MARRIOTT INTERNATIONAL INC MD

NOTE 6. INCOME TAXES

The components of our earnings before income taxes for the last three fiscal years consisted of:

Our (provision) benefit for income taxes for the last three fiscal years consisted of:

Unrecognized Tax Benefits

The following table reconciles our unrecognized tax benefit balance for each year from the beginning of 2022 to the end of 2024:

Our unrecognized tax benefit balance included $171 million at year-end 2024, $161 million at year-end 2023, and $241 million at year-end 2022 of tax positions that, if recognized, would impact our effective tax rate. It is reasonably possible that within the next 12 months we will reach resolution of income tax examinations in one or more jurisdictions. The actual amount of any change to our unrecognized tax benefits could vary depending on the timing and nature of the settlement. Therefore, an estimate of the change cannot be provided. We recognize accrued interest and penalties for our unrecognized tax benefits as a component of tax expenses. Related interest expense totaled $14 million in 2024, $6 million in 2023, and $13 million in 2022. We accrued interest and penalties related to our unrecognized tax benefits of approximately $63 million at year-end 2024 and $52 million at year-end 2023.

We file income tax returns, including returns for our subsidiaries, in various jurisdictions around the world. The U.S. Internal Revenue Service has examined our federal income tax returns, and as of year-end 2024, we have settled all issues for tax years through 2022. Our 2023 and 2024 tax year audits are currently ongoing. Various foreign, state, and local income tax returns are also under examination by the applicable taxing authorities.

Deferred Income Taxes

Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases, as well as from net operating loss and tax credit carry-forwards. We state those balances at the enacted tax rates we expect will be in effect when we pay or recover the taxes. Deferred income tax assets represent amounts available to reduce income taxes we will pay on taxable income in future years. We evaluate our ability to realize these future tax deductions and credits by assessing whether we expect to have sufficient future taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings, and available tax planning strategies to utilize these future deductions and credits. We establish a valuation allowance when we no longer consider it more likely than not that a deferred tax asset will be realized.

The following table presents the tax effect of each type of temporary difference and carry-forward that gave rise to significant portions of our deferred tax assets and liabilities as of year-end 2024 and year-end 2023:

Our valuation allowance is primarily attributable to non-U.S. net operating loss carry-forwards.

At year-end 2024, we had approximately $50 million of tax credits that will expire through 2034 and $12 million of tax credits that do not expire. We recorded $22 million of net operating loss benefits in 2024 and $25 million in 2023. At year-end 2024, we had approximately $4,611 million of primarily state and foreign net operating losses, of which $2,963 million will expire through 2044.

We made no provision for U.S. income taxes or additional non-U.S. taxes on certain undistributed earnings of non-U.S. subsidiaries. These earnings could become subject to additional taxes if the non-U.S. subsidiaries dividend or loan those earnings to an affiliate or if we sell our interests in the non-U.S. subsidiaries. We cannot practically estimate the amount of additional taxes that might be payable on the undistributed earnings.

Reconciliation of U.S. Federal Statutory Income Tax Rate to Actual Income Tax Rate

The following table reconciles the U.S. statutory tax rate to our effective income tax rate for the last three fiscal years:

Other Information

We paid cash for income taxes, net of refunds, of $947 million in 2024, $907 million in 2023, and $476 million in 2022.