UNITED PARCEL SERVICE INC
For the period ended Dec 31, 2025. Filed Feb 17, 2026.
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FY2025 · Filed Feb 17, 2026
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Income Tax Expense
The following table sets forth our income tax expense and effective tax rate for 2025 and 2024 (in millions):
| 2025 | 2024 | $ Change | % Change | |
|---|---|---|---|---|
| Income Tax Expense: | $1,592 | $1,660 | $(68) | (4.1)% |
| Income Tax Impact of: | ||||
| Business Portfolio Review | (5) | 7 | (12) | (171.4)% |
| Financial Systems | 14 | 13 | 1 | 7.7% |
| Transformation 2.0 Total | 9 | 20 | (11) | (55.0)% |
| Fit to Serve | 10 | 49 | (39) | (79.6)% |
| Network Reconfiguration and Efficiency Reimagined | 122 | 8 | 114 | N/M |
| Total Transformation Strategy Costs | 141 | 77 | 64 | 83.1% |
| Net Loss (Gain) on Divestiture | 4 | (4) | 8 | (200.0)% |
| Goodwill and Asset Impairment Charges | 45 | 27 | 18 | 66.7% |
| Reversal of Income Tax Valuation Allowance | 109 | — | 109 | N/A |
| Multiemployer Pension Plan Withdrawal Expense | — | 5 | (5) | (100.0)% |
| Defined Benefit Pension and Postretirement Medical Plan Loss | — | 159 | (159) | (100.0)% |
| Non-GAAP Adjusted Income Tax Expense | $1,891 | $1,924 | $(33) | (1.7)% |
| Effective Tax Rate | 22.2% | 22.3% | ||
| Non-GAAP Adjusted Effective Tax Rate | 23.7% | 22.5% | ||
In July 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law. The income tax-related provisions of the OBBBA include revisions to international tax regimes, the repeal of mandatory capitalization of research and development expenditures, and the extension of bonus depreciation. The OBBBA has multiple effective dates, with certain provisions effective in future years. The impact of the OBBBA is not material to our 2025 overall effective tax rate and has been reflected in our audited, consolidated financial statements. We continue to evaluate the expected impact in future years and expect a favorable impact to our effective tax rate and cash flows.
For additional information on income tax expense and our effective tax rate, see note 15 to the audited, consolidated financial statements.
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