Income Taxes |
6 Months Ended |
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Jun. 30, 2025 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | 4. Income Taxes
One Big Beautiful Bill Act On July 4, 2025, H.R. 1 – One Big Beautiful Bill Act (OBBBA) was signed into law. The OBBBA makes permanent many of the expired and expiring tax provisions originally enacted in the Tax Cuts and Jobs Act of 2017. It also includes significant changes in future years to the timing and availability of several clean energy tax credits previously enacted in the Inflation Reduction Act, including the investment tax credit and production tax credit. TEC is currently evaluating the impact of the enacted changes but does not anticipate they will have a material impact on its financial statements.
Income Tax Expense TEC is included in a consolidated U.S. federal income tax return with EUSHI and its subsidiaries. TEC’s income tax expense is based upon a standalone return method, modified for the benefits-for-loss allocation in accordance with EUSHI's tax sharing agreement. To the extent that TEC’s cash tax positions are settled differently than the amount reported as realized under the tax sharing agreement, the difference is accounted for as either a capital contribution or a distribution. TEC’s effective tax rates for the six months ended June 30, 2025 and 2024 were 14.4% and 11.6%, respectively. The June 30, 2025 and 2024 effective tax rates are an estimate of the annual effective income tax rate. TEC’s effective tax rate for the six months ended June 30, 2025 and 2024 differed from the statutory rate principally due to the tax benefit from production tax credits and amortization of the regulatory tax liability resulting from tax reform. The effective tax rate for the six months ended June 30, 2025 is higher compared to the same period in 2024 primarily due to an increase in pre-tax income, partially offset by higher benefit from production tax credits related to solar facilities. See Note 3 for further information regarding the regulatory tax liability.
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