Income Taxes (Tables)

12 Months Ended

Mar. 31, 2025

Consolidated Income Tax Expense/(Benefit)

The Company’s consolidated income tax expense/(benefit) was computed on a modified separate return basis pursuant to the intercompany tax allocation agreement with the Parent and consisted of the following:


	Current		Deferred		Total

	(U.S. dollars in millions)
Year ended March 31, 2025
Federal	$	612	$	(323)	$	289
State and local	99		(23)		76
Foreign	69		(19)		50
Total	$	780	$	(365)	$	415
Year ended March 31, 2024
Federal	$	809	$	(545)	$	264
State and local	198		(78)		120
Foreign	17		38		55
Total	$	1,024	$	(585)	$	439
Year ended March 31, 2023
Federal	$	839	$	(575)	$	264
State and local	35		39		74
Foreign	6		59		65
Total	$	880	$	(477)	$	403

Reconciliation of the Expected Income Tax Expense to the Reported Income Tax Expense

Income tax expense differs from the expected income taxes by applying the statutory federal corporate rate of 21% to income before income taxes as follows:


	Years ended March 31,
	2025		2024		2023

	(U.S. dollars in millions)
Computed “expected” income taxes	$	334	$	323	$	324
Foreign tax rate differential	10		12		13
State and local income taxes, net of federal income tax benefit	70		68		64
Change in estimated state tax rate, net of federal income tax benefit	(3)		23		(10)
Change in unrecognized tax benefit	6		5		4
Other	(2)		8		8
Income tax expense	$	415	$	439	$	403

Deferred Tax Assets and Liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:


	March 31,
	2025		2024

	(U.S. dollars in millions)
Deferred tax assets:
State income tax	$	150	$	143
Receivable allowance	107		88
Accrued postretirement benefits	14		14
State loss carryforwards	23		22
Other assets	95		86
Total gross deferred tax assets	389		353
Less: valuation allowance	—		—
Net deferred tax assets	389		353
Deferred tax liabilities:
HCFI leases	494		539
AHFC leases	4,777		4,891
Mark-to-market	285		481
Other	135		143
Total gross deferred tax liabilities	5,691		6,054
Net deferred tax liabilities	$	5,302	$	5,701

Reconciliation of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


	Years ended March 31,
	2025		2024		2023

	(U.S. dollars in millions)
Balance, beginning of year	$	73	$	73	$	81
Additions for current year tax positions	—		—		—
Additions for prior year tax positions	—		—		—
Reductions for prior year tax positions	—		—		(8)
Settlements	—		—		—
Reductions related to a lapse in the statute of limitations	—		—		—

Balance, end of year	$	73	$	73	$	73