v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income TaxesProvision for Federal Income Taxes
We are subject to federal income tax, but we are exempt from state and local income taxes. We do not conduct
business in foreign jurisdictions. The following table displays the components of our provision for U.S. federal income
taxes.
For the Year Ended December 31,
2025
2024
2023
(Dollars in millions)
Current income tax benefit (provision)
$(2,900)
$(3,154)
$(3,317)
Deferred income tax benefit (provision)(1)
(719)
(1,137)
(1,231)
Provision for federal income taxes
$(3,619)
$(4,291)
$(4,548)
(1)Amount excludes the current income tax effect of items recognized directly in “Total stockholders' equity.”
The following table displays the difference between the statutory corporate tax rate and our effective tax rate.
For the Year Ended December 31,
2025
2024
2023
(Dollars in millions)
Income before U.S. federal income taxes
$17,983
$21,269
$21,956
U.S. federal statutory corporate tax rate
3,776
21.0%
4,467
21.0%
4,611
21.0%
Tax credits
LIHTC investments
(417)
(2.3)
(311)
(1.4)
(213)
(1.0)
Research and development
(47)
(0.3)
(85)
(0.4)
(29)
(0.1)
Valuation allowance
(9)
—
(18)
(0.1)
30
0.1
Other adjustments
Proportional amortization, net of other tax
benefits, on LIHTC investments
331
1.8
255
1.2
166
0.8
Other
(15)
(0.1)
(17)
(0.1)
(17)
(0.1)
Provision for U.S. federal income taxes and
effective tax rate
$3,619
20.1%
$4,291
20.2%
$4,548
20.7%
Our effective tax rate is the provision for federal income taxes expressed as a percentage of income before federal
income taxes. Our effective tax rates for the years 2025, 2024, and 2023 were impacted by benefits for research tax
credits, investments in housing projects eligible for low-income housing tax credits, and changes in the valuation
allowance against our capital loss carryforward tax assetDeferred Tax Assets and Liabilities
We evaluate our deferred tax assets for recoverability using a consistent approach which considers the relative impact
of negative and positive evidence, including our historical profitability and projections of future taxable income. Our
framework for assessing the recoverability of deferred tax assets requires us to weigh all available evidence, to the
extent it exists, including:
•the sustainability of recent profitability required to realize the deferred tax assets;
•the cumulative net income or losses in our consolidated statements of operations and comprehensive income
in recent years;
•unsettled circumstances that, if unfavorably resolved, would adversely affect future operations and profit levels
on a continuing basis in future years;
•the carryforward period for capital losses; and
•tax planning strategies.
Based on all positive and negative evidence available as of December 31, 2025, we concluded that it is more likely than
not that our deferred tax assets will be realized, except the deferred tax asset relating to capital loss carryforwards. For
the deferred tax asset relating to capital loss carryforwards, we concluded that the negative evidence outweighed the
positive evidence, and it is more likely than not that these capital loss carryforwards will not be utilized during the
allowable five-year carryforward period, which will expire in 2027 and 2028 if unused. Therefore, a valuation allowance
has been recorded against our capital loss carryforward deferred tax asset, which is included in “Other, net” in the table
below.
The following table displays our deferred tax assets and deferred tax liabilities.
As of December 31,
2025
2024
(Dollars in millions)
Deferred tax assets:
Mortgage and mortgage-related assets
$4,293
$5,060
Allowance for loan losses and basis in acquired property, net
1,621
1,392
Derivative instruments
160
291
Partnership and other equity investments
1
9
Interest-only securities
3,901
3,982
Other, net
531
749
Total deferred tax assets
10,507
11,483
Deferred tax liabilities:
Debt instruments
561
811
Valuation allowance
(118)
(127)
Deferred tax assets, net
$9,828
$10,545