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INCOME TAXES
 3 Months Ended
Mar. 31, 2026
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
FET and its subsidiaries’ interim effective income tax rates reflect the estimated annual effective income tax rates for 2026 and 2025. These tax rates are affected by estimated annual permanent items, such as AFUDC equity and other flow-through items, as well as certain discrete items. The following table reconciles the effective income tax rate to the federal income tax statutory rate for the three months ended March 31, 2026 and 2025:
For the Three Months Ended March 31,
(In millions) 20262025
Amount %Amount%
Income before income taxes$185 $165 
Federal statutory income tax$39 21.0 %$35 21.0 %
Federal:
Nontaxable and Nondeductible:
AFUDC equity income(4)(2.2)%(3)(1.8)%
Other:
Excess deferred tax amortization— — %(1)(0.6)%
Other— — %(1)(0.6)%
State and municipal income taxes, net of federal effect (1)
8 4.3 %7 4.2 %
Total income taxes (2)
$43 23.2 %$37 22.4 %
(1) Pennsylvania makes up the majority of FET’s respective domestic state income taxes, net of federal effect.
(2) There were no amounts for the three months ended March 31, 2026, or 2025, related to tax credits, cross-border tax laws, changes in laws or rates, changes in valuation allowances, foreign tax effects, or changes in unrecognized tax benefits.

For federal income tax purposes, FET files as a consolidated group with its subsidiaries and maintains an intercompany income tax allocation agreement for the allocation of consolidated tax liability, including corporate AMT. Prior to the closing of the FET Equity Interest Sale, FET and its subsidiaries were included in the FirstEnergy consolidated group for federal income tax purposes and were parties to the FirstEnergy intercompany income tax allocation agreement.

On February 18, 2026, the U.S. Treasury and IRS issued guidance that allows certain tax repair deductions in computing corporate AMT. As a result of this guidance, FET reversed $10 million in corporate AMT credit carryforwards in the first quarter of 2026 related to corporate AMT incurred and paid in prior tax years, none of which had an impact to the effective tax rate. The FET consolidated tax group remains subject to the corporate AMT, but expects that this allowance for certain tax repair deductions will reduce future corporate AMT liability.

On July 4, 2025, President Trump signed into law the OBBBA, which makes permanent certain corporate tax incentives from the TCJA and accelerates the phase out of tax credits for wind and solar projects, but is not expected to materially impact FET.

During 2025, FERC issued orders to a non-affiliate concluding that, based on certain previously issued IRS private letter rulings, certain NOL carryforward deferred tax assets, as computed on a separate return basis, should be included in rate base for ratemaking purposes. FET determined in the third quarter of 2025 that these rulings and orders also would apply to certain of its subsidiaries, resulting in a benefit from a reduction in regulatory liabilities, reflected as the remeasurement of excess deferred income taxes, and an increase in accumulated deferred income tax assets for ratemaking purposes. FET made the appropriate updates in its annual formula rates for the impacted subsidiaries.

FET will continue to monitor and evaluate future tax legislation, guidance from the U.S. Treasury and/or the IRS, including guidance related to the corporate AMT, and developments concerning the regulatory treatment of income taxes by FERC and/or applicable state regulatory authorities, that could negatively impact FET’s cash flows, results of operations and financial condition.