v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of income tax provision attributable to continuing operations were as follows:
Years Ended December 31,
202520242023
(in millions)
Current income tax
Federal$605 $583 $518 
State and local154 137 124 
Foreign25 21 18 
Total current income tax784 741 660 
Deferred income tax
Federal157 164 45 
State and local(2)(29)(14)
Foreign2 (10)(13)
Total deferred income tax157 125 18 
Total income tax provision$941 $866 $678 
The geographic sources of pretax income from continuing operations were as follows:
Years Ended December 31,
202520242023
(in millions)
United States$4,406 $4,221 $3,199 
Foreign98 46 35 
Total$4,504 $4,267 $3,234 
The principal reasons that the aggregate income tax provision attributable to continuing operations is different from that computed by using the U.S. statutory rate of 21% were as follows:
Years Ended December 31,
202520242023
AmountPercentageAmountPercentageAmountPercentage
(in millions, except percentages)
U.S. federal statutory tax rate
$946 21.0%$896 21.0%$679 21.0%
State and local income taxes, net of federal income tax effect (1)
103 2.385 2.087 2.7
Foreign tax effects6 0.11 —(2)(0.1)
Effect of cross-border tax laws
2 —1 —— —
Tax credits(46)(1.0)(47)(1.1)(61)(1.9)
Nontaxable or nondeductible items:
Incentive compensation(61)(1.4)(66)(1.6)(47)(1.5)
Other(12)(0.2)(12)(0.3)3 0.1
Changes in unrecognized tax benefits
13 0.319 0.526 0.8
Other adjustments
(10)(0.2)(11)(0.2)(7)(0.1)
Effective tax rate
$94120.9%$86620.3%$67821.0%
(1) State taxes in California, Minnesota, New York, Massachusetts and New Jersey made up the majority (greater than 50 percent) of the tax effect in this category for 2025. State taxes in Minnesota, California, New York, Georgia, and Wisconsin made up the majority (greater than 50 percent) of the tax effect in this category for 2024. State taxes in California, Minnesota, New York and New Jersey made up the majority (greater than 50 percent) of the tax effect in this category for 2023.
Deferred income tax assets and liabilities result from temporary differences between the assets and liabilities measured for GAAP reporting versus income tax return purposes. Deferred income tax assets and liabilities are measured at the statutory rate of 21% as of both December 31, 2025 and 2024. The significant components of the Company’s deferred income tax assets and liabilities, which are included net within Other assets or Other liabilities, were as follows:
December 31,
20252024
(in millions)
Deferred income tax assets
Deferred compensation including corresponding hedges
$715 $655 
Insurance and annuity benefits including corresponding hedges
525 802 
Investments including net unrealized on Available-for-Sale securities
195 381 
Net operating loss and tax credit carryforward
159 221 
Other200 159 
Gross deferred income tax assets1,794 2,218 
Less: valuation allowance65 67 
Total deferred income tax assets1,729 2,151 
Deferred income tax liabilities
Deferred acquisition costs333 364 
Goodwill and intangibles
323 323 
Other153 137 
Gross deferred income tax liabilities809 824 
Net deferred income tax assets$920 $1,327 
Included in the Company’s deferred income tax assets are tax benefits related to foreign net operating losses of $50 million, which do not expire, corporate alternative minimum tax (“CAMT”) credit carryforwards of $75 million, which do not expire, and state net operating losses of $34 million, net of federal benefit, which will expire beginning December 31, 2026. Based on analysis of the Company’s tax position as of December 31, 2025, management believes it is more likely than not that the Company will not realize certain state net operating losses of $29 million, state deferred tax assets of $2 million (both net of federal benefit), and foreign net operating losses of $34 million; therefore, a valuation allowance of $65 million has been established.
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits was as follows:
202520242023
(in millions)
Balance at January 1$164 $150 $138 
Additions for tax positions related to the current year
19 22 26 
Reductions for tax positions related to the current year
(2)(2)(3)
Additions for tax positions of prior years15 23 80 
Reductions for tax positions of prior years(20)(8)(85)
Reductions due to lapse of statutes of limitations
(5)(20)(5)
Audit settlements(3)(1)(1)
Balance at December 31$168 $164 $150 
If recognized, approximately $137 million, $134 million and $120 million, net of federal tax benefits, of unrecognized tax benefits as of December 31, 2025, 2024 and 2023, respectively, would affect the effective tax rate.
The Company recognizes interest and penalties related to unrecognized tax benefits as a component of the income tax provision. The Company recognized a net increase of $16 million, $5 million and $12 million in interest and penalties for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025 and 2024, the Company had a payable of $55 million and $31 million, respectively, related to accrued interest and penalties.
The Company or one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The federal statutes of limitations are closed on years through 2018, except for two issues for 2016 which were claimed on an amended return. During the second quarter of 2025, the Internal Revenue Service (“IRS”) finalized the audit of tax years 2019 and 2020, except for one issue for 2020, which remains open. The IRS is currently auditing the Company’s U.S. income tax returns for 2021 through 2023. The Company’s state income tax returns are currently under examination by various jurisdictions for years ranging from 2018 through 2023.
The Company is an applicable corporation required to compute CAMT, however, as of December 31, 2025, based on current estimates, the Company does not expect to be liable for CAMT in 2025. This estimate is based on interpretations and assumptions of available guidance, including proposed regulations and notices, that the Company has made regarding the CAMT provisions of the Inflation Reduction Act of 2022.
In December 2021, the Organization for Economic Co-operation and Development published the Pillar Two model rules which introduce new taxing mechanisms aimed at ensuring multinational enterprises pay a minimum level of tax on profits from each jurisdiction in which they operate. As of December 31, 2025, the tax impact was not material to the consolidated financial statements. The Company continues to monitor the adoption and implementation of these rules and evaluate the potential impact on its consolidated financial statements.
The legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”) was enacted on July 4, 2025. The corporate tax law changes resulting from the OBBBA did not have a material impact to the Company’s consolidated financial statements for the year ended December 31, 2025 and, based on current guidance, the Company does not expect to record any material impacts in the future.
Income taxes paid were as follows:
202520242023
(in millions)
Income taxes paid, net$885 $496 $1,036 
Federal716 366 885 
State and local
146 117 129 
Foreign23 13 22