MARRIOTT VACATIONS WORLDWIDE Corp

Our provision for income taxes is calculated using an estimated annual effective tax rate (“AETR”), which is based upon projected annual income or loss, including anticipated losses in certain jurisdictions, non-deductible expenses under applicable federal and local tax laws, statutory rates, and planned tax strategies across the jurisdictions in which we operate. Certain items that do not relate directly to ordinary income are excluded from the AETR and are recognized in the period in which they occur.

The effective tax rate for the three months ended September 30, 2025 differed from the blended U.S. federal and state statutory tax rate primarily due to discrete income tax adjustments in non-U.S. jurisdictions. These adjustments included a $25 million increase related to changes in valuation allowances, partially offset by tax benefits from $13 million of permanent differences arising from restructuring activities and $6 million for other deferred tax adjustments.

The effective tax rate for the three months ended September 30, 2024 differed from the blended U.S. federal and state statutory tax rate primarily due to discrete income tax adjustments. These adjustments included an $11 million decrease related to changes in valuation allowances on certain deferred tax assets in non-U.S. jurisdictions and a $6 million decrease as a result of the expiration of statutes of limitation on certain unrecognized tax benefits, partially offset by an $8 million increase related to the removal of the permanent reinvestment assertion for certain non-U.S. entities and a $3 million increase for deferred non-U.S. withholding taxes.

Our effective tax rate was 37.0% and 32.1% for the nine months ended September 30, 2025 and September 30, 2024, respectively.

The effective tax rate for the nine months ended September 30, 2025 differed from the blended U.S. federal and state statutory tax rate primarily due to discrete income tax adjustments in non-U.S. jurisdictions. These adjustments included a $25 million increase related to changes in valuation allowances, partially offset by tax benefits from $13 million of permanent differences arising from restructuring activities and $6 million related to prior year true-up adjustments.

The effective tax rate for the nine months ended September 30, 2024 differed from the blended U.S. federal and state statutory tax rate primarily due to discrete income tax adjustments. These adjustments included a $27 million decrease as a result of the expiration of statutes of limitation on uncertain unrecognized tax benefits and an $8 million net decrease related to changes in valuation allowances in non-U.S. jurisdictions. These decreases were partially offset by a $28 million increase related to the removal of the permanent reinvestment assertion for certain non-U.S. entities and a $3 million increase for deferred non-U.S. withholding taxes.

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 2022. 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.

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 Accounting Standards Codification (“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 do not anticipate that it will have a material impact on our financial statements.