DOW INC

For the period ended Dec 31, 2024. Filed Feb 4, 2025.

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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.

FY2024 · Filed Feb 4, 2025

DOW$31.48+1.7%Stored close · as of Nov 10, 2026

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Contents

Income Taxes

NOTE 7 –INCOME TAXES

The financial statements for Dow Inc. and TDCC are substantially similar, including the reporting of current and deferred tax expense (benefit), provision (credit) for income taxes, and deferred tax asset and liability balances. As a result, the following income tax discussion pertains to Dow Inc. only.

Geographic Allocation of Income and Provision (Credit) for Income Taxes
In millions	2024	2023	2022
Income (loss) before income taxes
Domestic	$492	$(602)	$2,383
Foreign	1,108	1,258	3,707
Income before income taxes	$1,600	$656	$6,090
Current tax expense (benefit)
Federal	$(137)	$249	$434
State and local	12	18	82
Foreign	389	951	855
Total current tax expense	$264	$1,218	$1,371
Deferred tax expense (benefit)
Federal	$218	$(445)	$63
State and local	51	3	1
Foreign	(134)	(780)	15
Total deferred tax expense (benefit)	$135	$(1,222)	$79
Provision (credit) for income taxes	$399	$(4)	$1,450
Net income	$1,201	$660	$4,640

Reconciliation to U.S. Statutory Rate	2024	2023 1	2022 1
Statutory U.S. federal income tax rate	21.0%		21.0%	21.0%
Equity earnings effect	—		4.2	(1.2)
Foreign income taxed at rates other than the statutory U.S. federal income tax rate	4.6		8.3	(1.4)
U.S. tax effect of foreign earnings and dividends	3.9		(13.0)	1.2
Unrecognized tax benefits	(10.2)		33.1	1.3
Changes in valuation allowances	(4.4)		18.8	(2.8)
Federal tax accrual adjustment	(1.0)		(21.2)	0.6
State and local income taxes	5.4		3.0	2.8
Change in tax basis in foreign assets 2	8.3		(54.9)	—
Foreign permanent items	(5.7)		(1.1)	(0.6)
Other - net	3.0		1.2	2.9
Effective tax rate	24.9%		(0.6)%	23.8%

Certain prior year rates have been adjusted to conform with the current year presentation.
The 2023 impact primarily represents the initial recognition of tax basis in intangible assets in foreign jurisdictions and the related valuation allowance.

Deferred Tax Balances at Dec 31	2024		2023
In millions	Assets	Liabilities	Assets	Liabilities
Property	$178	$2,550	$404	$2,663
Tax loss and credit carryforwards	1,732	—	1,754	—
Postretirement benefit obligations	949	187	983	196
Other accruals and reserves	1,881	572	1,923	521
Intangibles	1,972	261	2,090	331
Inventory	137	227	114	272
Investments	102	31	166	34
Other – net	586	96	733	115
Subtotal	$7,537	$3,924	$8,167	$4,132
Valuation allowances	(2,748)	—	(2,948)	—
Total	$4,789	$3,924	$5,219	$4,132

Operating Loss and Tax Credit Carryforwards at Dec 31	2024	2023
In millions	Assets	Assets
Operating loss carryforwards
Expire within 5 years	$390	$213
Expire after 5 years or indefinite expiration	567	727
Total operating loss carryforwards	$957	$940
Tax credit carryforwards
Expire within 5 years	$121	$80
Expire after 5 years or indefinite expiration	244	317
Total tax credit carryforwards	$365	$397
Capital loss carryforwards
Expire within 5 years	$410	$417
Total tax loss and tax credit carryforwards	$1,732	$1,754

Undistributed earnings of foreign subsidiaries and related companies that are deemed to be permanently invested amounted to $7,125 million at December 31, 2024 and $7,148 million at December 31, 2023. Undistributed earnings are subject to certain taxes upon repatriation, primarily where foreign withholding taxes apply. It is not practicable to calculate the unrecognized deferred tax liability on undistributed earnings.

The following table provides a reconciliation of the Company's unrecognized tax benefits:

Total Gross Unrecognized Tax Benefits
In millions	2024	2023	2022
Total unrecognized tax benefits at Jan 1	$513	$520	$580
Decreases related to positions taken on items from prior years	(3)	(58)	(47)
Increases related to positions taken on items from prior years	—	89	53
Increases related to positions taken in the current year	47	77	46
Settlement of uncertain tax positions with tax authorities	(118)	(109)	(111)
Decreases due to expiration of statutes of limitations	(12)	(11)	—
Foreign exchange loss (gain)	(5)	5	(1)
Total unrecognized tax benefits at Dec 31	$422	$513	$520
Total unrecognized tax benefits that, if recognized, would impact the effective tax rate	$422	$513	$520
Total amount of interest and penalties expense (benefit) recognized in "Provision (credit) for income taxes"	$(234)	$126	$(27)
Total accrual for interest and penalties recognized in the consolidated balance sheets	$327	$561	$498

The Company files tax returns in multiple jurisdictions. These returns are subject to examination and possible challenge by the tax authorities. Open years contain matters that could be subject to differing interpretations of applicable tax laws and regulations as they relate to the amount, character, timing or inclusion of revenue and expenses or the sustainability of income tax credits for a given audit cycle. The ultimate resolution of such uncertainties is not expected to have a material impact on the Company's results of operations. The earliest open tax years are 2004 for state income taxes and 2007 for federal income taxes in the United States and 2011 for taxes in foreign jurisdictions.

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