ALLSTATE CORPALL
ALLSTATE CORP Income Taxes Disclosure
Note 15 | Income Taxes | ||||
The Company and its eligible domestic subsidiaries file a U.S. consolidated federal income tax return. The Company also files tax returns in various states and foreign jurisdictions. Tax liabilities and benefits realized by the consolidated group are allocated as generated by the respective entities.
Deferred income taxes result from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in years in which those temporary differences are expected to be recovered or settled. Deferred tax assets and liabilities are adjusted through income tax expense (benefit) as changes in tax laws or rates are enacted.
H.R. 1 tax legislation On July 4, 2025, H.R. 1 was enacted, extending certain business tax provisions originally introduced under the 2017 Tax Cuts and Jobs Act, including permanently reinstating bonus depreciation and the full and immediate expensing for domestic research and development expenditures, new limitations on the charitable deductions, and a phase-out for certain energy tax credits. These changes do not have a significant impact to our consolidated financial statements.
Inflation Reduction Act of 2022 The Inflation Reduction Act of 2022, which contains several tax-related provisions, was signed into law in August 2022. The law established a 15% corporate alternative minimum tax (“CAMT”) for certain large corporations and an excise tax of 1% on stock repurchases by publicly traded U.S. corporations, both effective after December 31, 2022. The excise tax on common stock
repurchases is classified as an additional cost of the stock acquired included in treasury stock in shareholders' equity. The Company has determined that it is considered an “applicable corporation” under the rules of CAMT.
15% Global Minimum Tax The Organization for Economic Cooperation and Development (“OECD”) secured agreement to address how corporate profits are taxed for multinational enterprises (“MNEs”). The OECD released Pillar Two Model Rules (“Pillar Two”), a 15% minimum effective tax rate (also known as the Global Anti-Base Erosion), designed to ensure that large MNEs pay a minimum level of tax on the income arising in each jurisdiction where they operate and mandates sharing of certain company information with taxing authorities on a local and global basis. The Company was within the scope of Pillar Two beginning in 2024 based on certain jurisdictions where it operates, and it did not have a material impact to the consolidated financial statements. In January 2026, the OECD issued new administrative guidance introducing updates to how global minimum tax rules interact with existing U.S. tax rules, which is Allstate’s principal taxing jurisdiction. This guidance is intended to provide additional simplification, including updates to safe harbors and administrative rules related to Pillar Two. The Company is reviewing the new guidance; however, based on a preliminary assessment, it is not expected to have a material impact on the Company’s consolidated financial statements. The Company will continue to monitor future developments as applicable jurisdictions adopt the Pillar Two framework into their local laws.
Regulatory tax examinations The statutes of limitations for tax years 2016 and prior for Allstate
consolidated tax group have closed, barring any further IRS examinations. The IRS has also concluded its audit for Allstate’s 2017 and 2018 tax years with an approved refund claim outstanding. The statutes of limitations for 2019 and 2020 have lapsed without an audit. The Company’s U.S. Federal tax returns for 2021 and beyond remain subject to future examinations. The Company acquired National General on January 4, 2021 and SafeAuto on October 1, 2021. National General is under a separate IRS audit for pre-acquisition years 2015 through 2019 with appeals process pending for certain disputed issues. The statutes of limitations for all pre-acquisition years for SafeAuto have closed barring any further tax audits.
The Company conducts business in various state and foreign jurisdictions, which may give rise to tax audits from time to time. As of December 31, 2025, there are no state or foreign jurisdiction tax audits that are expected to have a material impact on the Company’s financial position.
The Company believes that adequate provisions have been made in the consolidated financial statements for any potential adjustments that may result from IRS examinations or any other tax authorities related to all open tax years.
Unrecognized tax benefits The Company recognizes tax positions in the consolidated financial statements only when it is more likely than not that the position will be sustained on examination by the relevant taxing authority based on the technical merits of the position. A position that meets this standard is measured at the largest amount of benefit that will more likely than not be realized on settlement. A liability is established for differences between positions taken in a tax return and amounts recognized in the consolidated financial statements.
Components of income (loss) from operations before income taxes | ||||||||
For the year ended December 31, | ||||||||
| ($ in millions) | 2025 | |||||||
| U.S. | $ | 12,722 | ||||||
| Foreign | 434 | |||||||
| Total income (loss) from operations before income taxes | $ | 13,156 | ||||||
Reconciliation of the statutory federal income tax rate to the effective income tax rate | |||||||||||
For the year ended December 31, | |||||||||||
| ($ in millions) | 2025 | ||||||||||
| Income (loss) from operations before income taxes | $ | 13,156 | |||||||||
U.S. federal statutory tax rate | $ | 2,763 | 21.0 | % | |||||||
State and local income taxes, net of federal income tax effect (1) | 134 | 1.0 | |||||||||
Foreign tax effects | 15 | 0.1 | |||||||||
Effect of cross-border tax laws | 8 | 0.1 | |||||||||
Tax credits | (55) | (0.4) | |||||||||
Change in valuation allowances | 3 | — | |||||||||
Nontaxable or nondeductible items | 47 | 0.4 | |||||||||
Changes in unrecognized tax benefits | (14) | (0.1) | |||||||||
Other adjustments | (11) | (0.1) | |||||||||
Effective tax rate | $ | 2,890 | 22.0 | % | |||||||
(1)State taxes in Florida and Illinois made up the majority (greater than 50%) of the tax effect in this category.
Reconciliation of the statutory federal income tax rate to the effective income tax rate | ||||||||||||||||||||
| For the years ended December 31, | ||||||||||||||||||||
| ($ in millions) | 2024 | 2023 | ||||||||||||||||||
Income (loss) before income taxes | $ | 5,761 | $ | (348) | ||||||||||||||||
| U.S. federal statutory tax rate | $ | 1,210 | 21.0 | % | $ | (73) | 21.0 | % | ||||||||||||
| State income taxes | 54 | 0.9 | (7) | 2.0 | ||||||||||||||||
| Tax credits | (42) | (0.7) | (47) | 13.5 | ||||||||||||||||
| Change in valuation allowances | 8 | 0.1 | 6 | (1.7) | ||||||||||||||||
| Share-based payments | (30) | (0.5) | (14) | 4.0 | ||||||||||||||||
| Tax-exempt income | (29) | (0.5) | (23) | 6.6 | ||||||||||||||||
| Dividend received deduction | (1) | — | (4) | 1.1 | ||||||||||||||||
| Changes in unrecognized tax benefits | (8) | (0.1) | 33 | (9.5) | ||||||||||||||||
U.S. shareholder’s tax (benefit) expense | — | — | (17) | 4.9 | ||||||||||||||||
| Other adjustments | — | — | 11 | (3.1) | ||||||||||||||||
Effective tax rate | $ | 1,162 | 20.2 | % | $ | (135) | 38.8 | % | ||||||||||||
Components of income tax expense (benefit) | ||||||||
For the year ended December 31, | ||||||||
| ($ in millions) | 2025 | |||||||
| Current | ||||||||
| U.S. federal | $ | 2,513 | ||||||
| U.S. state and local | 122 | |||||||
| Foreign | 99 | |||||||
| Total current | 2,734 | |||||||
| Deferred | ||||||||
| U.S. federal | 103 | |||||||
| U.S. state and local | 46 | |||||||
| Foreign | 7 | |||||||
| Total deferred | 156 | |||||||
| Total income tax expense (benefit) | ||||||||
| U.S. federal | 2,616 | |||||||
| U.S. state and local | 168 | |||||||
| Foreign | 106 | |||||||
| Total income tax expense (benefit) | $ | 2,890 | ||||||
Components of income tax expense (benefit) | ||||||||||||||
For the years ended December 31, | ||||||||||||||
| ($ in millions) | 2024 | 2023 | ||||||||||||
| Current | $ | 1,179 | $ | 114 | ||||||||||
| Deferred | (17) | (249) | ||||||||||||
Total income tax expense (benefit) | $ | 1,162 | $ | (135) | ||||||||||
Components of income taxes paid (received) | ||||||||
For the year ended December 31, | ||||||||
| ($ in millions) | 2025 | |||||||
| U.S. federal | $ | 1,907 | ||||||
| U.S. state and local | 91 | |||||||
| Foreign | ||||||||
| Canada | 136 | |||||||
| Other | 15 | |||||||
Total foreign | 151 | |||||||
Total income taxes paid (received) | $ | 2,149 | ||||||
The Company paid income taxes of $2.15 billion and $276 million in 2025 and 2024, respectively, which includes amounts paid of $136 million and $33 million,
respectively, for transferable tax credits applied to current tax liabilities, and received an income tax refund of $45 million in 2023.
The Company had current income tax payable of $531 million and $91 million as of December 31, 2025 and 2024, respectively.
Components of the deferred income tax assets and liabilities | ||||||||||||||
As of December 31, | ||||||||||||||
| ($ in millions) | 2025 | 2024 | ||||||||||||
| Deferred tax assets | ||||||||||||||
| Unearned premium reserves | $ | 1,046 | $ | 978 | ||||||||||
| Discount on loss reserves | 312 | 292 | ||||||||||||
| Net operating loss carryover | 222 | 232 | ||||||||||||
| Accrued compensation | 142 | 131 | ||||||||||||
| Research & development capitalization | 116 | 317 | ||||||||||||
| Other postretirement benefits | 6 | 7 | ||||||||||||
| Pension | 1 | 8 | ||||||||||||
| Unrealized net capital losses | — | 209 | ||||||||||||
| Other | 145 | 185 | ||||||||||||
| Total deferred tax assets before valuation allowance | 1,990 | 2,359 | ||||||||||||
| Valuation allowance | (68) | (69) | ||||||||||||
| Total deferred tax assets after valuation allowance | 1,922 | 2,290 | ||||||||||||
| Deferred tax liabilities | ||||||||||||||
| DAC | (1,272) | (1,173) | ||||||||||||
| Investments | (439) | (479) | ||||||||||||
| Depreciable assets | (103) | (123) | ||||||||||||
| Unrealized net capital gains | (85) | — | ||||||||||||
| Intangible assets | (44) | (66) | ||||||||||||
| Other | (206) | (218) | ||||||||||||
| Total deferred tax liabilities | (2,149) | (2,059) | ||||||||||||
Net deferred tax (liabilities) assets | $ | (227) | $ | 231 | ||||||||||
In assessing the realizability of gross deferred tax assets, management considers whether it is more likely than not that some portion or all of the gross deferred tax assets will not be realized. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment, as well as limitations on use in future periods. As of December 31, 2025, the Company has U.S. federal, state and foreign net operating loss (“NOL”) carryforwards. Management
believes that it is more likely than not that the benefit from certain NOL carryforwards will not be fully realized. Accordingly, the Company has a valuation allowance of $68 million on the deferred tax assets related to these NOL carryforwards.
The following table sets forth the amounts and expiration dates of federal, foreign and state NOL carryforwards.
Components of the net operating loss carryforwards as of December 31, 2025 | ||||||||||||||||||||
| ($ in millions) | 20-Year Carryforward Expires in 2028-2045 | Indefinite | Various | |||||||||||||||||
U.S. federal NOL | $ | 286 | $ | 9 | $ | — | ||||||||||||||
Foreign NOL (1) | — | 372 | 51 | |||||||||||||||||
State NOL (2) | — | — | 67 | |||||||||||||||||
(1)Multiple foreign NOL carryforwards expiring in various periods, beginning in 2027.
(2)Multiple state NOL carryforwards expiring in various periods, beginning in 2029.
Reconciliation of the change in the amount of unrecognized tax benefits | ||||||||||||||||||||
For the years ended December 31, | ||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Balance – beginning of year | $ | 41 | $ | 45 | $ | 17 | ||||||||||||||
(Decrease) increase for tax positions taken in a prior year | (14) | (4) | 23 | |||||||||||||||||
| Increase for tax positions taken in the current year | — | — | 5 | |||||||||||||||||
| Balance – end of year | $ | 27 | $ | 41 | $ | 45 | ||||||||||||||
The Company recognizes interest expense related to uncertain tax benefits in income tax expense (benefit) and penalties in operating costs and expenses.
There were no penalties related to the unrecognized tax benefits in 2025. There was a reduction of penalties related to the unrecognized tax benefits of $(4) million in 2024. There were no penalties related to the unrecognized tax benefits in 2023. As of December 31, 2025 and 2024, the Company recognized
a liability for penalties of $3 million and $3 million, respectively.
For the years ended December 31, 2025, 2024, and 2023, interest (benefit) expense related to unrecognized tax benefits of $(3) million, $(2) million, and $7 million was recorded, respectively. As of December 31, 2025 and 2024, the Company recognized an accumulated liability for interest of $12 million and $15 million, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 20, 2026 | Showing above |
| 2024 | Feb 24, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 16, 2023 | |
| 2021 | Feb 18, 2022 | |
| 2020 | Feb 22, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 15, 2019 | |
| 2017 | Feb 26, 2018 | |
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.