Brighthouse Financial, Inc.BHF

Brighthouse Financial, Inc. Income Taxes Disclosure

10-KFiled Feb 24, 20266 min read
15. Income Tax
The provision for income tax was as follows:
Years Ended December 31,
202520242023
(In millions)
Current:
Federal$(1)$(10)$7 
State and local16 12 12 
Subtotal15 2 19 
Deferred:
Federal21 27 (386)
Provision for income tax expense (benefit)$36 $29 $(367)
The reconciliation of the income tax provision at the statutory tax rate to the provision for income tax as reported was as follows:
Years Ended December 31,
202520242023
Amount
(In millions)
Percent
Amount
(In millions)
Percent
Amount
(In millions)
Percent
Federal statutory tax rate$100 21 %$88 21 %$(310)21 %
State and local income taxes, net of federal income tax effect (1)12 3 %10 2 %9 (1)%
Tax credits
Foreign tax credits(32)(7)%(31)(7)%(2)— %
General business tax credits— — %— — %(7)— %
Change in valuation allowance— — %— — %(18)2 %
Nontaxable or nondeductible items
Dividends received deduction(36)(7)%(41)(9)%(39)3 %
Tax advantaged investment income(10)(2)%(7)(1)%(5)— %
Merger related costs7 1 %— — %— — %
Nondeductible compensation5 1 %4 1 %5 — %
Other— — %3 — %— — %
Change in unrecognized tax benefits— — %(18)(4)%— — %
Other reconciling items
Adjustments to deferred tax(10)(2)%14 3 %— — %
Resolution of prior years— — %6 1 %— — %
Other— — %1 — %— — %
Effective tax rate$36 8 %$29 7 %$(367)25 %
______________
(1)State income taxes in North Carolina, New York, and Florida for 2025, North Carolina, Florida, and Pennsylvania for 2024, and North Carolina, South Carolina, and Pennsylvania for 2023 made up the majority (greater than 50%) of the tax effect in this category.
The income taxes paid (net of refunds) by jurisdiction for the years ended December 31, 2025, 2024, and 2023, as reported in the Consolidated Statements of Cash Flows, was as follows:
Years Ended December 31,
202520242023
Jurisdiction
(In millions)
U.S. Federal$(5)$(1)$(5)
North Carolina4 5 4 
New York3 **
Florida2 3 1 
South Carolina1 1 1 
Pennsylvania1 1 1 
New Jersey1 1 1 
California1 **
New York City, NY(1)*1 
Massachusetts*1 1 
Other Jurisdictions (1)5 2 2 
Total
$12 $13 $7 
_______________
(1)Includes all jurisdictions in which the amount of taxes paid does not meet the 5% disaggregation threshold.
*The amount of taxes paid does not meet the 5% threshold for disaggregation.

Deferred income tax represents the tax effect of the differences between the book and tax bases of assets and liabilities. Net deferred income tax assets and liabilities consisted of the following at:
December 31,
20252024
(In millions)
Deferred income tax assets:
Net unrealized investment losses
$888 $1,267 
Net operating loss carryforwards2,343 2,004 
Investments, including derivatives
493 147 
Tax credit carryforwards161 190 
Employee benefits35 27 
Intangibles53 60 
Other— 4 
Total deferred income tax assets3,973 3,699 
Less: Valuation allowance
1 1 
Total net deferred income tax assets3,972 3,698 
Deferred income tax liabilities:
Policyholder liabilities and receivables1,893 1,174 
DAC634 649 
Other3 — 
Total deferred income tax liabilities2,530 1,823 
Net deferred income tax asset (liability)$1,442 $1,875 
The following table sets forth the net operating loss carryforwards for tax purposes at December 31, 2025.
Net Operating Loss Carryforwards
(In millions)
Expiration
2032-2037$1,943 
Indefinite9,214 
$11,157 
The following table sets forth the general business credits and foreign tax credits available for carryforward for tax purposes at December 31, 2025.
Tax Credit Carryforwards
General Business CreditsForeign Tax Credits
(In millions)
Expiration
2028-2032$— $120 
2033-203716 16 
2038-20429 — 
$25 $136 
A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows:
 
Years Ended December 31,
 
202520242023
 
(In millions)
Balance at January 1,$1 $19 $19 
Additions for tax positions of prior years3 — — 
Reductions for tax positions of prior years(1)(6)— 
Additions for tax positions of current year— — — 
Reductions for tax positions of current year(2)— — 
Settlements with tax authorities— — — 
Lapses of statutes of limitations
— (12)— 
Balance at December 31,$1 $1 $19 
Unrecognized tax benefits that, if recognized would impact the effective rate$1 $1 $19 
The Company classifies interest accrued related to unrecognized tax benefits in interest expense, included in other expenses, while penalties are included in income tax expense. Interest and penalties related to unrecognized tax benefits were not significant.
The Company is subject to examination by the Internal Revenue Service and other tax authorities in jurisdictions in which the Company has significant business operations. The income tax years under examination vary by jurisdiction and subsidiary. The Company is no longer subject to federal, state or local income tax examinations for years prior to 2017.
Management believes it has established adequate tax liabilities, and final resolution of any examinations for the years 2017 and forward and any pending issues are not expected to have a material impact on the Company’s consolidated financial statements.
Tax Sharing Agreements
For the periods prior to the Separation, BHF and certain of its subsidiaries filed a consolidated federal income tax return with MetLife, Inc. and its insurance and non-insurance subsidiaries. Current taxes (and the benefits of tax attributes such as losses) are allocated to BHF, and its includable subsidiaries, under a tax sharing agreement with MetLife, Inc. This tax sharing agreement states that federal taxes are computed on a modified separate return basis with benefits for losses.
For periods after the Separation through the year ended December 31, 2022, Brighthouse Financial entered into two separate tax sharing agreements. Brighthouse Life Insurance Company, BHNY and BRCD entered into a tax sharing agreement to join a consolidated federal income tax return. BHF and certain of its non-insurance subsidiaries entered into a tax sharing agreement to join a consolidated federal income tax return. The tax sharing agreements state that federal taxes are computed on a modified separate return basis with benefit for losses. NELICO and the non-insurance subsidiaries of Brighthouse Life Insurance Company filed their own federal income tax returns.
For periods beginning with the year ended December 31, 2023, BHF and certain of its subsidiaries, including its insurance and reinsurance subsidiaries, file a consolidated federal income tax return. In furtherance thereof, such parties joined a single tax sharing agreement, pursuant to which federal taxes are computed on a modified separate return basis with benefits for losses.
Income Tax Transactions with Former Parent
In connection with the Separation, the Company entered into a tax receivables agreement (the “Tax Receivables Agreement”) with MetLife that provides MetLife with the right to receive, as partial consideration for its contribution of assets to BHF, future payments from BHF equal to 86% of the amount of cash savings, if any, in federal income tax that Brighthouse Financial actually, or is deemed to, realize as a result of the utilization of BHF and its subsidiaries’ net operating losses, capital losses, tax basis and amortization or depreciation deductions in respect of certain tax benefits it may realize as a result of certain transactions involved in the Separation. In connection with the Tax Receivables Agreement, the Company has a payable to MetLife of $328 million at both December 31, 2025 and 2024 reported in other liabilities, which would be accelerated upon closing of the Merger.
The Company also entered into a tax separation agreement with MetLife (the “Tax Separation Agreement”). Among other things, the Tax Separation Agreement governs the allocation between MetLife and the Company of the responsibility for the taxes of the MetLife group. The Tax Separation Agreement also allocates rights, obligations and responsibilities in connection with certain administrative matters relating to the preparation of tax returns and control of tax audits and other proceedings relating to taxes. For the years ended December 31, 2025, 2024 and 2023, no payments were made by MetLife or Brighthouse Financial under the Tax Separation Agreement. At December 31, 2025 and 2024, there was a current income tax receivable of $17 million and $16 million, respectively, related to this agreement.

Historical Timeline

Fiscal YearFiled
2025Feb 24, 2026Showing above
2024Feb 28, 2025
2023Feb 22, 2024
2022Feb 23, 2023
2021Feb 24, 2022
2020Feb 24, 2021
2019Feb 26, 2020
2018Feb 26, 2019
2017Mar 16, 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.

Other Available Disclosures

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