US BANCORP \DE\USB
US BANCORP \DE\ Income Taxes Disclosure
NOTE 18 | Income Taxes | |||||||
The components of income before income taxes and income tax expense (benefit) were as follows:
| Year Ended December 31 (Dollars in Millions) | 2025 | 2024 | 2023 | ||||||||
| Income before income taxes | |||||||||||
| U.S. | $ | 9,330 | $ | 7,786 | $ | 6,738 | |||||
| Foreign | 187 | 123 | 127 | ||||||||
| Total | $ | 9,517 | $ | 7,909 | $ | 6,865 | |||||
| Income tax expense (benefit) | |||||||||||
| Current tax expense (benefit) | |||||||||||
| U.S. Federal | $ | 1,183 | $ | 1,252 | $ | 1,418 | |||||
| U.S. State and local | 394 | 279 | 482 | ||||||||
| Foreign | 36 | 20 | 16 | ||||||||
| Total current tax expense (benefit) | 1,613 | 1,551 | 1,916 | ||||||||
| Deferred tax expense (benefit) | |||||||||||
| U.S. Federal | 209 | (5) | (342) | ||||||||
| U.S. State and local | 99 | 35 | (183) | ||||||||
| Foreign | — | (1) | 16 | ||||||||
| Total deferred tax expense (benefit) | 308 | 29 | (509) | ||||||||
| Total income tax expense (benefit) | |||||||||||
| U.S. Federal | 1,392 | 1,247 | 1,076 | ||||||||
| U.S. State and local | 493 | 314 | 299 | ||||||||
| Foreign | 36 | 19 | 32 | ||||||||
| Total income tax expense (benefit) | $ | 1,921 | $ | 1,580 | $ | 1,407 | |||||
A reconciliation of expected income tax expense at the U.S. federal statutory rate of 21 percent to the Company’s applicable income tax expense follows:
| Year Ended December 31 (Dollars in Millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||
| Tax at U.S. Federal statutory tax rate | $ | 1,999 | 21.0 | % | $ | 1,661 | 21.0 | % | $ | 1,442 | 21.0 | % | ||||||||
State income and local taxes, net of U.S. federal tax benefit(a) | 446 | 4.7 | 320 | 4.0 | 266 | 3.9 | ||||||||||||||
| Foreign tax effects | 2 | — | — | — | 4 | .1 | ||||||||||||||
| Effect of cross-border tax laws | 11 | .1 | 6 | .1 | (3) | — | ||||||||||||||
| Tax credits | ||||||||||||||||||||
| Renewable energy | (378) | (4.0) | (230) | (2.9) | (119) | (1.7) | ||||||||||||||
| Other | (139) | (1.5) | (119) | (1.5) | (106) | (1.5) | ||||||||||||||
| Changes in valuation allowances | 33 | .3 | — | — | — | — | ||||||||||||||
| Nontaxable or nondeductible items | ||||||||||||||||||||
| Tax-exempt income | (151) | (1.6) | (144) | (1.8) | (142) | (2.1) | ||||||||||||||
| Nondeductible legal and regulatory expenses | 46 | .5 | 57 | .7 | 76 | 1.1 | ||||||||||||||
| Other | 32 | .3 | 35 | .4 | 34 | .5 | ||||||||||||||
| Changes in unrecognized tax benefits | 21 | .2 | (65) | (.8) | (52) | (.8) | ||||||||||||||
| Other adjustments | (1) | — | 59 | .7 | 7 | .1 | ||||||||||||||
| Applicable income taxes | $ | 1,921 | 20.2 | % | $ | 1,580 | 20.0 | % | $ | 1,407 | 20.5 | % | ||||||||
(a)The majority of this category (greater than 50 percent) consists of California state taxes, California and Minnesota state taxes and California, Minnesota and New York state taxes for 2025, 2024 and 2023, respectively.
The components of cash paid for income taxes were:
| Year Ended December 31 (Dollars in Millions) | 2025 | 2024 | 2023 | ||||||||
| U.S. Federal | $ | 338 | $ | 355 | $ | 517 | |||||
| U.S. State and Local | |||||||||||
| California | 120 | 85 | 44 | ||||||||
| New York | * | 28 | * | ||||||||
| Other | 50 | 15 | 64 | ||||||||
| Total U.S. State and local | 170 | 128 | 108 | ||||||||
| Foreign | 36 | 16 | 20 | ||||||||
| Total cash paid for income taxes | $ | 544 | $ | 499 | $ | 645 | |||||
* The amount of cash paid for income taxes was less than 5 percent of total cash paid for income taxes for all jurisdictions during the period.
The tax effects of fair value adjustments on securities available-for-sale, derivative instruments in cash flow hedges, foreign currency translation adjustments, and pension and post-retirement plans are recorded directly to shareholders’ equity as part of other comprehensive income (loss).
In preparing its tax returns, the Company is required to interpret complex tax laws and regulations and utilize income and cost allocation methods to determine its taxable income. On an ongoing basis, the Company is subject to examinations by U.S. federal, state, local and foreign taxing authorities that may give rise to differing
interpretations of these complex laws, regulations and methods. Due to the nature of the examination process, it generally takes years before these examinations are completed and matters are resolved. U.S. federal tax examinations for all years ending through December 31, 2020 are completed and resolved. The Company’s tax returns for the years ended December 31, 2021 through December 31, 2022 are under examination by the Internal Revenue Service. The years open to examination by foreign, state and local government authorities vary by jurisdiction.
A reconciliation of the changes in the U.S. federal, state and foreign uncertain tax position balances are summarized as follows:
| Year Ended December 31 (Dollars in Millions) | 2025 | 2024 | 2023 | ||||||||
| Balance at beginning of period | $ | 256 | $ | 350 | $ | 513 | |||||
| Additions for tax positions taken in prior years | 8 | 32 | 141 | ||||||||
| Additions for tax positions taken in the current year | 7 | 6 | 3 | ||||||||
| Exam resolutions | (3) | (131) | (302) | ||||||||
| Statute expirations | (1) | (1) | (5) | ||||||||
| Balance at end of period | $ | 267 | $ | 256 | $ | 350 | |||||
The total amount of uncertain tax positions that, if recognized, would impact the effective income tax rate as of December 31, 2025, 2024 and 2023, were $215 million, $206 million and $276 million, respectively. The Company classifies interest and penalties related to uncertain tax positions as a component of income tax expense. At December 31, 2025, the Company’s uncertain tax position balance included $39 million of accrued interest and penalties. During the years ended December 31, 2025,
2024 and 2023 the Company recorded approximately $12 million, $(13) million and $(11) million, respectively, in interest and penalties on uncertain tax positions.
Deferred income tax assets and liabilities reflect the tax effect of estimated temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for the same items for income tax reporting purposes.
The significant components of the Company’s net deferred tax asset (liability) follows:
| At December 31 (Dollars in Millions) | 2025 | 2024 | ||||||
| Deferred Tax Assets | ||||||||
| U.S. federal, state and foreign net operating loss, credit carryforwards and other carryforwards | $ | 2,521 | $ | 2,772 | ||||
| Securities available-for-sale and financial instruments | 2,168 | 3,129 | ||||||
| Allowance for credit losses | 2,068 | 2,086 | ||||||
| Accrued expenses | 638 | 767 | ||||||
| Loans | 622 | 869 | ||||||
| Obligation for operating leases | 349 | 341 | ||||||
| Partnerships and other investment assets | 321 | 264 | ||||||
| Stock compensation | 84 | 89 | ||||||
| Fixed assets | 38 | — | ||||||
| Other deferred tax assets, net | 331 | 383 | ||||||
| Gross deferred tax assets | 9,140 | 10,700 | ||||||
| Deferred Tax Liabilities | ||||||||
| Goodwill and other intangible assets | (1,272) | (1,362) | ||||||
| Leasing activities | (1,087) | (1,273) | ||||||
| Mortgage servicing rights | (760) | (789) | ||||||
| Right of use operating leases | (311) | (297) | ||||||
| Pension and postretirement benefits | (241) | (184) | ||||||
| Fixed assets | — | (28) | ||||||
| Other deferred tax liabilities, net | (48) | (125) | ||||||
| Gross deferred tax liabilities | (3,719) | (4,058) | ||||||
| Valuation allowance | (432) | (389) | ||||||
| Net Deferred Tax Asset | $ | 4,989 | $ | 6,253 | ||||
The Company has approximately $142 million of deferred tax assets related to U.S. federal, state and foreign net operating loss carryforwards which expire at various times beginning in 2026. A substantial portion of these carryforwards relate to state-only net operating losses, for which the related deferred tax asset is subject to a full valuation allowance as the carryforwards are not expected to be realized within the carryforward period.
In addition, the Company has $1.3 billion of U.S. federal and state credit carryforwards which expire at various times through 2045. Certain of these carryforwards are subject to a valuation allowance as management believes that it is more likely than not that the credits will not be utilized within the carryforward period.
Management has determined it is more likely than not the other net deferred tax assets could be realized through carry back to taxable income in prior years, future reversals of existing taxable temporary differences and future taxable income.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 23, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 20, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Feb 22, 2022 | |
| 2020 | Feb 23, 2021 | |
| 2019 | Feb 20, 2020 | |
| 2018 | Feb 22, 2019 | |
| 2017 | Feb 22, 2018 | |
| 2016 | Feb 23, 2017 | |
| 2015 | Feb 25, 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.