MARRIOTT VACATIONS WORLDWIDE CorpVAC
MARRIOTT VACATIONS WORLDWIDE Corp Income Taxes Disclosure
INCOME TAXES
Income Tax Provision
The following table presents the components of our (losses) or income before income taxes and noncontrolling interests for the last three fiscal years:
| ($ in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| United States | $ | (244) | $ | 281 | $ | 419 | |||||||||||
| Non-U.S. jurisdictions | (55) | 25 | (21) | ||||||||||||||
| $ | (299) | $ | 306 | $ | 398 | ||||||||||||
Our (provision for) or benefit from income taxes consisted of:
| ($ in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Current | – U.S. Federal | $ | (73) | $ | (28) | $ | (123) | |||||||||||||
| – U.S. State | (24) | (20) | (21) | |||||||||||||||||
| – Non-U.S. | (14) | (7) | (62) | |||||||||||||||||
| (111) | (55) | (206) | ||||||||||||||||||
| Deferred | – U.S. Federal | 95 | (23) | 27 | ||||||||||||||||
| – U.S. State | 23 | (15) | 12 | |||||||||||||||||
| – Non-U.S. | (15) | 4 | 21 | |||||||||||||||||
| 103 | (34) | 60 | ||||||||||||||||||
| $ | (8) | $ | (89) | $ | (146) | |||||||||||||||
Deferred Income Taxes
The following table presents the significant components of our deferred tax assets and liabilities:
| ($ in millions) | At Year-End 2025 | At Year-End 2024 | |||||||||
| Deferred Tax Assets | |||||||||||
| Inventory | $ | 108 | $ | 74 | |||||||
Provision for doubtful accounts and sales reserve | 178 | 166 | |||||||||
| Convertible debt | 12 | 24 | |||||||||
| Deferred compensation | 50 | 42 | |||||||||
| Property and equipment | 129 | 73 | |||||||||
| Non-cash compensation | 17 | 15 | |||||||||
| Net operating loss and capital loss carryforwards | 180 | 143 | |||||||||
| Accrued expenses | 24 | 30 | |||||||||
| Tax credits | 29 | 30 | |||||||||
| Finance lease assets | 51 | 50 | |||||||||
| Other, net | 81 | 31 | |||||||||
| Deferred tax assets | 859 | 678 | |||||||||
| Less valuation allowance | (270) | (163) | |||||||||
| Net deferred tax assets | 589 | 515 | |||||||||
| Deferred Tax Liabilities | |||||||||||
| Long lived intangible assets | (171) | (189) | |||||||||
| Deferred sales of VOIs | (537) | (549) | |||||||||
| Finance lease liabilities | (42) | (43) | |||||||||
| Other, net | (45) | (41) | |||||||||
| Deferred tax liabilities | (795) | (822) | |||||||||
| Total net deferred tax liabilities | $ | (206) | $ | (307) | |||||||
In 2025, the change in valuation allowance is primarily attributable to changes in our assessment of the realizability of net deferred tax assets related to certain entities in Mexico.
We have $7 million in foreign capital loss carryforwards, $20 million in foreign tax credits, and $159 million of foreign net operating loss carryforwards, some of which will expire in 2026; however, a significant portion of the net operating loss carryforwards have indefinite carryforward periods. We have $11 million of state net operating loss carryforwards, the majority of which will not expire within the next five years, $4 million of business interest deduction carryforwards and $6 million of state tax credit carryforwards, both of which have an indefinite carryforward period.
We continue to assert indefinite reinvestment in the basis of certain foreign subsidiaries. Accordingly, no deferred taxes have been accrued with respect to these outside basis differences. An estimate of the applicable tax impact is not practicable to determine.
Reconciliation of U.S. Federal Statutory Income Tax Rate to Actual Income Tax Rate
The following table reconciles the U.S. statutory income tax rate to our effective income tax rate for 2025:
| 2025 | |||||||||||
$ in millions | Amount | Percent | |||||||||
| Tax at U.S. Federal Statutory Tax Rate | $ | (63) | 21.0% | ||||||||
State and Local Income Tax, Net of Federal Effect(1) | (4) | 1.2% | |||||||||
| Foreign Tax Effects | |||||||||||
| Mexico | |||||||||||
| Investment basis difference | (36) | 12.0% | |||||||||
| Valuation allowance established on investment basis difference | 36 | (12.0%) | |||||||||
| Valuation allowance established due to updated realizability assessment | 37 | (12.4%) | |||||||||
| Change in position regarding interest expense deductibility | (13) | 4.4% | |||||||||
| Other | 3 | (1.0%) | |||||||||
| Australia | |||||||||||
| Released valuation allowance due to updated realizability assessment | (7) | 2.2% | |||||||||
| Other | 1 | (0.3%) | |||||||||
| Other foreign jurisdictions | 20 | (6.6%) | |||||||||
| Total Foreign Tax Effects | 41 | (13.7%) | |||||||||
| Effect of Cross-Border Tax Laws | |||||||||||
| Deferred withholding taxes | 5 | (1.6%) | |||||||||
| Other | — | (0.1%) | |||||||||
| Total Effect of Cross-Border Tax Laws | 5 | (1.8%) | |||||||||
| Nontaxable or Nondeductible Items | |||||||||||
| Investment basis difference | (10) | 3.4% | |||||||||
| Goodwill impairment | 33 | (11.2%) | |||||||||
| Other | 4 | (1.2%) | |||||||||
| Total Nontaxable or Nondeductible Items | 27 | (9.0%) | |||||||||
| Other adjustments | 2 | (0.6%) | |||||||||
| Total Tax Provision | $ | 8 | (2.8%) | ||||||||
(1)State taxes in Hawaii and California made up the majority of the tax effect in this category.
The following table reconciles the U.S. statutory income tax rate to our effective income tax rate for 2024 and 2023:
| 2024 | 2023 | ||||||||||
| U.S. statutory income tax rate | 21.0% | 21.0% | |||||||||
| U.S. state income taxes, net of U.S. federal tax benefit | 4.6 | 4.5 | |||||||||
| Share-based compensation, net of Section 162(m) limitation | 0.8 | 0.3 | |||||||||
Other permanent differences(1) | 1.0 | (3.0) | |||||||||
| Tax rate changes | 0.3 | (0.8) | |||||||||
| Non-U.S. income | 9.4 | 2.7 | |||||||||
| Tax credits | (0.8) | (0.6) | |||||||||
| Unrecognized tax benefits | (6.3) | 5.5 | |||||||||
Change in valuation allowance | (2.6) | 7.1 | |||||||||
| Other items | 1.6 | (0.2) | |||||||||
| Effective rate | 29.0% | 36.5% | |||||||||
(1)The 2024 permanent differences are primarily related to non-deductible interest, other expenses and foreign taxes
partially offset by non-taxable income. The 2023 permanent differences are primarily related to non-taxable income and foreign taxes deducted in the U.S.
We conduct business in countries that grant “holidays” from income taxes for to -year periods. These holidays expire through 2034 and may be impacted by the global minimum tax rules (Pillar 2) set forth for large multinational corporations.
Income Taxes Paid, net of Refunds
The following table presents the components of our income taxes paid, net of refunds by jurisdiction for 2025:
| ($ in millions) | 2025 | ||||
| Federal | $ | 106 | |||
| California | 7 | ||||
| Other U.S. states | 12 | ||||
| Mexico | 7 | ||||
| Aruba | 7 | ||||
| Other foreign countries | 4 | ||||
| $ | 143 | ||||
Timing of Estimated Tax Payments
As part of the federal tax relief provided by the Internal Revenue Service for businesses in areas of Florida affected by hurricanes during 2024, we were permitted to defer certain federal income tax payments without incurring interest or penalties. As a result, we deferred $38 million of estimated tax payments from 2024 to 2025. Similarly, in 2024, under comparable relief measures related to hurricanes in 2023, we deferred $32 million of estimated tax payments from 2023 to 2024. In addition, in 2023, under similar circumstances, we deferred $45 million of estimated tax payments from 2022 to 2023. None of our 2025 estimated tax payments were deferred into 2026.
Unrecognized Tax Benefits
A reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding interest and penalties) is as follows:
| ($ in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Unrecognized tax benefits at beginning of year | $ | 23 | $ | 106 | $ | 25 | |||||||||||
| Increases related to tax positions taken during a prior period | 3 | 8 | 87 | ||||||||||||||
| Increases related to tax positions taken during the current period | 3 | — | — | ||||||||||||||
| Decreases related to tax positions taken during a prior period | — | (82) | (6) | ||||||||||||||
| Decreases as a result of a lapse of the applicable statute of limitations | (2) | (9) | — | ||||||||||||||
| Unrecognized tax benefits at end of year | $ | 27 | $ | 23 | $ | 106 | |||||||||||
The increase in 2025 is attributable to reserves established for interest relief provided under government relief programs, including amounts reported on the 2024 U.S. corporate income tax return and estimated amounts expected to be claimed on the 2025 return. The increase in the unrecognized tax benefits during 2023 and subsequent decrease during 2024 is primarily related to an $80 million proposed tax method change in 2023, which was filed with the IRS in 2024.
The total amount of gross interest and penalties accrued relating to unrecognized tax benefits was $41 million at December 31, 2025 and $37 million at December 31, 2024, which is predominantly attributable to non-U.S. jurisdictions. We recognized an income tax expense of $4 million in 2025, an income tax benefit of $11 million in 2024, and an income tax expense of $20 million in 2023 related to accrued interest and penalties. Unrecognized tax benefits (including interest and penalties) of $32 million and $29 million, net of indemnification, would have impacted the effective tax rate for the years ended December 31, 2025 and December 31, 2024, respectively, if recognized.
We anticipate $36 million of unrecognized tax benefits, including interest and penalties, to be indemnified pursuant to a Tax Matters Agreement dated May 11, 2016 by and among Starwood Hotels & Resorts Worldwide, Inc., Vistana Signature Experiences, Inc., and Interval Leisure Group, Inc., (the “Tax Matters Agreement”) and consequently have recorded a corresponding indemnification asset. The unrecognized tax benefits, including accrued interest and penalties, are included in Other liabilities on our Balance Sheets.
Our income tax returns remain subject to examination by the relevant tax authorities. Certain returns are currently under audit in various jurisdictions for tax years 2007 through 2020. The amount of the unrecognized tax benefits may change within the next twelve months as a result of audits or resolution of audit-related matters.
Other
As of December 31, 2025, the $14 million tax reserve for non-income tax issues is predominantly related to the ILG Acquisition. We expect that we will be indemnified for liabilities of $4 million in connection with the Legacy-ILG non-income tax matters pursuant to the Tax Matters Agreement and consequently have recorded a corresponding indemnification asset.
During the third quarter of 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, making several provisions of the Tax Cuts and Jobs Act permanent. Under ASC 740, “Income Taxes,” the effects of changes in tax laws must be recognized in the period of enactment. We have evaluated the impact of OBBBA and have incorporated the effect of these changes into our financial statements. For the provisions effective in 2025, there was no material impact to our effective tax rate for the year ended December 31, 2025, but we continue to assess the potential impact of these law changes, including provisions becoming effective in 2026, on our business and financial results.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 2, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | 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.