Marathon Petroleum CorpMPC
Marathon Petroleum Corp Income Taxes Disclosure
Income Taxes
| (Millions of dollars) | 2025 | 2024 | 2023 | ||||||||||||||
| Income (loss) from operations before income taxes: | |||||||||||||||||
| Domestic | $ | 6,958 | $ | 5,964 | $ | 13,875 | |||||||||||
| Foreign | 57 | (7) | 114 | ||||||||||||||
| Total | $ | 7,015 | $ | 5,957 | $ | 13,989 | |||||||||||
| Provision (benefit) for income taxes: | |||||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 706 | $ | 862 | $ | 2,359 | |||||||||||
| State and local | 129 | 144 | 475 | ||||||||||||||
| Foreign | 20 | 8 | 11 | ||||||||||||||
| Total current | 855 | 1,014 | 2,845 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | 255 | (90) | 18 | ||||||||||||||
| State and local | 25 | (33) | (46) | ||||||||||||||
| Foreign | 2 | (1) | — | ||||||||||||||
| Total deferred | 282 | (124) | (28) | ||||||||||||||
| Total | $ | 1,137 | $ | 890 | $ | 2,817 | |||||||||||
A reconciliation of the federal statutory income tax rate to the effective tax rate applied to income from before income taxes follows:
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| (Millions of dollars) | Amount | % | Amount | % | Amount | % | |||||||||||||||||||||||||||||
| Federal statutory rate | $ | 1,473 | 21.0 | % | $ | 1,251 | 21.0 | % | $ | 2,937 | 21.0 | % | |||||||||||||||||||||||
State and local income taxes, net of federal income tax effects(a) | 128 | 1.8 | 91 | 1.5 | 338 | 2.4 | |||||||||||||||||||||||||||||
| Nontaxable or nondeductible items: | |||||||||||||||||||||||||||||||||||
| Noncontrolling interests | (385) | (5.5) | (341) | (5.7) | (314) | (2.2) | |||||||||||||||||||||||||||||
| Other | 24 | 0.3 | (44) | (0.8) | (30) | (0.3) | |||||||||||||||||||||||||||||
| Tax credits | (84) | (1.2) | (42) | (0.7) | — | — | |||||||||||||||||||||||||||||
| Other adjustments | (19) | (0.2) | (25) | (0.4) | (114) | (0.8) | |||||||||||||||||||||||||||||
| Effective tax rate applied to income before income taxes | $ | 1,137 | 16.2 | % | $ | 890 | 14.9 | % | $ | 2,817 | 20.1 | % | |||||||||||||||||||||||
(a) State taxes in California, Texas and Kentucky make up the majority of the tax effect of this category.
Deferred tax assets and liabilities resulted from the following:
| December 31, | |||||||||||
| (Millions of dollars) | 2025 | 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Employee benefits | $ | 560 | $ | 558 | |||||||
| Environmental remediation | 80 | 81 | |||||||||
| Finance lease obligations | 409 | 433 | |||||||||
| Operating lease liabilities | 314 | 243 | |||||||||
| Net operating loss carryforwards | 32 | 39 | |||||||||
| Tax credit carryforwards | 20 | 22 | |||||||||
| Goodwill and other intangibles | 84 | 75 | |||||||||
| Other | 115 | 95 | |||||||||
| Total deferred tax assets | 1,614 | 1,546 | |||||||||
| Valuation allowance | (9) | (51) | |||||||||
| Total net deferred tax assets | 1,605 | 1,495 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Property, plant and equipment | 2,441 | 2,584 | |||||||||
| Inventories | 845 | 672 | |||||||||
| Investments in subsidiaries and affiliates | 3,957 | 3,742 | |||||||||
| Right of use assets | 324 | 246 | |||||||||
| Other | 19 | 20 | |||||||||
| Total deferred tax liabilities | 7,586 | 7,264 | |||||||||
| Net deferred tax liabilities | $ | 5,981 | $ | 5,769 | |||||||
Net deferred tax liabilities were classified in the consolidated balance sheets as follows:
| December 31, | |||||||||||
| (Millions of dollars) | 2025 | 2024 | |||||||||
| Assets: | |||||||||||
| Other noncurrent assets | $ | 3 | $ | 2 | |||||||
| Liabilities: | |||||||||||
| Deferred income taxes | 5,984 | 5,771 | |||||||||
| Net deferred tax liabilities | $ | 5,981 | $ | 5,769 | |||||||
At December 31, 2025 and 2024, federal operating loss carryforwards were $2 million and $3 million, respectively, which includes a mix of indefinite carryforward ability and expiration periods ranging from 2032 through 2034. As of December 31, 2025 and 2024, state and local operating loss and tax credit carryforwards were $38 million and $42 million, respectively, which includes a mix of indefinite carryforward ability and expiration periods ranging from 2029 through 2045. At December 31, 2025 and 2024, foreign operating loss carryforwards were $12 million and $16 million, respectively, which includes expiration periods ranging from 2031 through 2043.
As of December 31, 2025 and 2024, $9 million and $51 million of valuation allowances have been recorded related to income taxes, related to realizability of foreign tax operating losses, state tax net operating losses and credits, and related deferred tax assets.
MPC is continuously undergoing examination of its U.S. federal income tax returns by the Internal Revenue Service (“IRS”). Since 2012, we have continued to participate in the Compliance Assurance Process (“CAP”). CAP is a real-time audit of the U.S. federal income tax return that allows the IRS, working in conjunction with MPC, to determine tax return compliance with the U.S. federal tax law prior to filing the return. This program provides us with greater certainty about our tax liability for years under examination by the IRS. MPLX and its subsidiaries are undergoing examination of its U.S. federal income tax returns by the IRS for the tax years 2019 through 2022. We do not believe the eventual outcome of such audits will have a material impact on our financial statements as of December 31, 2025.
Further, we are routinely involved in U.S. state income tax audits. We believe all other audits will be resolved with the amounts provided for these liabilities. As of December 31, 2025, we have various state and local income tax returns subject to examination for years 2016 through 2023, depending on jurisdiction.
The following table summarizes the activity in unrecognized tax benefits:
| (Millions of dollars) | 2025 | 2024 | 2023 | ||||||||||||||
| January 1 balance | $ | 27 | $ | 38 | $ | 57 | |||||||||||
| Additions for tax positions of current year | 80 | — | — | ||||||||||||||
| Additions for tax positions of prior years | 65 | — | 8 | ||||||||||||||
| Reductions for tax positions of prior years | (7) | (5) | (6) | ||||||||||||||
| Settlements | (2) | (6) | (20) | ||||||||||||||
| Statute of limitations | — | — | (1) | ||||||||||||||
| December 31 balance | $ | 163 | $ | 27 | $ | 38 | |||||||||||
If the unrecognized tax benefits as of December 31, 2025 were recognized, $82 million would affect our effective income tax rate.
Interest and penalties related to income taxes are recorded as part of the provision for income taxes.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Feb 28, 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.