v3.26.1
Income Taxes
 3 Months Ended
Mar. 31, 2026
Entity Information [Line Items]  
Income Taxes INCOME TAXES
DPL’s provision for income taxes is based on the estimated annual effective tax rate, plus discrete items. The effective combined state and federal income tax rates were as follows:
Three months ended
March 31,
2026
2025
Effective tax rate
24.3 
%
27.0 
%

The year-to-date rate is different from the combined federal and state statutory rate of 22.4% primarily due to the net loss of disregarded single member LLCs not allocated income tax expense following the DPL conversion, the tax expense related to the amortization of a municipal tax shortage of AES Ohio, and the flowthrough of the net tax benefit related to the reversal of excess deferred taxes of AES Ohio.

DPL's income tax expense for the three months ended March 31, 2026 was calculated using the estimated annual effective income tax rate for 2026 of 24.3% on ordinary income. Management estimates the annual effective tax rate based on its forecast of annual pre-tax income or loss.

AES files federal and state income tax returns, which consolidate DPL and its subsidiaries. Under a tax sharing agreement with AES, DPL is responsible for the income taxes associated with its own taxable income and records the provision for income taxes for taxable corporations using a separate return method.

On April 3, 2025, DPL Inc. converted its form of business organization from an Ohio corporation to an Ohio limited liability company. As a result of the conversion, DPL LLC, Miami Valley Lighting, and AES Ohio Generation each became a disregarded single member LLC of AES for US federal income tax purposes and are no longer severally liable for taxes reported on the consolidated federal income tax return of AES for periods beginning after April 3, 2025. DPL LLC will no longer allocate income tax expense to disregarded single member LLCs and has derecognized the tax balances, including AOCI tax balances, of all disregarded single-member LLCs. However, DPL remains liable for taxes under its tax sharing agreement with AES.