Cigna GroupCI

Cigna Group Income Taxes Disclosure

10-KFiled Feb 26, 20269 min read
Note 21 – Income Taxes
Accounting Policy. Deferred income taxes are reflected in the Consolidated Balance Sheets for differences between the financial and income tax reporting bases of the Company's underlying assets and liabilities and are established based upon enacted tax rates and laws. Deferred income tax assets are recognized when available evidence indicates that realization is more likely than not, and a valuation allowance is established to the extent this standard is not met. The deferred income tax provision generally represents the net change in deferred income tax assets and liabilities during the reporting period excluding adjustments to Accumulated other comprehensive income (loss) or amounts recorded in connection with a business combination. The current income tax provision generally represents estimated amounts due on income tax returns for the year reported to various jurisdictions plus the effect of any uncertain tax positions. The Company uses the deferral method of accounting on investments that generate tax credits. Under this method, the investment tax credits are recognized as a reduction to the related asset, which are generally reported in Other assets in the Consolidated Balance Sheets. The Company recognizes a liability for uncertain tax positions if management believes the probability that the positions will be sustained is 50% or less. For uncertain positions that management believes are more likely than not to be sustained, the Company recognizes a liability based upon management's estimate of the most likely settlement outcome with the taxing authority. The liabilities for uncertain tax positions are classified as current when the position is expected to be settled within 12 months or the statute of limitation expires within 12 months.
Income taxes attributable to the Company's foreign operations are provided using the foreign jurisdictions' applicable tax rate.

The Company prospectively adopted ASU 2023-09, Improvements to Income Tax Disclosures. As a result, disclosures for 2025 reflect the requirements of ASU 2023-09, including the reconciliation of the statutory federal income tax rate and disaggregated tax payment information. Prior years (2024 and 2023) are presented under the previous disclosure requirements.
Income Tax Expense
The components of income taxes were as follows:
For the Years Ended December 31,
(In millions)202520242023
Current taxes
U.S. income taxes$807 $1,167 $1,459 
Foreign income taxes191 248 161 
State income taxes169 171 180 
Total current taxes1,167 1,586 1,800 
Deferred taxes (tax benefits)
U.S. income tax benefits
(69)(142)(533)
Foreign income taxes (tax benefits)
447 64 (1,046)
State income tax benefits
(52)(17)(80)
Total deferred taxes (tax benefits)
326 (95)(1,659)
Total income taxes$1,493 $1,491 $141 
Total income taxes were different from the amount computed using the statutory federal income tax rate in 2025 for the following reasons:
For the Year Ended December 31,
2025
(in millions)$%
Tax expense at statutory rate$1,634 21.0 %
State income tax effect, net of federal income tax effect (1)
93 1.2 
Nontaxable or nondeductible items13 0.2 
Effects of cross-border tax laws:
Global intangible low-taxed income ("GILTI")127 1.6 
Other cross-border tax laws11 0.1 
Tax credits(83)(1.1)
Change in valuation allowance(74)(1.0)
Change in unrecognized tax benefits37 0.5 
Other
Impact of sale of business(173)(2.2)
Tax equity investments(102)(1.3)
Other reconciling items3 0.2 
Foreign tax effects:
 Switzerland
Effect of rates different than U.S. statutory(360)(4.6)
Cantonal income taxes206 2.6 
Change in valuation allowance384 4.9 
 Other countries(223)(2.9)
Total income taxes$1,493 19.2 %
(1) The jurisdictions that make up the majority (greater than 50 percent) of the state and local tax impact are Florida and California.
Total income taxes were different from the amount computed using the statutory federal income tax rate in 2024 and 2023 for the following reasons:
For the Years Ended December 31,
 20242023
(In millions)$%$%
Tax expense at statutory rate$1,107 21.0 %$1,158 21.0 %
Change in valuation allowance767 14.6 1,290 23.4 
State income tax effect, net of federal income tax effect62 1.2 (39)(0.7)
Investment tax credits(111)(2.1)(48)(0.8)
Impact of businesses held for sale(129)(2.4)(213)(3.9)
Effect of foreign earnings(252)(4.9)(173)(3.1)
Other foreign tax attributes— — (153)(2.8)
Swiss tax attributes— — (1,674)(30.4)
Other47 0.9 (7)(0.1)
Total income taxes$1,491 28.3 %$141 2.6 %
Tax Equity Investments. Company investments in renewable energy projects provided $968 million, $1,057 million and $453 million of investment tax credits for the years ended December 31, 2025, 2024 and 2023, respectively. The Company accounted for the tax credits using the deferral method and accordingly reduced the associated carrying value of the related assets by these amounts.

Pre-tax Income Disaggregation. Consolidated pre-tax income from the Company's foreign operations was approximately 53% of the Company's pre-tax income in 2025, 62% in 2024 and 48% in 2023. The change relative to 2024 is primarily attributable to lower 2024 domestic earnings driven by the impairment of equity securities in 2024 (see Note 11 to the Consolidated Financial Statements).
Deferred Income Taxes
Deferred income tax assets and liabilities were as follows:
(In millions)December 31, 2025December 31, 2024
Deferred tax assets
Foreign tax attributes$1,615 $1,752 
Deferred loss - sale of business— 773 
Investments587 561 
Other insurance and contractholder liabilities241 300 
Loss carryforwards492 270 
Other accrued liabilities321 207 
Employee and retiree benefit plans190 177 
Unrealized depreciation on investments and foreign currency translation10 93 
Policy acquisition expenses53 — 
Other339 256 
Deferred tax assets before valuation allowance3,848 4,389 
Valuation allowance for deferred tax assets(2,374)(2,332)
Deferred tax assets, net of valuation allowance1,474 2,057 
Deferred tax liabilities
Acquisition-related basis differences7,558 7,822 
Depreciation and amortization602 243 
Policy acquisition expenses— 74 
Total deferred tax liabilities8,160 8,139 
Net deferred income tax liabilities (1)
$(6,686)$(6,082)
(1)Deferred tax liabilities, net in the Consolidated Balance Sheets excludes $459 million and $954 million reported in Other assets as of December 31, 2025 and December 31, 2024, respectively, and $61 million reported in liabilities of businesses held for sale as of December 31, 2024.
Management believes that it is more likely than not that future results will be sufficient to realize the Company's gross deferred tax assets ("DTAs") that remain after valuation allowance. Valuation allowances have been established against certain federal, state and foreign tax attributes. There are multiple expiration dates associated with these tax attributes.
Foreign Jurisdiction Tax Attributes. As of December 31, 2025 and 2024, the Company had DTAs of approximately $1.6 billion and $1.8 billion, respectively, and had a related $1.2 billion and $0.8 billion valuation allowance, respectively, against these deferred tax assets based on projections of future earnings and requirements to utilize the assets within certain time periods. In 2025, the Company recorded an increase to the valuation allowance as a result of management's reassessment of the composition of future foreign and domestic earnings. It is possible that the Company may revalue these net deferred tax assets in future periods due to modifications in certain assumptions, such as forecasted future earnings.
Capital DTAs: Impairments, Unrealized Investment Losses and Sale of Medicare Advantage and Related Businesses. As of December 31, 2025 and 2024, the Company had approximately $819 million and $880 million, respectively, in DTAs associated with the impairment of equity securities and other unrealized investment losses (see Note 11 to the Consolidated Financial Statements), as well as $237 million and $773 million, respectively, of DTAs in connection with the HCSC transaction, reflecting total capital DTAs of approximately $1,056 million and $1,653 million, respectively. A valuation allowance of $1,025 million and $1,351 million, respectively, has been established against these DTAs as of December 31, 2025 and 2024 due to the uncertainty relative to the recovery of the deferred tax benefits as the Company does not anticipate having sufficient sources of capital income to support these capital losses. We have determined that a valuation allowance against the remaining capital DTAs is not currently required based on the Company's loss carryback capacity and ability and intent to hold certain investment securities until recovery. We continue to monitor and evaluate the need for any additional valuation allowance.
During 2025, the reallocation of the HCSC transaction purchase price by legal entity resulted in an equal write-off of the DTAs and valuation allowance associated with the tax-deductible capital loss on the sale, resulting in zero net impact to the Company's total tax provision. Additionally, a reallocation of available sources of capital income generated a substantial portion of the after-tax gain on sale presented in Note 5 to the Consolidated Financial Statements. There was no material change to the realizability assessment of the Company's consolidated DTAs and no material net impact to the Company's consolidated tax expense as a result of this reallocation.
Uncertain Tax Positions
Reconciliations of unrecognized tax benefits were as follows:
For the Years Ended December 31,
(In millions)202520242023
Balance at January 1,$1,477 $1,399 $1,343 
Decrease due to prior year positions
(50)(7)(26)
Increase due to current year positions
187 165 107 
Reduction related to settlements with taxing authorities
(62)(22)(13)
Reduction related to lapse of applicable statute of limitations
(14)(58)(12)
Balance at December 31,$1,538 $1,477 $1,399 
Substantially all unrecognized tax benefits would increase Shareholders' net income if recognized.
The Company classifies net interest expense on uncertain tax positions as a component of income tax expense and in Other non-current liabilities in the Consolidated Balance Sheets. In addition to the amounts in the table above, the liability for net interest expense on uncertain tax positions was approximately $223 million, $228 million and $220 million as of December 31, 2025, 2024 and 2023, respectively.
Other Tax Matters
The statutes of limitations for the Company's consolidated federal income tax returns through 2016 have closed. The statute of limitations for the Company's 2020 and 2021 tax returns have also closed. However, The Cigna Group filed amended returns for both the 2015 and 2016 tax years, which are under review by the Internal Revenue Service ("IRS"). Additionally, the IRS is examining the Company's returns for 2017, 2018, 2019, 2022 and 2023. The IRS has examined Express Scripts' tax returns for 2010 through 2017, for which there remain significant disputed matters. In addition, the Company has pending refund claims for various years. The Company has established adequate reserves for these matters.
The Company conducts business in a number of state and foreign jurisdictions and may be engaged in multiple audit proceedings at any given time. Generally, no further state or foreign audit activity is expected for tax years prior to 2013 for Express Scripts entities and 2014 for all other entities of The Cigna Group.
Pillar Two. The Organization for Economic Co-operation and Development ("OECD") Pillar Two Framework defines a minimum effective tax rate of 15%. The Company is within the scope of the OECD Pillar Two model rules, which did not have a significant impact on our 2025 results. We will continue to monitor the potential impact on future periods but do not currently expect Pillar Two to significantly impact future periods.
Income Taxes Paid
For the year ended December 31, 2025, the Company made tax payments, net of refunds, in the amount of $399 million to the following jurisdictions: U.S. federal refund ($4 million), U.S. state payment ($140 million), and foreign payments ($263 million), primarily Switzerland. The Company’s federal tax payments reflect the benefit of $968 million of renewable energy tax credits, which have been applied against the Company’s federal tax liability under existing tax rules.

For the years ended December 31, 2024 and 2023, the company made tax payments, net of refunds in the amount of $898 million and $1,471 million, respectively. For the years ended December 31, 2024 and 2023, the Company’s federal tax payments reflect the benefit of $1,057 million and $453 million, respectively, of renewable energy tax credits, which were applied against the Company’s federal tax liability under existing tax rules.

Historical Timeline

Fiscal YearFiled
2025Feb 26, 2026Showing above
2024Feb 27, 2025
2023Feb 29, 2024
2022Feb 23, 2023
2021Feb 24, 2022
2020Feb 25, 2021
2019Feb 27, 2020
2018Feb 28, 2019

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

RevenueEarnings Per ShareFair ValuePP&ELeasesSegmentsDebtCommitmentsStock CompensationNew Standards