T-Mobile US, Inc.TMUS
T-Mobile US, Inc. Income Taxes Disclosure
Note 14 – Income Taxes
Our sources of Income before income taxes were as follows:
| Year Ended December 31, | |||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| U.S. income | $ | 14,018 | $ | 14,607 | $ | 10,943 | |||||||||||
| Foreign income | 263 | 105 | 56 | ||||||||||||||
| Income before income taxes | $ | 14,281 | $ | 14,712 | $ | 10,999 | |||||||||||
Income tax expense is summarized as follows:
| Year Ended December 31, | |||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Current tax expense | |||||||||||||||||
| Federal | $ | (54) | $ | (57) | $ | (42) | |||||||||||
| State | (295) | (179) | (28) | ||||||||||||||
| Foreign | (76) | (17) | (12) | ||||||||||||||
| Total current tax expense | (425) | (253) | (82) | ||||||||||||||
| Deferred tax expense | |||||||||||||||||
| Federal | (2,608) | (2,743) | (2,150) | ||||||||||||||
| State | (216) | (348) | (417) | ||||||||||||||
| Foreign | (40) | (29) | (33) | ||||||||||||||
| Total deferred tax expense | (2,864) | (3,120) | (2,600) | ||||||||||||||
| Total income tax expense | $ | (3,289) | $ | (3,373) | $ | (2,682) | |||||||||||
The following table summarizes income tax expense and the calculation of the effective income tax rate:
| Year Ended December 31, 2025 | Year Ended December 31, 2024 | Year Ended December 31, 2023 | |||||||||||||||||||||||||||||||||
| (in millions, except percentages) | Income Tax Expense | Effective Tax Rate | Income Tax Expense | Effective Tax Rate | Income Tax Expense | Effective Tax Rate | |||||||||||||||||||||||||||||
| Pre-tax income | $ | 14,281 | $ | 14,712 | $ | 10,999 | |||||||||||||||||||||||||||||
| Income tax expense | 3,289 | 3,373 | 2,682 | ||||||||||||||||||||||||||||||||
| Effective income tax rate | 23.0 | % | 22.9 | % | 24.4 | % | |||||||||||||||||||||||||||||
| US federal statutory income tax rate | 2,999 | 21.0 | % | 3,089 | 21.0 | % | 2,310 | 21.0 | % | ||||||||||||||||||||||||||
| Domestic federal | |||||||||||||||||||||||||||||||||||
| Tax credits | (286) | (2.0) | % | (141) | (1.0) | % | (130) | (1.2) | % | ||||||||||||||||||||||||||
| Non-taxable or non-deductible items | (34) | (0.2) | % | 35 | 0.2 | % | (5) | — | % | ||||||||||||||||||||||||||
| Cross-border tax laws | 55 | 0.3 | % | 21 | 0.2 | % | 19 | 0.2 | % | ||||||||||||||||||||||||||
| Changes in valuation allowances | (1) | — | % | (14) | (0.1) | % | (12) | (0.1) | % | ||||||||||||||||||||||||||
| Other | 15 | 0.1 | % | (26) | (0.2) | % | (6) | — | % | ||||||||||||||||||||||||||
| Domestic state & local income tax, net of federal income tax effect | 421 | 3.0 | % | 451 | 3.1 | % | 422 | 3.8 | % | ||||||||||||||||||||||||||
| Foreign tax effects | 67 | 0.5 | % | 26 | 0.2 | % | 26 | 0.2 | % | ||||||||||||||||||||||||||
| Changes in unrecognized tax benefits | 53 | 0.3 | % | (68) | (0.5) | % | 58 | 0.5 | % | ||||||||||||||||||||||||||
| Effective income tax rate | $ | 3,289 | 23.0 | % | $ | 3,373 | 22.9 | % | $ | 2,682 | 24.4 | % | |||||||||||||||||||||||
In 2025, state and local income taxes in California, Illinois, Iowa, Texas and Wisconsin comprise the majority of the domestic state and local income taxes, net of federal income tax effect category. In 2024, state and local income taxes in California, Florida, Illinois, New Jersey and Texas comprise the majority of that same category. In 2023, state and local income taxes in California, Florida, Illinois, New Jersey, New York and New York City comprise the majority of that same category.
Significant components of deferred income tax assets and liabilities, tax effected, are as follows:
| (in millions) | December 31, 2025 | December 31, 2024 | |||||||||
| Deferred tax assets | |||||||||||
| Loss carryforwards | $ | 2,537 | $ | 3,844 | |||||||
| Lease liabilities | 7,814 | 7,781 | |||||||||
| Reserves and accruals | 1,160 | 958 | |||||||||
| Other | 2,932 | 3,959 | |||||||||
| Deferred tax assets, gross | 14,443 | 16,542 | |||||||||
| Valuation allowance | (240) | (259) | |||||||||
| Deferred tax assets, net | 14,203 | 16,283 | |||||||||
| Deferred tax liabilities | |||||||||||
| Spectrum licenses | 20,105 | 19,527 | |||||||||
| Property and equipment | 6,399 | 5,874 | |||||||||
| Lease right-of-use assets | 6,543 | 6,508 | |||||||||
| Other | 739 | 1,074 | |||||||||
| Total deferred tax liabilities | 33,786 | 32,983 | |||||||||
| Net deferred tax liabilities | $ | 19,583 | $ | 16,700 | |||||||
Classified on the consolidated balance sheets as: | |||||||||||
| Deferred tax liabilities | $ | 19,583 | $ | 16,700 | |||||||
As of December 31, 2025, we have tax effected federal net operating loss (“NOL”) carryforwards of $1.8 billion, state NOL carryforwards of $1.4 billion and foreign NOL carryforwards of $8 million, expiring through 2045. Federal and certain state NOLs of $1.7 billion generated in and after 2018 do not expire. As of December 31, 2025, our tax effected federal, state and foreign NOL carryforwards for financial reporting purposes were approximately $167 million, $682 million and $8 million, respectively, less than our NOL carryforwards for federal, state and foreign income tax purposes, due to unrecognized tax benefits of the same amount. The unrecognized tax benefit amounts exclude offsetting tax effects of $180 million in other jurisdictions.
As of December 31, 2025, we have research and development, corporate alternative minimum tax, investment and other general business credit carryforwards with a combined value of $648 million for federal income tax purposes, an immaterial amount of which begins to expire in 2042.
As of December 31, 2025, 2024 and 2023, our valuation allowance was $240 million, $259 million and $306 million, respectively. The change from December 31, 2024, to December 31, 2025 primarily related to the release of valuation allowance on state NOLs due to the expiration of those attributes. The change from December 31, 2023, to December 31, 2024 primarily related to a reduction in the valuation allowance against federal and state deferred tax assets resulting from a change in expected utilization of accumulated capital losses.
We file income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. We are currently under examination by various states. Management does not believe the resolution of any of the audits will result in a material change to our financial condition, results of operations or cash flows. The IRS has concluded audits of certain of our federal tax returns, most recently the 2020 tax year; however, NOL and other carryforwards for certain prior periods remain open for examination. U.S. federal, state and foreign examination for years prior to 2006 are generally closed.
A reconciliation of the beginning and ending amount of unrecognized tax benefits were as follows:
| Year Ended December 31, | |||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Unrecognized tax benefits, beginning of year | $ | 1,470 | $ | 1,477 | $ | 1,254 | |||||||||||
| Gross increases to tax positions in prior periods | 70 | 140 | 19 | ||||||||||||||
| Gross decreases to tax positions in prior periods | (147) | (201) | (39) | ||||||||||||||
| Gross increases to current period tax positions | 166 | 132 | 256 | ||||||||||||||
| Gross decreases due to settlements with taxing authorities | (62) | (11) | — | ||||||||||||||
| Gross decreases due to statute of limitations lapse | (18) | (67) | (13) | ||||||||||||||
| Unrecognized tax benefits, end of year | $ | 1,479 | $ | 1,470 | $ | 1,477 | |||||||||||
As of December 31, 2025, 2024 and 2023, we had $1.3 billion in unrecognized tax benefits that, if recognized, would affect our annual effective tax rate. Penalties and interest on income tax assessments are included in Selling, general and administrative and Interest expense, respectively, on our Consolidated Statements of Comprehensive Income. The accrued interest and penalties associated with unrecognized tax benefits are insignificant.
Income taxes paid, net of refunds received, were as follows:
| Year Ended December 31, | |||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Federal | $ | 97 | $ | 113 | $ | 10 | |||||||||||
| State & local | |||||||||||||||||
| Texas | 34 | 27 | 26 | ||||||||||||||
| Illinois | 42 | NM | 18 | ||||||||||||||
| California | 190 | (10) | (10) | ||||||||||||||
| Other | 65 | 40 | 26 | ||||||||||||||
| Total state & local | 331 | 57 | 60 | ||||||||||||||
| Foreign | |||||||||||||||||
| Puerto Rico | NM | NM | 35 | ||||||||||||||
| Other | 23 | 9 | 3 | ||||||||||||||
| Total foreign | 23 | 9 | 38 | ||||||||||||||
| Total income taxes paid, net | $ | 451 | $ | 179 | $ | 108 | |||||||||||
NM - Not meaningful, the amount of income taxes paid does not meet the 5% disaggregation threshold for reporting.
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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.