REPUBLIC SERVICES, INC.RSG

REPUBLIC SERVICES, INC. Income Taxes Disclosure

10-KFiled Feb 18, 20266 min read
INCOME TAXES
The components of the provision for income taxes for the years ended December 31 follow:
202520242023
Current:
Federal
$81 $204 $260 
Foreign
10 13 9 
State
95 84 90 
Deferred:
Federal
240 55 72 
Foreign
(11)2 (3)
State
40 30 32 
Provision for income taxes$455 $388 $460 
On July 4, 2025, the One Big Beautiful Bill Act (the "Act”) was signed into law. The Act, among other things, implemented changes to the tax treatment relating to bonus depreciation, research and experimental expenditures and interest expense, and included phase-outs and restrictions on several clean energy tax incentives. The Act did not have a material impact on our effective tax rate.
The reconciliations of the statutory federal income tax rate to our effective tax rate for the years ended December 31 follow:
202520242023
US Federal Statutory Tax Rate$545 21.0 %$510 21.0 %$460 21.0 %
State and Local Income Taxes, Net of Federal Income Tax Effect(1)
110 4.2 107 4.4 97 4.4 
Tax Credits
Renewable energy assets(189)(7.3)(238)(9.8)(100)(4.6)
Other(46)(1.8)(23)(0.9)(3)(0.1)
Nontaxable or Nondeductible Items42 1.6 37 1.5 36 1.6 
Other Adjustments(7)(0.2)(5)(0.2)(30)(1.3)
Effective Tax Rate$455 17.5 %$388 16.0 %$460 21.0 %
(1) State taxes in California, Illinois, Massachusetts, & Texas made up the majority (greater than 50 percent) of the tax effect in this category for 2025, 2024, and 2023.
The impact of foreign tax effects, effect of changes in tax laws or rates enacted in the current period, effect of cross-border tax laws, changes in valuation allowances and changes in unrecognized tax benefits were each immaterial to the periods presented.
During 2023 through 2025, we acquired non-controlling interests in limited liability companies established to own renewable energy assets that qualified for investment tax credits under Section 48 of the Internal Revenue Code. We account for these investments under the equity method of accounting utilizing the HLBV method and recognize our share of income or loss and other reductions or increases in the value of our investment in loss from unconsolidated equity method investments within our consolidated statements of income. For further discussion regarding our equity method accounting, see Note 3, Business Acquisitions, Investments and Restructuring Charges of the notes to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
In addition, during 2023 we resolved IRS examinations for our 2014 to 2018 tax years, that in the aggregate, reduced our tax provision by approximately $21 million.
The components of the income tax payments (net of refunds received) for the period ended December 31 follow:
202520242023
Federal
$98 $195 $243 
 State
California
29 27 24 
Texas
11 10 — 
Other
52 71 59 
Foreign16 10 17 
Income tax payments (net of refunds received)$206 $313 $343 
We made income tax payments (net of refunds) of $206 million, $313 million and $343 million for 2025, 2024, and 2023, respectively. Income taxes paid in 2025 reflect benefits from the Act as well as tax credits from our continuing investments in qualified renewable energy projects. Income taxes paid in 2024 and 2023 reflect benefits from tax credits from our continuing investments in qualified renewable energy projects.
The components of the net deferred income tax asset and liability as of December 31 follow:
20252024
Deferred tax liabilities relating to:
Differences between book and tax basis of property and equipment
$(1,400)$(1,258)
Difference between book and tax basis of intangible assets
(722)(637)
Operating right-of-use lease assets
(52)(57)
Basis difference due to redemption of partnership interests
(80)(82)
Other
(10)— 
Total deferred tax liabilities
$(2,264)$(2,034)
Deferred tax assets relating to:
Environmental reserves
$182 $218 
Accruals not currently deductible
116 105 
Net operating loss carryforwards
60 61 
Difference between book and tax basis of other assets
9 48 
Operating right-of-use lease liabilities
56 59 
Other
15 15 
Total deferred tax assets
438 506 
Valuation allowance
(45)(51)
Net deferred tax asset
393 455 
Net overall deferred tax liability$(1,871)$(1,579)
Changes in the deferred tax valuation allowance for the years ended December 31 follow:
202520242023
Valuation allowance, beginning of year$51 $49 $44 
Additions charged to provision for income taxes3 6 3 
Deferred tax assets realized or written-off(6)— — 
Other, net(3)(4)2 
Valuation allowance, end of year$45 $51 $49 
We have deferred tax assets related to state net operating loss carryforwards with an estimated tax effect of $51 million available as of December 31, 2025. These state net operating loss carryforwards expire at various times between 2026 and 2045. We believe that it is more likely than not that the benefit from some of our state net operating loss carryforwards will not be realized due to limitations on these loss carryforwards in certain states. In recognition of this risk, as of December 31, 2025, we have provided a valuation allowance of $40 million.
We are subject to income tax in the United States and Canada, as well as multiple state and provincial jurisdictions. Our compliance with income tax rules and regulations is periodically audited by taxing authorities. These authorities may challenge
the positions taken in our tax filings. Thus, to provide for certain potential tax exposures, we maintain liabilities for uncertain tax positions for our estimate of the final outcome of the examinations. Our federal statute of limitations applicable to our federal tax returns is closed through 2021. In addition, we are currently under state examination or administrative review in various jurisdictions for tax years 2013 through 2024.
The following table summarizes the activity in our gross unrecognized tax benefits for the years ended December 31:
202520242023
Balance at beginning of year$28 $42 $111 
Additions for tax positions of current year3 — 1 
Additions for tax positions of prior years— 1 3 
Reductions for tax positions of prior years— (5)(7)
Reductions for tax positions resulting from lapse of statute of limitations(1)(1)— 
Settlements(7)(9)(66)
Balance at end of year$23 $28 $42 
Included in our gross unrecognized tax benefits as of December 31, 2025, 2024 and 2023 are $18 million, $22 million and $33 million, respectively, of unrecognized tax benefits (net of the federal benefit) that, if recognized, would affect our effective income tax rate in future periods.
During 2023, we settled our 2014-2018 tax years with the Internal Revenue Service. These settlements reduced our gross unrecognized tax benefits by $66 million.
We recognize interest and penalties as incurred within the provision for income taxes in our consolidated statements of income. Related to the unrecognized tax benefits previously noted, we recorded a reduction to interest expense of $1 million during 2025 and, in total as of December 31, 2025, have recognized a liability for penalties of $4 million and interest of $4 million. During 2024, we recorded a reduction to interest expense of $6 million and, in total as of December 31, 2024, had recognized a liability for penalties of $1 million and interest of $5 million. During 2023, we recorded interest expense of $1 million and, in total as of December 31, 2023, had recognized a liability for interest of $14 million.
We believe the recorded liabilities for uncertain tax positions are adequate. However, a significant assessment against us in excess of the liabilities recorded could have a material adverse effect on our consolidated financial position, results of operations and cash flows.
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Historical Timeline

Fiscal YearFiled
2025Feb 18, 2026Showing above
2024Feb 14, 2025
2023Feb 29, 2024
2022Feb 23, 2023
2021Feb 11, 2022
2020Feb 23, 2021
2019Feb 14, 2020
2018Feb 8, 2019
2017Feb 9, 2018
2016Feb 17, 2017
2015Feb 12, 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.

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