Sylvamo CorpSLVM
Sylvamo Corp Income Taxes Disclosure
INCOME TAXES
The components of the Company’s income before income taxes by taxing jurisdiction were as follows:
In millions | 2025 | 2024 | 2023 | |||||||||||||||||
U.S. | $ | 169 | $ | 205 | $ | 121 | ||||||||||||||
Non-U.S. | 30 | 200 | 248 | |||||||||||||||||
Income before income taxes | $ | 199 | $ | 405 | $ | 369 | ||||||||||||||
Income tax provision by taxing jurisdictions was as follows:
In millions | 2025 | 2024 | 2023 | |||||||||||||||||
Current tax provision | ||||||||||||||||||||
U.S. federal | $ | 12 | $ | 43 | $ | 32 | ||||||||||||||
U.S. state and local | 3 | 13 | 11 | |||||||||||||||||
Non-U.S. | 45 | 54 | 73 | |||||||||||||||||
| 60 | 110 | 116 | ||||||||||||||||||
Deferred tax provision | ||||||||||||||||||||
U.S. federal | 17 | (5) | (3) | |||||||||||||||||
U.S. state and local | 5 | (3) | (7) | |||||||||||||||||
Non-U.S. | (15) | 1 | 10 | |||||||||||||||||
| 7 | (7) | — | ||||||||||||||||||
Income tax provision | $ | 67 | $ | 103 | $ | 116 | ||||||||||||||
Income taxes paid (net of refunds) by taxing jurisdictions was as follows:
In millions | 2025 | 2024 | 2023 | |||||||||||||||||
Federal | $ | 10 | $ | 32 | $ | 39 | ||||||||||||||
State | 6 | 11 | 9 | |||||||||||||||||
Non-U.S. | 46 | 55 | 64 | |||||||||||||||||
| Total | $ | 62 | $ | 98 | $ | 112 | ||||||||||||||
The Company also made payments of $20 million to purchase tax credits of which $15 million were applied against our U.S. federal tax liability for 2024 and 2025.
Income taxes paid (net of refunds) exceeded 5% of total income taxes paid (net of refunds) in the following jurisdictions:
In millions | 2025 | 2024 | 2023 | |||||||||||||||||
| Non-U.S. | ||||||||||||||||||||
Brazil | $ | 42 | $ | 52 | $ | 60 | ||||||||||||||
| Luxembourg | $ | 4 | $ | — | $ | 1 | ||||||||||||||
| In millions | 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||
| Amount | % | Amount | % | Amount | % | |||||||||||||||||||||||||||||||||
| U.S. federal statutory tax rate | $ | 42 | 21 | % | $ | 85 | 21 | % | $ | 77 | 21 | % | ||||||||||||||||||||||||||
| State and local income taxes, net of federal income tax effect (a) | 6 | 3 | % | 6 | 2 | % | 2 | — | % | |||||||||||||||||||||||||||||
| Non-U.S. tax effects | ||||||||||||||||||||||||||||||||||||||
| Brazil | ||||||||||||||||||||||||||||||||||||||
| Statutory tax rate difference between Brazil and U.S. | 17 | 9 | % | 23 | 6 | % | 33 | 9 | % | |||||||||||||||||||||||||||||
| Permanent benefit for non-U.S. interest deduction | (11) | (6) | % | (9) | (2) | % | (11) | (3) | % | |||||||||||||||||||||||||||||
| France | ||||||||||||||||||||||||||||||||||||||
| Changes in valuation allowances | 13 | 7 | % | (3) | (1) | % | 7 | 2 | % | |||||||||||||||||||||||||||||
| Sweden | ||||||||||||||||||||||||||||||||||||||
| Foreign exchange impacts | 3 | 2 | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||
| Other Non-U.S. jurisdiction | (2) | (1) | % | 1 | — | % | (2) | (1) | % | |||||||||||||||||||||||||||||
| Effect of cross-border tax laws | ||||||||||||||||||||||||||||||||||||||
| Global intangible low-taxed income and Subpart F income | — | — | % | 1 | — | % | 2 | — | % | |||||||||||||||||||||||||||||
| Tax credits | ||||||||||||||||||||||||||||||||||||||
| Research and development credits | (2) | (1) | % | (2) | (1) | % | (1) | — | % | |||||||||||||||||||||||||||||
| Purchased credits | (1) | (1) | % | (2) | — | % | — | — | % | |||||||||||||||||||||||||||||
| Nontaxable or nondeductible items | ||||||||||||||||||||||||||||||||||||||
| Stock compensation | (2) | (1) | % | — | — | % | 1 | — | % | |||||||||||||||||||||||||||||
| Other permanent differences | 1 | 1 | % | — | — | % | 2 | 1 | % | |||||||||||||||||||||||||||||
| Changes in unrecognized tax benefits | 4 | 2 | % | 2 | — | % | 6 | 2 | % | |||||||||||||||||||||||||||||
| Other adjustments | (1) | (1) | % | 1 | — | % | — | — | % | |||||||||||||||||||||||||||||
| Effective income tax rate | $ | 67 | 34 | % | $ | 103 | 25 | % | $ | 116 | 31 | % | ||||||||||||||||||||||||||
(a)
The components of deferred income tax assets and liabilities are as follows:
In millions | 2025 | 2024 | ||||||||||||
Deferred income tax assets: | ||||||||||||||
Net operating and capital loss carryforwards | $ | 43 | $ | 23 | ||||||||||
Accrued payroll and benefits | 24 | 31 | ||||||||||||
Lease liabilities | 11 | 13 | ||||||||||||
Tax credits | 34 | 25 | ||||||||||||
| Capitalized research and development | — | 23 | ||||||||||||
Other | 37 | 35 | ||||||||||||
Gross deferred income tax assets | 149 | 150 | ||||||||||||
Less: valuation allowance | (52) | (35) | ||||||||||||
Net deferred income tax asset | 97 | 115 | ||||||||||||
Deferred income tax liabilities: | ||||||||||||||
Intangibles | (41) | (37) | ||||||||||||
| Inventories | (16) | (15) | ||||||||||||
Right of use assets | (9) | (11) | ||||||||||||
Deferred foreign income | (55) | (49) | ||||||||||||
Plants, properties and equipment | (69) | (86) | ||||||||||||
Forestlands | (46) | (41) | ||||||||||||
Gross deferred income tax liabilities | (236) | (239) | ||||||||||||
Net deferred income tax liability | $ | (139) | $ | (124) | ||||||||||
The Company recognizes deferred income tax assets for deductible temporary differences and carryforwards. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized based on estimates of future taxable income. Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. Based on this evaluation, as of December 31, 2025, a valuation allowance of $52 million has been recorded to reduce certain deferred tax assets to the amount that is more likely than not to be realized.
The Company has NOL carryforwards of $28 million in Brazil, $30 million in Finland, $54 million in France, $1 million in Luxembourg and $53 million in the United Kingdom. The Company has $5 million of U.S. federal tax credit carryforwards, $24 million of U.S. state tax credit carryforwards, and $5 million of United Kingdom tax credit carryforwards. The NOL carryforwards in Finland and Luxembourg will begin to expire in 2032 and the remainder of the Company’s NOL and credit carryforwards may be carried forward indefinitely.
The reconciliation of the beginning and ending amount of unrecognized tax benefits were as follows:
In millions | 2025 | 2024 | 2023 | |||||||||||||||||
Balance at January 1 | $ | (12) | $ | (10) | $ | (4) | ||||||||||||||
(Additions) reductions for tax positions related to current year | (4) | (4) | (6) | |||||||||||||||||
| Reductions for tax positions related to prior years | — | 1 | — | |||||||||||||||||
Settlements | — | 1 | — | |||||||||||||||||
Balance at December 31 | $ | (16) | $ | (12) | $ | (10) | ||||||||||||||
Included in the balance of unrecognized tax benefits as of December 31, 2025, December 31, 2024 and December 31, 2023 are $16 million, $12 million and $10 million, respectively, of tax benefits that if recognized would affect the effective tax rate. The Company accrues interest on unrecognized tax benefits as a component of interest expense. Penalties, if incurred, are recognized as a component of income tax expense. During the periods mentioned above, the amount of interest accrued was not material.
The Brazilian Federal Revenue Service has challenged the deductibility of goodwill amortization generated in a 2007 acquisition by International Paper do Brasil Ltda., a wholly-owned subsidiary of the Company now named Sylvamo do Brasil Ltda. (“Sylvamo Brasil”). Sylvamo Brasil received assessments for the tax years 2007-2015 totaling approximately $106 million in tax, and $289 million in interest, penalties and fees (adjusted for variation in currency exchange rates). International Paper challenged and is managing the litigation of this matter pursuant to the Tax Matters Agreement between us and International Paper. After a previous favorable ruling challenging the basis for these assessments, Sylvamo Brasil received other subsequent unfavorable decisions from the Brazilian Administrative Council of Tax Appeals. These decisions are being appealed. The appeal involves several separate cases. In October 2024, at the first level of appeal in the Brazilian federal court system, the court ruled in favor of Sylvamo Brasil in cases covering approximately two thirds of the disputed amounts. The Brazilian tax authorities have appealed the favorable ruling. One third of the disputed amounts was under challenge at the Brazilian administrative court level and was not part of the ruling. In November 2025, the administrative court upheld the assessments for the remaining one third of the disputed amounts. In January 2026, Sylvamo Brasil’s challenge of the administrative ruling was filed in the Brazilian federal court system. This tax litigation matter may take many years to resolve. The Company believes that the transaction underlying these assessments was appropriately evaluated, and that the Company’s tax position would be sustained, based on Brazilian tax law.
Pursuant to the terms of the Tax Matters Agreement, International Paper will pay 60%, and Sylvamo will pay 40% on up to $300 million of any assessment related to this matter, and International Paper will pay all amounts of the assessment over $300 million. Also in connection with this agreement, all decisions concerning the conduct of the litigation related to this matter, including strategy, settlement, pursuit and abandonment, will continue to be made by International Paper, which is vigorously defending Sylvamo Brasil’s historic tax position against the current assessments and any similar assessments that may be issued for tax years subsequent to 2015.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 20, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2021 | Mar 2, 2022 | |
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.