred tax asset for the portion of our JUUL-related capital losses that is now part of our tax basis in the shares of a domestic subsidiary and the ABI Transaction. This outside basis difference of the domestic subsidiary is not recognized as a deferred tax asset since we do not expect the temporary difference to reverse in the foreseeable future. The cumulative valuation allowance at December 31, 2024 was primarily attributable to deferred tax assets recorded in connection with our investment in Cronos ($402 million) and our JUUL-related capital loss carryforwards ($207 million).
The additions to valuation allowances during 2023 were due primarily to deferred tax assets recorded in connection with our former investment in JUUL. The reductions to valuation allowances during 2023 were due primarily to the reduction of a deferred tax asset for the portion of our JUUL capital losses that is now part of our tax basis in the shares of a foreign subsidiary. This outside basis difference of the foreign subsidiary is not recognized as a deferred tax asset since we do not expect the temporary difference to reverse in the foreseeable future. The cumulative valuation allowance at December 31, 2023 was primarily attributable to deferred tax assets recorded in connection with our tax basis in the shares of a domestic subsidiary ($1,808 million) and our investment in Cronos ($397 million).
For a discussion regarding our former investment in JUUL and current investments in ABI and Cronos, see Note 6. Investments in Equity Securities.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 25, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 27, 2017 | |
| 2015 | Feb 25, 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.