v3.25.4
Income Tax Expense (Tables)
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Schedule of Income before Income Tax, Domestic and Foreign
The Partnership’s income before income tax expense by geographic area were as follows:
Year Ended December 31,
202520242023
United States$397 $1,040 $430 
Foreign192 9 — 
Total$589 $1,049 $430 
Cash paid for taxes were as follows:
Year Ended December 31,
202520242023
Cash paid for income taxes, net of refunds (excluding federal tax credits purchased from non-governmental third parties)
Federal$(68)$105 $21 
State
Pennsylvania2 7 2 
New Jersey2 12 3 
Other3 11 3 
Foreign
Canada62 — — 
Other2 — — 
Total$3 $135 $29 
Cash paid for federal tax credits purchased from non-governmental third parties$41 $47 $— 
Schedule of Federal and State Components of Income Tax Expense (Benefit)
The components of the federal and state income tax expense (benefit) of our taxable subsidiaries were summarized as follows:
Year Ended December 31,
202520242023
Current:
Federal$18 $152 $16 
State(1)37 7 
Foreign7 — — 
Total current income tax expense24 189 23 
Deferred: 
Federal22 (19)9 
State(8)5 4 
Foreign24 — — 
Total deferred tax expense (benefit)38 (14)13 
Income tax expense$62 $175 $36 
Schedule of Effective Income Tax Rate Reconciliation
Our effective tax rate differs from the statutory rate primarily due to Partnership earnings that are not subject to U.S. federal and most state income taxes at the Partnership level. A reconciliation of income tax expense at the U.S. federal statutory rate to net income tax expense is as follows:
Year Ended December 31,
202520242023
AmountPercentAmountPercentAmountPercent
Income tax expense at United States statutory rate$124 21.00 %$220 21.00 %$90 21.00 %
Increase (reduction) in income taxes resulting from:
Non-taxable Partnership earnings(67)(11.40)(84)(8.04)(64)(14.85)
State and local income tax, net of federal income tax effect (1)
4 0.66 33 3.11 9 2.11 
Foreign tax effects(4)(0.68)— — — — 
Effect of cross-border tax laws - subpart F income inclusion6 1.06 — — — — 
Changes in unrecognized tax benefits - state apportionment positions(10)(1.67)1 0.07 1 0.15 
Other:
Deferred tax remeasurement15 2.64 — — — — 
Discount on purchased tax credits(4)(0.64)— — — — 
Interest on federal refund(5)(0.93)— — — — 
Other adjustments3 0.56 5 0.48 — — 
Income tax expense$62 10.60 %$175 16.62 %$36 8.41 %
(1)State taxes that made up the majority (greater than 50 percent) of the tax effect in this category were Pennsylvania in 2025, New Jersey, Pennsylvania and New York in 2024, and Pennsylvania, Hawaii and New Jersey in 2023.
Schedule of Principal Components of Deferred Tax Assets (Liabilities)
Deferred taxes result from the temporary differences between financial reporting carrying amounts and the tax basis of existing assets and liabilities. The principal components of deferred tax assets and liabilities were as follows:
December 31, 2025December 31, 2024
Deferred income tax assets:  
Net operating losses, credits and other carryforwards$233 $16 
Other45 18 
Total deferred income tax assets278 34 
Valuation allowance(62)— 
Net deferred income tax assets216 34 
Deferred income tax liabilities:
Property, plant and equipment846 49 
Trademarks and other intangibles239 82 
Investments in affiliates54 53 
Other38 1 
Total deferred tax liabilities1,177 185 
Net deferred income tax liabilities$961 $151 
The completion of the Parkland transaction significantly increased the deferred tax assets (liabilities). The table below provides a rollforward of the net deferred income tax liability as follows:
December 31, 2025December 31, 2024
Net deferred income tax liability, beginning of year$(151)$(166)
Acquired via Parkland Acquisition(755)— 
Acquired via NuStar Acquisition— (3)
Tax accrual(55)18 
Net deferred income tax liability, end of year$(961)$(151)
Schedule of Unrecognized Tax Benefits Roll Forward
The following table sets forth the changes in unrecognized tax benefits:
December 31, 2025December 31, 2024
Balance at beginning of year$11 $11 
Reduction attributable to tax positions taken in prior years(8)— 
Balance at end of year$3 $11 
As of December 31, 2025, we had $3 million ($2 million after federal income tax benefits) related to tax positions which, if recognized, would impact our effective tax rate. During 2025, the Partnership recognized an $8 million tax benefit associated with certain prior tax positions that previously did not meet the criteria for recognition in the Partnership's consolidated financial statements.