AMERICAN INTERNATIONAL GROUP, INC.AIG
AMERICAN INTERNATIONAL GROUP, INC. Income Taxes Disclosure
21. Income Taxes
U.S. TAX LAW CHANGES
On July 4, 2025, new U.S. tax legislation was signed into law (known as the "One Big Beautiful Bill Act" or "OBBB Act") which, among other provisions, makes permanent many of the tax provisions enacted in 2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of 2025. The OBBB Act does not have a material impact on our results of operations.
BASIS OF PRESENTATION
We file a consolidated U.S. federal income tax return with our eligible U.S. subsidiaries. Income earned by subsidiaries operating outside the U.S. is taxed, and income tax expense is recorded, based on applicable U.S. and foreign laws.
We consider our foreign earnings with respect to certain operations in Canada, South Africa, Japan, Latin America, Bermuda as well as the European, Asia Pacific and Middle East regions to be indefinitely reinvested. These earnings relate to ongoing operations and have been reinvested in active business operations. A deferred tax liability has not been recorded for those foreign subsidiaries whose earnings are considered to be indefinitely reinvested. If recorded, such deferred tax liability would not be material to our consolidated financial condition. Deferred taxes, if necessary, have been provided on earnings of non-U.S. affiliates whose earnings are not indefinitely reinvested.
EFFECTIVE TAX RATE
The following table presents income (loss) from continuing operations before income tax expense (benefit) by U.S. and foreign location in which such pre-tax income (loss) was earned or incurred:
| Years Ended December 31, | ||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| U.S. | $ | 1,503 | $ | 1,818 | $ | 900 | ||||||||||||||
| Foreign | 2,376 | 2,052 | 1,967 | |||||||||||||||||
| Total | $ | 3,879 | $ | 3,870 | $ | 2,867 | ||||||||||||||
The following table presents the income tax expense (benefit) attributable to pre-tax income (loss) from continuing operations:
| Years Ended December 31, | ||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Income tax expense (benefit): | ||||||||||||||||||||
| U.S. Federal: | ||||||||||||||||||||
| Current | $ | 253 | $ | 283 | $ | (246) | ||||||||||||||
| Deferred | (221) | 416 | (110) | |||||||||||||||||
U.S. State & Local*: | ||||||||||||||||||||
| Current | 17 | |||||||||||||||||||
| Deferred | (12) | |||||||||||||||||||
| Foreign: | ||||||||||||||||||||
| Current | 635 | 374 | 422 | |||||||||||||||||
| Deferred | 110 | 97 | 60 | |||||||||||||||||
| Total | $ | 782 | $ | 1,170 | $ | 126 | ||||||||||||||
*The income tax expense (benefit) related to U.S. state and local tax jurisdictions are reflected in the U.S. Federal income tax expense (benefit) for years 2024 and 2023 based on the originally as-filed basis prior to the adoption of the accounting standard.
Our actual income tax expense (benefit) from continuing operations differs from the statutory U.S. federal amount computed by applying the federal income tax rate due to the following:
| Year Ended December 31, | 2025 | ||||||||||
(dollars in millions) | Pre-Tax Income (Loss) | Tax Expense (Benefit) | Percent of Pre-Tax Income (Loss) | ||||||||
U.S. federal income tax at statutory rate | $ | 3,879 | $ | 815 | 21.0 | % | |||||
Adjustments: | |||||||||||
| State and local income tax, net of federal income tax effect | 14 | 0.4 | |||||||||
Foreign tax effects: | |||||||||||
United Kingdom: | |||||||||||
Effect of rate different than statutory | 43 | 1.1 | |||||||||
Other | 46 | 1.2 | |||||||||
Netherlands: | |||||||||||
Effect of rate different than statutory | 41 | 1.1 | |||||||||
Other | (1) | — | |||||||||
Other jurisdictions | 116 | 3.0 | |||||||||
Effect of cross-border tax laws, net of related tax credits: | |||||||||||
U.S. income taxes on non-U.S. insurance companies(a) | (59) | (1.5) | |||||||||
Other | 28 | 0.7 | |||||||||
| Tax credits | (20) | (0.5) | |||||||||
| Changes in valuation allowances | (300) | (7.7) | |||||||||
| Nontaxable or nondeductible items | 20 | 0.5 | |||||||||
Changes in unrecognized tax benefits - Global | 17 | 0.4 | |||||||||
| Other | 22 | 0.5 | |||||||||
Consolidated total amounts | $ | 3,879 | $ | 782 | 20.2 | % | |||||
(a)This relates to certain foreign insurance companies elected to be treated as a U.S. corporation under the U.S. federal tax law provisions.
The effective tax rate disclosures for the years ended 2024 and 2023 remain on the originally as-filed basis prior to the adoption of the improvements to income tax disclosures standard.
| Years Ended December 31, | 2024 | 2023 | |||||||||||||||||||||
| (dollars in millions) | Pre-Tax Income (Loss) | Tax Expense (Benefit) | Percent of Pre-Tax Income (Loss) | Pre-Tax Income (Loss) | Tax Expense (Benefit) | Percent of Pre-Tax Income (Loss) | |||||||||||||||||
U.S. federal income tax at statutory rate | $ | 3,870 | $ | 813 | 21.0 | % | $ | 2,867 | $ | 602 | 21.0 | % | |||||||||||
Adjustments: | |||||||||||||||||||||||
Tax exempt interest | (8) | (0.2) | (14) | (0.5) | |||||||||||||||||||
Uncertain tax positions(a) | 17 | 0.4 | 169 | 5.9 | |||||||||||||||||||
Dispositions of subsidiaries(b) | (1) | — | (143) | (5.0) | |||||||||||||||||||
Non-deductible transfer pricing charges | 13 | 0.3 | 16 | 0.6 | |||||||||||||||||||
Effect of foreign operations(c) | 110 | 2.8 | 176 | 6.1 | |||||||||||||||||||
Share-based compensation payments excess tax effect | (16) | (0.4) | (21) | (0.7) | |||||||||||||||||||
State and local income taxes | 26 | 0.7 | 23 | 0.8 | |||||||||||||||||||
Developments related to prior tax years under IRS review(a) | 240 | 6.2 | (467) | (16.3) | |||||||||||||||||||
Other(d) | 9 | 0.3 | 150 | 5.2 | |||||||||||||||||||
Valuation allowance(e) | (33) | (0.9) | (365) | (12.7) | |||||||||||||||||||
Consolidated total amounts | $ | 3,870 | $ | 1,170 | 30.2 | % | $ | 2,867 | $ | 126 | 4.4 | % | |||||||||||
(a)2024 includes an update related to the estimated impact of potential resolution for prior tax years under IRS Appeals review. Refer to the Tax Examinations section below for further discussion on developments related to prior tax years under IRS review. For 2023, refer to the Accounting for Uncertainty in Income Taxes section below for further discussion on tax audit resolution activity. 2024 and 2023 uncertain tax positions include changes in unrecognized tax benefits in U.S. and certain foreign jurisdictions.
(b)This primarily includes tax implications of the sales of Validus Re for year 2023.
(c)Effect of foreign operations is primarily related to income and losses in our foreign operations taxed at statutory tax rates different than 21 percent, and foreign income subject to U.S. taxation.
(d)Primarily includes tax charges associated with tax adjustments related to prior year U.S. and foreign returns.
(e)2024 and 2023 amounts reflect changes in valuation allowances in U.S. and certain foreign jurisdictions. Primarily due to 2023 reduction in valuation allowance related to AIG’s U.S. federal consolidated income tax group tax attribute carryforwardsDEFERRED TAX ASSET
The following table presents the components of the net deferred tax assets (liabilities):
| December 31, | ||||||||||||||
| (in millions) | 2025 | 2024 | ||||||||||||
| Deferred tax assets: | ||||||||||||||
| Losses and tax credit carryforwards | $ | 4,155 | $ | 4,636 | ||||||||||
| Basis differences on investments | 336 | 30 | ||||||||||||
| Accruals not currently deductible, and other | 276 | 150 | ||||||||||||
| Investments in foreign subsidiaries | 29 | 19 | ||||||||||||
| Loss reserve discount | 440 | 443 | ||||||||||||
| Loan loss and other reserves | 43 | 37 | ||||||||||||
| Unearned premium reserve reduction | — | 46 | ||||||||||||
| Fixed assets and intangible assets | 271 | 293 | ||||||||||||
| Unrealized losses related to available for sale debt securities | 153 | 618 | ||||||||||||
| Employee benefits | 163 | 192 | ||||||||||||
| Other | 10 | 39 | ||||||||||||
| Total deferred tax assets | 5,876 | 6,503 | ||||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Deferred policy acquisition costs | (139) | (278) | ||||||||||||
| Life policy reserves | (43) | (45) | ||||||||||||
Unearned premium reserve reduction | (161) | — | ||||||||||||
| Total deferred tax liabilities | (343) | (323) | ||||||||||||
| Net deferred tax assets before valuation allowance | 5,533 | 6,180 | ||||||||||||
| Valuation allowance | (1,051) | (1,650) | ||||||||||||
| Net deferred tax assets | $ | 4,482 | $ | 4,530 | ||||||||||
The following table presents AIG's U.S. consolidated federal income tax group tax losses and credits carryforwards.
| December 31, 2025 | Tax | Carryforward Period Ending Tax Year(b) | Unlimited Carryforward Period and Carryforward Periods(b) | ||||||||||||||||||||
| (in millions) | Gross | Effected | 2028 | 2029 | 2030 | 2031 | 2032 - After | ||||||||||||||||
| Net operating loss carryforwards | $ | 15,610 | $ | 3,278 | $ | 1,300 | $ | 178 | $ | — | $ | 930 | $ | 870 | |||||||||
| Other carryforwards | — | — | — | — | — | — | |||||||||||||||||
Total AIG U.S. consolidated federal income tax group tax losses and credits carryforwards on a U.S. GAAP basis(a) | $ | 3,278 | $ | 1,300 | $ | 178 | $ | — | $ | 930 | $ | 870 | |||||||||||
(a)Financial reporting basis reflects the impact of unrecognized tax benefits for tax years in which tax attributes can be realized through carryback upon settlement.
(b)Carryforward periods are based on U.S. tax laws governing utilization of tax attributes. Expiration periods are based on the year the carryforward was generated.
ASSESSMENT OF DEFERRED TAX ASSET VALUATION ALLOWANCE
The evaluation of the recoverability of our deferred tax asset and the need for a valuation allowance requires us to weigh all positive and negative evidence to reach a conclusion that it is more likely than not that all or some portion of the deferred tax asset will not be realized. The weight given to the evidence is commensurate with the extent to which it can be objectively verified. The more negative evidence that exists, the more positive evidence is necessary and the more difficult it is to support a conclusion that a valuation allowance is not needed.
During the three months ended December 31, 2025, taxable income projections were updated to reflect the latest projections of income for our insurance and non-insurance companies and projections of taxable income generated from prudent and feasible tax planning strategies. In order to demonstrate the predictability and sufficiency of future taxable income necessary to support the realizability of the net operating losses carryforwards, we have considered forecasts of future income for each of our businesses, including assumptions about future macroeconomic and AIG-specific conditions and events, and any impact these conditions and events may have on our prudent and feasible tax planning strategies. We also subjected the forecasts to a variety of stresses of key assumptions and evaluated the effect on tax attribute utilization.
After factoring in multiple data points and assessing the relative weight of all positive and negative evidence, we concluded that the cumulative positive evidence outweighs the negative evidence regarding the likelihood that our U.S. federal consolidated income tax group tax attribute carryforwards will be realized and that the beginning of year valuation allowance should be released. Accordingly, during the fourth quarter of 2025, we recorded valuation allowance release of $300 million related to our U.S. federal consolidated tax attribute carryforwards.
Estimates of future taxable income, including income generated from prudent and feasible actions and tax planning strategies and impact of settlements with taxing authorities, could change in the near term, perhaps materially, which may require us to consider any potential impact to our assessment of the recoverability of the deferred tax asset.
For the year ended December 31, 2025, recent changes in market conditions, including changes in interest rates, impacted the unrealized tax gains and losses in the available for sale securities portfolios of our general insurance and non-insurance companies, resulting in a decrease to deferred tax assets related to net unrealized tax capital losses. The deferred tax assets relate to the unrealized tax capital losses for which the carryforward period has not yet begun. As of December 31, 2025, based on all available evidence, we concluded that a valuation allowance of $200 million is necessary on deferred tax assets related to unrealized tax capital losses that are not more-likely-than-not to be realized. For the year ended December 31, 2025, we recorded a decrease in valuation allowance of $309 million associated with the unrealized tax capital losses in AIG's available for sale securities portfolio. The valuation allowance decrease was allocated to Other comprehensive income.
For the year ended December 31, 2025, we recognized a net $13 million increase in deferred tax asset valuation allowance associated with certain foreign jurisdictions.
The following table presents the net deferred tax assets (liabilities) at December 31, 2025 and 2024 on a U.S. GAAP basis:
| December 31, | ||||||||||||||
| (in millions) | 2025 | 2024 | ||||||||||||
| Net U.S. deferred tax assets | $ | 4,835 | $ | 4,922 | ||||||||||
| Net deferred tax assets (liabilities) in AOCI | 109 | 421 | ||||||||||||
| Valuation allowance | (194) | (798) | ||||||||||||
| Subtotal | 4,750 | 4,545 | ||||||||||||
| Net foreign, state and local deferred tax assets | 1,203 | 1,263 | ||||||||||||
| Valuation allowance | (857) | (852) | ||||||||||||
| Subtotal | 346 | 411 | ||||||||||||
| Subtotal - Net U.S., foreign, state and local deferred tax assets | 5,096 | 4,956 | ||||||||||||
| Net foreign, state and local deferred tax liabilities | (614) | (426) | ||||||||||||
| Total AIG net deferred tax assets (liabilities) | $ | 4,482 | $ | 4,530 | ||||||||||
TAX EXAMINATIONS
We are currently under examination by the IRS for the tax years 2011 through 2019. We continue to engage in the IRS Appeals process for certain disagreed issues related to tax years 2007 through 2010. These tax years are still subject to ongoing computational review by IRS Appeals.
Listed below are the tax years that remain subject to examination by major tax jurisdictions:
| At December 31, 2025 | Open Tax Years | ||||
| Major Tax Jurisdiction | |||||
| United States | 2007-2024 | ||||
| Australia | 2021-2024 | ||||
| Canada | 2021-2024 | ||||
| France | 2023-2024 | ||||
Germany | 2016-2024 | ||||
| Japan | 2019-2024 | ||||
| Korea | 2020-2024 | ||||
| Singapore | 2021-2024 | ||||
| United Kingdom | 2023-2024 | ||||
ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES
The following table presents a reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits, excluding interest and penalties:
| Years Ended December 31, | ||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Gross unrecognized tax benefits, beginning of year | $ | 1,384 | $ | 1,387 | $ | 1,191 | ||||||||||||||
| Increases in tax positions for prior years | 41 | 3 | 200 | |||||||||||||||||
| Decreases in tax positions for prior years | (12) | (20) | (4) | |||||||||||||||||
| Increases in tax positions for current year | — | 15 | — | |||||||||||||||||
| Lapse in statute of limitations | (1) | (1) | — | |||||||||||||||||
| Gross unrecognized tax benefits, end of year | $ | 1,412 | $ | 1,384 | $ | 1,387 | ||||||||||||||
The activity in unrecognized tax benefits for the year ended December 31, 2023 is primarily attributable to the potential resolution of an IRS audit matter. There was no significant activity in unrecognized tax benefits for the years ended December 31, 2025 and December 31, 2024.
At December 31, 2025 and 2024 and 2023, the amounts of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate were $1.4 billion. Unrecognized tax benefits that would not affect the effective tax rate generally relate to such factors as the timing, rather than the permissibility of the deduction.
Interest and penalties related to unrecognized tax benefits are recognized in income tax expense. At December 31, 2025, 2024 and 2023, we had accrued liabilities of $62 million, $53 million and $52 million, respectively for the payment of interest (net of the federal benefit) and penalties. For the years ended December 31, 2025, 2024, and 2023, we recorded expense (benefit) of $13 million, $1 million, and $(11) million, respectively, for the payment of interest and penalties. There was no significant activity in interest and penalties related to unrecognized tax benefit for the years 2025, 2024 or 2023.
NET CASH TAXES PAID
The following table presents net income taxes paid (refunded):
| Year Ended December 31, | |||||
(in millions) | 2025 | ||||
| Net Income Taxes Paid (Refunded) | |||||
| U.S. federal | $ | (229) | |||
U.S. state & local: | |||||
New York | 21 | ||||
Other | 26 | ||||
Foreign: | |||||
UK | 79 | ||||
Canada | 77 | ||||
Italy | 32 | ||||
Japan | 71 | ||||
Australia | 38 | ||||
Mexico | 31 | ||||
Korea | 23 | ||||
| Other | 161 | ||||
| Total net income taxes paid (refunded) | $ | 330 | |||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 12, 2026 | Showing above |
| 2024 | Feb 13, 2025 | |
| 2023 | Feb 14, 2024 | |
| 2022 | Feb 17, 2023 | |
| 2021 | Feb 17, 2022 | |
| 2020 | Feb 19, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 15, 2019 | |
| 2017 | Feb 16, 2018 | |
| 2016 | Feb 23, 2017 | |
| 2015 | Feb 19, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.