Income Taxes |
6 Months Ended | ||
|---|---|---|---|
Jun. 30, 2026 | |||
| Income Tax Disclosure [Abstract] | |||
| Income Taxes | 18. Income Taxes RECENT TAX LAW CHANGESThe Inflation Reduction Act of 2022 (H.R. 5376) (the “Inflation Reduction Act”) includes a 15% corporate alternative minimum tax (“CAMT”) on adjusted financial statement income for corporations with average profits over $1 billion over a three-year period and a 1% stock buyback tax. The U.S. Treasury and Internal Revenue Service (“IRS”) have published proposed regulations, as well as interim guidance, with respect to the CAMT which we rely upon to calculate our estimated CAMT liability. Our estimated CAMT liability may be refined as additional guidance is issued. RECLASSIFICATION OF CERTAIN TAX EFFECTS FROM AOCI We use an item-by-item approach to release the stranded or disproportionate income tax effects in AOCI related to our available-for- sale securities. Under this approach, a portion of the disproportionate tax effects is assigned to each individual security when recognized in AOCI. When the individual securities are sold, mature or are otherwise impaired on an other-than-temporary basis, the assigned portion of the disproportionate tax effect is reclassified from AOCI to income (loss) from operations. INTERIM TAX CALCULATION METHOD We use the estimated annual effective tax rate method in computing our interim tax provision. Certain items, including those deemed to be unusual or infrequent or that cannot be reliably estimated, are excluded from the estimated annual effective tax rate. In these cases, the actual tax expense or benefit is reported in the same period as the related item. Certain tax effects are excluded from the estimated annual effective tax rate, including the reclassification of certain tax effects from AOCI and changes in the realizability of deferred tax assets, and are recorded in the period in which they occur. INTERIM TAX EXPENSE (BENEFIT) For the three and six months ended June 30, 2026, the effective tax rate on income from operations was 96.2% and 139.6%, respectively. The effective tax rate on income from operations differs from the statutory tax rate of 21% primarily due to tax charges associated with increase in U.S. federal valuation allowance and state and local income taxes, partially offset by tax benefits associated with dividends received deduction, tax adjustments related to prior year returns including interest, reclassifications from AOCI to income from operations related to the disposal of available-for-sale securities, and non-controlling interest. For the three and six months ended June 30, 2025, the effective tax rate on loss from operations was (9.9)% and 9.9%, respectively. The effective tax rate on loss from operations differs from the statutory tax rate of 21% primarily due to tax benefits associated with dividends received deduction, non-controlling interest, reclassifications from AOCI to income from operations related to the disposal of available-for-sale securities, and tax adjustments related to prior year returns including interest. These tax benefits are offset by tax charges associated with increase in U.S. federal and state valuation allowance and state and local income taxes. Additionally, the six months ended June 30, 2025 reflects excess tax benefits related to share based compensation payments recorded through the income statement during first quarter 2025. ASSESSMENT OF DEFERRED TAX ASSET VALUATION ALLOWANCE In evaluating the recoverability of our deferred tax assets and the need for a valuation allowance, we consider recent events, changes in interest rates, significant market volatility, forecasts of future income for each of our businesses, and any potential impact of these factors on our tax planning strategies. Our assessment of the realization of deferred tax assets, including net operating loss and capital loss carryforwards, is performed for each separate U.S. federal tax filing group and separate U.S. tax filer. This assessment considers, among other factors, the five-year waiting period during which certain life insurance subsidiaries are not permitted to join in the filing of the U.S. consolidated federal income tax return. We also consider the impact of Sec. 382 limitations on pre-ownership change net operating losses and other built-in losses and deductions. After evaluating all positive and negative evidence, if we determine that it is more-likely-than-not that some portion of the deferred tax asset will not be realized, a valuation allowance is recorded. Based on management’s analysis, as of June 30, 2026, we have a U.S. federal valuation allowance of $1.7 billion, of which $179 million is related to NOLs and other ordinary DTAs and $1.5 billion ($1.1 billion reflected in AOCI) is related to realized and unrealized capital losses. For the three months ended June 30, 2026, we recorded an increase in valuation allowance of $8 million related to NOLs and other ordinary DTAs and net increase of $92 million related to investment losses, of which $51 million was recorded through the Condensed Consolidated Statements of Income (Loss) and $41 million was recorded in OCI. For the six months ended June 30, 2026, we recorded an increase in valuation allowance of $19 million related to NOLs and other ordinary DTAs and net increase of $319 million related to investment losses, of which $191 million was recorded through the Condensed Consolidated Statements of Income (Loss) and $128 million was recorded in OCI. TAX EXAMINATIONS AND LITIGATION Corebridge Parent and certain U.S. subsidiaries are included in a consolidated U.S. federal income tax return with AIG through the date of IPO (short-period tax year 2022), and income tax expense is recorded, based on applicable U.S. and foreign laws. The AIG Consolidated Tax Group is currently under IRS examination for the tax years 2011 through 2019 and is continuing to engage in the appeals process for years 2007 through 2010. We are periodically advised of certain IRS and other adjustments identified in AIG's consolidated tax return which are attributable to our operations. Under our tax sharing arrangement, we provide a charge or credit for the effect of the adjustments and the related interest in the period we are advised of such adjustments and interest.
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