Income Taxes (Tables)

12 Months Ended

Mar. 31, 2026

Income before Income Taxes and Provision for Income Taxes

Income before income taxes and the provision for income taxes in fiscal 2024, 2025 and 2026 are as follows:


	Millions of yen
	2024		2025			2026
Income before income taxes:
Japan	¥	298,321	¥	307,830		¥	496,631
Overseas		171,654		172,633			194,800

	¥	469,975	¥	480,463		¥	691,431

Provision for income taxes:
Current—
Japan - Total	¥	80,274	¥	72,230		¥	94,317
Japan - National tax*		—		—			72,845
Japan - Local tax*		—		—			21,472
Overseas		31,114		33,252			48,399

		111,388		105,482			142,716

Deferred—
Japan - Total		9,049		26,803			76,511
Japan - National tax*		—		—			63,768
Japan - Local tax*		—		—			12,743
Overseas		10,951		(3,457	)		13,876

		20,000		23,346			90,387

Total—
Japan - Total		89,323		99,033			170,828
Japan - National tax*		—		—			136,613
Japan - Local tax*		—		—			34,215
Overseas		42,065		29,795			62,275

	¥	131,388	¥	128,828		¥	233,103

*	Since fiscal 2026, we have changed the disclosure of the breakdown of income taxes in accordance with Accounting Standards Update 2023-09.

Reconciliations of Differences between Tax Provision Computed and Consolidated Provisions for Income Taxes

Reconciliations of the differences between the tax provision computed at the statutory income tax rate of 31.5%, the aggregate statutory income tax rate of the Company’s tax domicile, and the consolidated provision for income taxes in fiscal 2024 and 2025 are as follows:


	Millions of yen
	2024			2025
Income before income taxes	¥	469,975		¥	480,463

Tax provision computed at the statutory rate	¥	148,042		¥	151,346
Increases (reductions) in taxes due to:
Change in valuation allowance		5,441			1,973
Nondeductible expenses		4,762			5,813
Nontaxable income		(3,574	)		(5,893	)
Effect of lower tax rates on certain subsidiaries		(17,627	)		(22,271	)
Effect of investor taxes on earnings of subsidiaries		7,674			3,494
Effect of the tax law and rate changes		(1,295	)		2,218
Effect of sale or liquidation of subsidiaries		(14,995	)		(8,423	)
Other, net		2,960			571

Provision for income taxes	¥	131,388		¥	128,828

Reconciliations of the differences between the corporate income taxes computed at the Japanese national statutory income tax rate of approximately 25.6%, the national statutory income tax rate in our country of domicile, and the consolidated provision for income taxes in fiscal 2026 was as follows.


	Millions of yen
	2026
Income before income taxes	¥	691,431

Tax provision computed at the national statutory income tax rate	¥	177,006		25.6	%
Japan national tax:
Nontaxable and nondeductible items		(223	)	(0.0	%)
Tax credits
Foreign tax credit		(9,769	)	(1.4	% )
Other		(1,539	)	(0.2	% )
Effect of the tax law and rate changes		1,012		0.1	%
Change in valuation allowance		2,375		0.3	%
Cross-border tax laws		10,975		1.6	%
Other, net		6,715		1.0	%
Japan local tax, net of national tax effect		34,215		4.9	%
Foreign tax effects
The United States		9,030		1.3	%
India
Direct foreign withholding tax		10,367		1.5	%
Other		138		0.0	%
Other foreign jurisdictions		(7,522	)	(1.1	% )
Worldwide changes in unrecognized tax benefits		323		0.1	%

Provision for income taxes	¥	233,103		33.7	%

Summary of Amounts of Taxes Paid (Net of Amounts Received)

The amounts of taxes paid (net of amounts received) in fiscal 2026 was as follows.


	Millions of yen
	2026
Japan national tax		52,638

Japan local tax
Tokyo Metropolitan Government		8,437
Other		9,021

Subtotal		17,458

Foreign
The United States		10,216
India		11,286
Other		23,149

Subtotal		44,651

Total		114,747

Total Income Tax Expense Recognized

Total income tax expense recognized in fiscal 2024, 2025 and 2026 was allocated as follows:


	Millions of yen
	2024			2025			2026
Provision for income taxes	¥	131,388		¥	128,828		¥	233,103
Income tax expense (benefit) allocated to other comprehensive income (loss):
Net change of unrealized gains (losses) on investment in securities		(27,157	)		(60,260	)		(88,096	)
Net change of impact of changes in policy liability discount rate		32,471			54,382			100,702
Net change of debt valuation adjustments		(74	)		(13	)		78
Net change of defined benefit pension plans		5,554			2,063			7,711
Net change of foreign currency translation adjustments		(30,992	)		2,484			(12,045	)
Net change of unrealized gains (losses) on derivative instruments		(1,523	)		(441	)		1,016
Other direct adjustments to shareholders’ equity		32			22			57

Total income tax expense	¥	109,699		¥	127,065		¥	242,526

Deferred Tax Assets and Liabilities

The tax effects of temporary differences and carryforwards giving rise to the deferred tax assets and liabilities as of March 31, 2025 and 2026 are as follows:


	Millions of yen
	2025			2026
Assets:
Net operating loss carryforwards	¥	48,953		¥	50,576
Allowance for credit losses		14,842			18,565
Investment in securities		4,581			4,109
Accrued expenses		26,516			23,644
Investment in operating leases		11,576			12,597
Property under facility operations		28,007			33,551
Installment loans		8,075			7,036
Unrealized losses on investment in securities		158,375			245,605
Lease liabilities		74,215			76,790
Other*		159,391			188,081

		534,531			660,554
Less: valuation allowance		(35,845	)		(44,262	)

		498,686			616,292


	Millions of yen
	2025		2026
Liabilities:
Net investment in leases		12,755		13,524
Investment in operating leases		171,455		175,410
Unrealized gains on investment in securities		9,259		17,966
Deferred insurance policy acquisition costs		90,934		96,048
Policy liabilities and policy account balances		263,515		397,682
Property under facility operations		33,075		37,326
Other intangible assets		143,701		148,872
Undistributed earnings		103,808		134,589
Prepaid benefit cost		27,224		32,689
Advances paid		8,387		9,023
Right-of-use assets		72,034		73,828
Other		24,834		43,256

		960,981		1,180,213

Net deferred tax liability	¥	462,295	¥	563,921

*	As of March 31, 2025 and 2026, other deferred tax assets includes amounts related to net investment hedges of ¥96,778 million and ¥107,235 million.

Net Deferred Tax Assets and Liabilities

Net deferred tax assets and liabilities at March 31, 2025 and 2026 are reflected in the accompanying consolidated balance sheets under the following captions:


	Millions of yen
	2025		2026
Other assets	¥	63,337	¥	47,130
Income taxes: Deferred		525,632		611,051

Net deferred tax liability	¥	462,295	¥	563,921

Net Operating Loss Carryforwards Expire Date

The Company and certain subsidiaries have net operating loss carryforwards of

¥339,611

million at March 31, 2026, which expire as follows:


Years ending March 31,	Millions of yen
2027	¥	6,395
2028		1,989
2029		17,331
2030		45,820
2031		64,843
Thereafter		147,470
Indefinite period		55,763

Total	¥	339,611