Bank of New York Mellon CorpBNY
Bank of New York Mellon Corp Income Taxes Disclosure
Income taxes
The components of the income tax provision are as follows:
| Provision for income taxes | Year ended Dec. 31, | ||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||
| Current tax expense: | |||||||||||
| Federal | $ | 654 | $ | 902 | $ | 727 | |||||
| Foreign | 641 | 595 | 443 | ||||||||
| State and local | 81 | 153 | 192 | ||||||||
| Total current tax expense | $ | 1,376 | $ | 1,650 | $ | 1,362 | |||||
| Deferred tax expense (benefit): | |||||||||||
| Federal | $ | 92 | $ | (277) | $ | (344) | |||||
| Foreign | (6) | (30) | 31 | ||||||||
| State and local | 13 | (38) | (70) | ||||||||
| Total deferred tax expense (benefit) | $ | 99 | $ | (345) | $ | (383) | |||||
| Total provision for income taxes: | |||||||||||
| Federal | $ | 746 | $ | 625 | $ | 383 | |||||
| Foreign | 635 | 565 | 474 | ||||||||
| State and local | 94 | 115 | 122 | ||||||||
| Provision for income taxes | $ | 1,475 | $ | 1,305 | $ | 979 | |||||
The components of income before taxes are as follows:
Income before taxes | Year ended Dec. 31, | ||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||
| Domestic | $ | 4,431 | $ | 3,462 | $ | 2,196 | |||||
| Foreign | 2,627 | 2,386 | 2,087 | ||||||||
| Income before taxes | $ | 7,058 | $ | 5,848 | $ | 4,283 | |||||
The components of our net deferred tax liability are as follows:
| Net deferred tax liability | Dec. 31, | |||||||
| (in millions) | 2025 | 2024 | ||||||
| Depreciation and amortization | $ | 1,549 | $ | 1,700 | ||||
| Pension obligation | 476 | 421 | ||||||
| Other liabilities | 215 | 189 | ||||||
| Securities valuation | 159 | (39) | ||||||
| Equity investments | 54 | 55 | ||||||
| Other assets | (43) | (62) | ||||||
| Leasing | (53) | (41) | ||||||
| Credit losses on loans | (88) | (98) | ||||||
| Reserves not deducted for tax | (152) | (236) | ||||||
| Employee benefits | (279) | (269) | ||||||
| U.S. foreign tax credits | (114) | (101) | ||||||
| Valuation allowance | 127 | 135 | ||||||
| Net deferred tax liability | $ | 1,851 | $ | 1,654 | ||||
As of Dec. 31, 2025, we had $114 million of U.S. foreign tax credit carryforwards which will begin to expire in 2029. In addition, we have an unrealized capital loss of $13 million. We believe it is more likely than not that the benefit from these items will not be realized. Accordingly, we have recorded a valuation allowance of $127 million. We believe it is more likely than not that we will fully realize our remaining deferred tax assets. This conclusion is based on historical financial results and profit forecasts.
As of Dec. 31, 2025, we had approximately $1.6 billion of earnings attributable to foreign subsidiaries that have been permanently reinvested abroad and for which no local distribution tax provision has been recorded.
The statutory federal income tax rate is reconciled to our effective income tax rate below:
| Effective tax rate | Year ended Dec. 31, | |||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
| $ | % | $ | % | $ | % | |||||||||||||||||||||
| Federal rate | $ | 1,482 | 21.0 | % | $ | 1,228 | 21.0 | % | $ | 899 | 21.0 | % | ||||||||||||||
State and local income taxes, net of federal income tax benefit (a) | 104 | 1.5 | 94 | 1.6 | 98 | 2.3 | ||||||||||||||||||||
| Foreign tax effects: | ||||||||||||||||||||||||||
| United Kingdom | 55 | 0.8 | 62 | 1.1 | 44 | 1.0 | ||||||||||||||||||||
| Other | 32 | 0.4 | 31 | 0.5 | 15 | 0.3 | ||||||||||||||||||||
| Effects of cross-border tax laws | 10 | 0.1 | 2 | — | 15 | 0.4 | ||||||||||||||||||||
| Tax credits: | ||||||||||||||||||||||||||
| Tax credit investments | (101) | (1.4) | (83) | (1.4) | (91) | (2.1) | ||||||||||||||||||||
| Other | (24) | (0.3) | (19) | (0.3) | (14) | (0.3) | ||||||||||||||||||||
| Valuation allowances | (13) | (0.2) | (1) | — | 34 | 0.8 | ||||||||||||||||||||
| Nontaxable or nondeductible items | (66) | (0.9) | (11) | (0.2) | (29) | (0.7) | ||||||||||||||||||||
| Changes in unrecognized tax benefits | (4) | (0.1) | 2 | — | 8 | 0.2 | ||||||||||||||||||||
| Effective tax rate | $ | 1,475 | 20.9 | % | $ | 1,305 | 22.3 | % | $ | 979 | 22.9 | % | ||||||||||||||
(a) Primarily New York state and New York City.
| Unrecognized tax positions | |||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||
| Beginning balance at Jan. 1, – gross | $ | 109 | $ | 109 | $ | 106 | |||||
| Prior period tax positions: | |||||||||||
| Increases | 15 | 2 | — | ||||||||
| Decreases | (5) | (2) | (5) | ||||||||
| Current period tax positions | 14 | 8 | 8 | ||||||||
| Settlements | (8) | — | — | ||||||||
| Statute expiration | (13) | (8) | — | ||||||||
| Ending balance at Dec. 31, – gross | $ | 112 | $ | 109 | $ | 109 | |||||
Our total tax reserves as of Dec. 31, 2025 were $112 million compared with $109 million at Dec. 31, 2024. If these tax reserves were unnecessary, $112 million would affect the effective tax rate in future periods.
We recognize accrued interest and penalties, if applicable, related to income taxes in income tax expense. Included in the balance sheet at Dec. 31, 2025 is accrued interest, where applicable, of $36 million. The tax benefit related to interest for the year ended Dec. 31, 2025 was $5 million, compared with $2 million of tax expense for the year ended Dec. 31, 2024.
Our federal income tax returns are open to examination from 2017 through 2019 and 2022 and forward. Our New York State and New York City income tax returns are open to examination after 2015. Our UK income tax returns are open to examination after 2021.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Feb 27, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Feb 28, 2017 | |
| 2015 | Feb 26, 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.