REPUBLIC SERVICES, INC.RSG
REPUBLIC SERVICES, INC. Income Taxes Disclosure
INCOME TAXES
The components of the provision for income taxes for the years ended December 31 follow:
| 2025 | 2024 | 2023 | |||||||||||||||
| 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:
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
| 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 Items | 42 | 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:
| 2025 | 2024 | 2023 | |||||||||||||||
Federal | $ | 98 | $ | 195 | $ | 243 | |||||||||||
State | |||||||||||||||||
California | 29 | 27 | 24 | ||||||||||||||
Texas | 11 | 10 | — | ||||||||||||||
Other | 52 | 71 | 59 | ||||||||||||||
| Foreign | 16 | 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:
| 2025 | 2024 | ||||||||||
| 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:
| 2025 | 2024 | 2023 | |||||||||||||||
| Valuation allowance, beginning of year | $ | 51 | $ | 49 | $ | 44 | |||||||||||
| Additions charged to provision for income taxes | 3 | 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:
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance at beginning of year | $ | 28 | $ | 42 | $ | 111 | |||||||||||
| Additions for tax positions of current year | 3 | — | 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.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 18, 2026 | Showing above |
| 2024 | Feb 14, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 11, 2022 | |
| 2020 | Feb 23, 2021 | |
| 2019 | Feb 14, 2020 | |
| 2018 | Feb 8, 2019 | |
| 2017 | Feb 9, 2018 | |
| 2016 | Feb 17, 2017 | |
| 2015 | Feb 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.