WILLIAMS COMPANIES, INC.WMB
WILLIAMS COMPANIES, INC. Income Taxes Disclosure
Note 6 – Provision (Benefit) for Income Taxes
Williams has adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures and has applied the disclosure guidance retrospectively for each period presented.
The Provision (benefit) for income taxes includes:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (Millions) | |||||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 99 | $ | 125 | $ | 3 | |||||||||||
| State | 14 | 9 | 21 | ||||||||||||||
| 113 | 134 | 24 | |||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | 597 | 472 | 872 | ||||||||||||||
| State | 147 | 34 | 109 | ||||||||||||||
| 744 | 506 | 981 | |||||||||||||||
| Provision (benefit) for income taxes | $ | 857 | $ | 640 | $ | 1,005 | |||||||||||
Reconciliations from the Provision (benefit) for income taxes at the federal statutory rate to recorded Provision (benefit) for income taxes are as follows:
| Year Ended December 31, | ||||||||||||||||||||||||||
| 2025 | % | 2024 | % | 2023 | % | |||||||||||||||||||||
| (Millions) | ||||||||||||||||||||||||||
Provision (benefit) for income taxes at the federal statutory rate | $ | 21.0 | % | $ | 21.0 | % | $ | 21.0 | % | |||||||||||||||||
State and local income tax, net of federal income tax effect | 130 | 3.6 | % | 35 | 1.2 | % | 104 | 2.4 | % | |||||||||||||||||
Nontaxable or nondeductible items | (34) | (0.9) | % | (23) | (0.8) | % | (23) | (0.5) | % | |||||||||||||||||
Other adjustments | — | 0.0 | % | 1 | 0.0 | % | (1) | 0.0 | % | |||||||||||||||||
| Provision (benefit) for income taxes | $ | 857 | 23.7 | % | $ | 640 | 21.4 | % | $ | 1,005 | 22.9 | % | ||||||||||||||
During the course of audits of its business by domestic and foreign tax authorities, Williams frequently faces challenges regarding the amount of taxes due. These challenges include questions regarding the timing and amount of deductions and the allocation of income among various tax jurisdictions. In evaluating the liability associated with its various filing positions, Williams applies the two-step process of recognition and measurement. In association with this liability, Williams records an estimate of related interest and tax exposure as a component of its tax provision. The impact of this accrual is included within Other adjustments in its reconciliation of the Provision (benefit) for income taxes at the federal statutory rate to recorded Provision (benefit) for income taxes.
Significant components of Deferred income tax liabilities are as follows:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (Millions) | |||||||||||
| Gross deferred income tax liabilities: | |||||||||||
Property, plant and equipment | $ | 5,116 | $ | 4,501 | |||||||
Investments | 1,718 | 1,733 | |||||||||
Other | 237 | 193 | |||||||||
| Total gross deferred income tax liabilities | 7,071 | 6,427 | |||||||||
| Gross deferred income tax assets: | |||||||||||
Accrued liabilities | 1,142 | 1,146 | |||||||||
Corporate alternative minimum tax credits | 203 | 108 | |||||||||
Federal loss carryovers | 224 | 325 | |||||||||
Disallowed business interest expense carryforward | 117 | 247 | |||||||||
State losses and credits | 171 | 224 | |||||||||
Other | 127 | 92 | |||||||||
| Total gross deferred income tax assets | 1,984 | 2,142 | |||||||||
| Less valuation allowance | 83 | 91 | |||||||||
| Net deferred income tax assets | 1,901 | 2,051 | |||||||||
| Deferred income tax liabilities | $ | 5,170 | $ | 4,376 | |||||||
The valuation allowance at December 31, 2025 and 2024 serves to reduce the available deferred income tax assets to an amount that will, more likely than not, be realized. Williams considered all available positive and negative evidence, which incorporates available tax planning strategies, and management’s estimate of future reversals of existing taxable temporary differences and has determined that a portion of its deferred income tax assets related to State losses and credits may not be realized. The amounts presented in the table above are, with respect to state items, before any federal benefit. The change from prior year for the State losses and credits reflects increases in losses and credits generated in the current and prior years less losses and/or credits utilized in the current year. Williams has loss and credit carryovers in multiple state taxing jurisdictions. These attributes generally expire between 2026 and 2044 with some carryovers having indefinite carryforward periods.
Corporate alternative minimum tax credits, Federal loss carryovers and Disallowed business interest expense carryforward at December 31, 2025 reflect deferred tax assets on corporate alternative minimum tax credits, net operating loss carryovers and federal interest expense carryforwards. None of these attributes have an expiration date.
Cash payments for income taxes (net of refunds) are as follows:
Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (Millions) | |||||||||||||||||
U.S. Federal | $ | 135 | $ | 41 | $ | 11 | |||||||||||
U.S. State and Local | 27 | 27 | 20 | ||||||||||||||
Total income taxes paid (net of refunds) | $ | 162 | $ | 68 | $ | 31 | |||||||||||
On July 4, 2025, the One Big Beautiful Bill Act was enacted. While the new law did not have a significant impact on Williams’ federal income tax provision, Williams did have a temporary deferral of federal income tax payments as a result of permanently restoring full bonus depreciation of certain business property and excluding tax depreciation and amortization in the calculation of the business interest expense limitation.
During the fourth quarter of 2023, Williams closed the audit for 2018 and made a $5 million payment.
Williams recognizes related interest and penalties as a component of Provision (benefit) for income taxes. There were no significant interest and penalties recognized for any period presented. There were no interest or penalties relating to uncertain tax positions accrued as of December 31, 2025 and December 31, 2024.
Consolidated U.S. Federal income tax returns are open to Internal Revenue Service (IRS) examination for tax years after 2021. The statute of limitations for most states expires one year after expiration of the IRS statute.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Feb 24, 2020 | |
| 2018 | Feb 21, 2019 | |
| 2017 | Feb 22, 2018 | |
| 2016 | Feb 22, 2017 | |
| 2015 | Feb 26, 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.