CENTERPOINT ENERGY INCCNP
CENTERPOINT ENERGY INC Income Taxes Disclosure
Income Taxes
The components of the Registrants’ income tax expense (benefit) were as follows for the periods presented:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in millions) | |||||||||||||||||
| CenterPoint Energy | |||||||||||||||||
Current income tax expense (benefit): | |||||||||||||||||
| Federal | $ | 64 | $ | (17) | $ | 106 | |||||||||||
| State | 9 | (9) | 33 | ||||||||||||||
Total current income tax expense (benefit) | 73 | (26) | 139 | ||||||||||||||
| Deferred income tax expense (benefit): | |||||||||||||||||
| Federal | 174 | 218 | 119 | ||||||||||||||
| State | (52) | 3 | (88) | ||||||||||||||
Total deferred income tax expense | 122 | 221 | 31 | ||||||||||||||
| Total income tax expense | $ | 195 | $ | 195 | $ | 170 | |||||||||||
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Houston Electric | |||||||||||||||||
| Current income tax expense (benefit): | |||||||||||||||||
| Federal | $ | 47 | $ | 62 | $ | (26) | |||||||||||
| State | 19 | 15 | 34 | ||||||||||||||
Total current income tax expense | 66 | 77 | 8 | ||||||||||||||
| Deferred income tax expense: | |||||||||||||||||
| Federal | 80 | 60 | 159 | ||||||||||||||
| State | 1 | 1 | 1 | ||||||||||||||
Total deferred income tax expense | 81 | 61 | 160 | ||||||||||||||
| Total income tax expense | $ | 147 | $ | 138 | $ | 168 | |||||||||||
| CERC | |||||||||||||||||
Current income tax expense (benefit): | |||||||||||||||||
| Federal | $ | 88 | $ | 55 | $ | 12 | |||||||||||
| State | 1 | (6) | 3 | ||||||||||||||
Total current income tax expense | 89 | 49 | 15 | ||||||||||||||
| Deferred income tax expense (benefit): | |||||||||||||||||
| Federal | 70 | 60 | 95 | ||||||||||||||
| State | (62) | (5) | (136) | ||||||||||||||
Total deferred income tax expense (benefit) | 8 | 55 | (41) | ||||||||||||||
| Total income tax expense (benefit) | $ | 97 | $ | 104 | $ | (26) | |||||||||||
A reconciliation of income tax expense (benefit) using the federal statutory income tax rate to the actual income tax expense and resulting effective income tax rate were as follows for the periods presented:
| Year Ended December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||
(in millions, except percentages) | |||||||||||||||||||||||||||||||||||
CenterPoint Energy (1) (2) (3) (4) | |||||||||||||||||||||||||||||||||||
| Income before income taxes | $ | 1,247 | $ | 1,214 | $ | 1,087 | |||||||||||||||||||||||||||||
| Federal statutory income tax rate | 262 | 21 | % | 255 | 21 | % | 228 | 21 | % | ||||||||||||||||||||||||||
| Increase (decrease) in tax expense resulting from: | |||||||||||||||||||||||||||||||||||
State income tax benefit, net of federal income tax | (30) | (2) | % | (8) | (1) | % | (44) | (4) | % | ||||||||||||||||||||||||||
Tax credits | (5) | — | % | (9) | (1) | % | (6) | (1) | % | ||||||||||||||||||||||||||
Nontaxable or non-deductible items: | |||||||||||||||||||||||||||||||||||
Goodwill | 46 | 4 | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
| Equity AFUDC | (13) | (1) | % | (12) | (1) | % | (13) | (1) | % | ||||||||||||||||||||||||||
Other | 3 | — | % | (1) | — | % | 10 | 1 | % | ||||||||||||||||||||||||||
Changes in unrecognized tax benefits | (8) | (1) | % | 3 | — | % | 1 | — | % | ||||||||||||||||||||||||||
| Excess deferred income tax amortization | (63) | (5) | % | (43) | (4) | % | (44) | (4) | % | ||||||||||||||||||||||||||
| Sale of Energy Systems Group | — | — | % | — | — | % | 28 | 3 | % | ||||||||||||||||||||||||||
| Other, net | 3 | — | % | 10 | 2 | % | 10 | 1 | % | ||||||||||||||||||||||||||
| Total | (67) | (5) | % | (60) | (5) | % | (58) | (5) | % | ||||||||||||||||||||||||||
Total income tax expense and effective tax rate | $ | 195 | 16 | % | $ | 195 | 16 | % | $ | 170 | 16 | % | |||||||||||||||||||||||
Houston Electric (5) | |||||||||||||||||||||||||||||||||||
| Income before income taxes | $ | 725 | $ | 684 | $ | 761 | |||||||||||||||||||||||||||||
| Federal statutory income tax rate | 152 | 21 | % | 144 | 21 | % | 160 | 21 | % | ||||||||||||||||||||||||||
| Increase (decrease) in tax expense resulting from: | |||||||||||||||||||||||||||||||||||
| State income tax expense, net of federal income tax | 15 | 2 | % | 12 | 2 | % | 27 | 4 | % | ||||||||||||||||||||||||||
Tax credits | — | — | % | (3) | — | % | (2) | (1) | % | ||||||||||||||||||||||||||
Nontaxable or non-deductible items: | |||||||||||||||||||||||||||||||||||
Equity AFUDC | (6) | (1) | % | (5) | (1) | % | — | — | % | ||||||||||||||||||||||||||
Other | 1 | — | % | (2) | — | % | — | — | % | ||||||||||||||||||||||||||
Excess deferred income tax amortization | (17) | (2) | % | (17) | (2) | % | (17) | (2) | % | ||||||||||||||||||||||||||
| Other, net | 2 | — | % | 9 | — | % | — | — | % | ||||||||||||||||||||||||||
| Total | (5) | (1) | % | (6) | (1) | % | 8 | 1 | % | ||||||||||||||||||||||||||
Total income tax expense and effective tax rate | $ | 147 | 20 | % | $ | 138 | 20 | % | $ | 168 | 22 | % | |||||||||||||||||||||||
CERC (1) (6) (7) (8) | |||||||||||||||||||||||||||||||||||
| Income before income taxes | $ | 736 | $ | 644 | $ | 486 | |||||||||||||||||||||||||||||
| Federal statutory income tax rate | 155 | 21 | % | 135 | 21 | % | 102 | 21 | % | ||||||||||||||||||||||||||
| Increase (decrease) in tax expense resulting from: | |||||||||||||||||||||||||||||||||||
State income tax benefit, net of federal income tax | (48) | (7) | % | (10) | (2) | % | (106) | (22) | % | ||||||||||||||||||||||||||
Tax credits | — | — | % | (1) | — | % | — | — | % | ||||||||||||||||||||||||||
Nontaxable or non-deductible items: | |||||||||||||||||||||||||||||||||||
Goodwill | 26 | 4 | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
| Equity AFUDC | (3) | — | % | (4) | (1) | % | — | — | % | ||||||||||||||||||||||||||
Other | — | — | % | (3) | — | % | 5 | 1 | % | ||||||||||||||||||||||||||
Changes in unrecognized tax benefits | 1 | — | % | 1 | — | % | 1 | — | % | ||||||||||||||||||||||||||
| Excess deferred income tax amortization | (36) | (5) | % | (15) | (2) | % | (23) | (5) | % | ||||||||||||||||||||||||||
| Other, net | 2 | — | % | 1 | — | % | (5) | — | % | ||||||||||||||||||||||||||
| Total | (58) | (8) | % | (31) | (5) | % | (128) | (26) | % | ||||||||||||||||||||||||||
Total income tax expense (benefit) and effective tax rate | $ | 97 | 13 | % | $ | 104 | 16 | % | $ | (26) | (5) | % | |||||||||||||||||||||||
(1)For all periods presented, Minnesota contributed to the majority (greater than 50%) of the tax effect.
(2)For 2025, included in the state income tax benefit above is a $74 million net benefit from the remeasurement of deferred state income taxes, resulting from apportionment changes.
(3)For 2024, included in the state income tax benefit above is a $47 million benefit from the remeasurement of deferred state income taxes, resulting from state apportionment changes and a Louisiana statutory rate change. In addition, a
$17 million valuation allowance was established against Louisiana and Mississippi NOLs, since those NOLs will not be utilized due to the Louisiana and Mississippi natural gas LDC businesses sale.
(4)For 2023, included in the state income tax benefit is a $69 million benefit for the impact of state apportionment changes that resulted in the remeasurement of state deferred taxes of the unitary group.
(5)For all periods presented, Texas contributed to 100% of the tax effect.
(6)For 2025, included in the state income tax benefit above is a $73 million net benefit from state apportionment changes, resulting in a remeasurement of state deferred taxes.
(7)For 2024, included in the state income tax benefit above is a $45 million benefit resulting from a remeasurement of state deferred taxes due to state apportionment changes and a Louisiana statutory rate change. In addition, a $17 million valuation allowance was established against Louisiana and Mississippi NOLs, since those NOLs will not be utilized due to the Louisiana and Mississippi natural gas LDC businesses sale.
(8)For 2023, included in the state income tax benefit above is a $66 million benefit for the impact of state apportionment changes that resulted in the remeasurement of state deferred taxes of the unitary group.
The tax effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities were as follows for the periods presented:
| December 31, 2025 | December 31, 2024 | ||||||||||
| (in millions) | |||||||||||
| CenterPoint Energy | |||||||||||
| Deferred tax assets: | |||||||||||
| Benefits and compensation | $ | 97 | $ | 126 | |||||||
| Regulatory liabilities | 325 | 348 | |||||||||
| Loss and credit carryforwards | 1,012 | 942 | |||||||||
| Asset retirement obligations | 81 | 98 | |||||||||
| Other | 235 | 150 | |||||||||
| Valuation allowance | (37) | (35) | |||||||||
| Total deferred tax assets | 1,713 | 1,629 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Property, plant and equipment | 4,609 | 4,384 | |||||||||
| Regulatory assets | 734 | 750 | |||||||||
| Investment in ZENS and equity securities related to ZENS | 950 | 866 | |||||||||
| Other | 22 | 18 | |||||||||
| Total deferred tax liabilities | 6,315 | 6,018 | |||||||||
| Net deferred tax liabilities | $ | 4,602 | $ | 4,389 | |||||||
| Houston Electric | |||||||||||
| Deferred tax assets: | |||||||||||
| Benefits and compensation | $ | 6 | $ | 8 | |||||||
| Regulatory liabilities | 163 | 158 | |||||||||
Loss and credit carryforwards | 493 | 408 | |||||||||
| Asset retirement obligations | 9 | 9 | |||||||||
| Other | 20 | 16 | |||||||||
| Total deferred tax assets | 691 | 599 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Property, plant and equipment | 2,161 | 1,988 | |||||||||
| Regulatory assets | 139 | 113 | |||||||||
| Total deferred tax liabilities | 2,300 | 2,101 | |||||||||
| Net deferred tax liabilities | $ | 1,609 | $ | 1,502 | |||||||
| CERC | |||||||||||
| Deferred tax assets: | |||||||||||
| Benefits and compensation | $ | 14 | $ | 17 | |||||||
| Regulatory liabilities | 127 | 150 | |||||||||
| Loss and credit carryforwards | 564 | 694 | |||||||||
| Asset retirement obligations | 59 | 82 | |||||||||
| Other | 196 | 122 | |||||||||
| Valuation allowance | (28) | (25) | |||||||||
| Total deferred tax assets | 932 | 1,040 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Property, plant and equipment | 1,871 | 1,883 | |||||||||
| Regulatory assets | 467 | 513 | |||||||||
| Other | 20 | 14 | |||||||||
| Total deferred tax liabilities | 2,358 | 2,410 | |||||||||
| Net deferred tax liabilities | $ | 1,426 | $ | 1,370 | |||||||
Tax Attribute Carryforwards and Valuation Allowance. As of December 31, 2025, CenterPoint Energy had (i) federal NOL carryforwards of $3.3 billion, which have an indefinite carryforward period; (ii) federal charitable contribution carryforwards of $63 million, which expire beginning in 2028; (iii) federal corporate alternative minimum tax carryforwards of $201 million, which have an indefinite carryforward period; (iv) $2 billion of gross state NOL carryforwards, which expire beginning in 2029; and (v) $1 million of state tax credits, net of valuation allowance, which expire beginning in 2032.
CenterPoint Energy reported a valuation allowance against certain state NOL and credit carryforwards because it is more likely than not that the benefit will not be realized.
As of December 31, 2025, Houston Electric had (i) federal NOL carryforwards of $1.9 billion, which have an indefinite carryforward period; and (ii) federal corporate alternative minimum tax carryforwards of $96 million, which have an indefinite carryforward period.
As of December 31, 2025, CERC had (i) federal NOL carryforwards of $1.5 billion, which have an indefinite carryforward period; (ii) federal corporate alternative minimum tax carryforwards of $152 million, which have an indefinite carryforward period; and (iii) $927 million of gross state NOL carryforwards, which expire beginning in 2029.
A reconciliation of CenterPoint Energy’s beginning and ending balance of unrecognized tax benefits, excluding interest and penalties, are as follows for the periods presented:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Balance, beginning of year | $ | 25 | $ | 25 | $ | 26 | |||||||||||
Lapse of statute of limitations | (8) | — | (1) | ||||||||||||||
| Balance, end of year | $ | 17 | $ | 25 | $ | 25 | |||||||||||
As of December 31, 2025, CenterPoint Energy reported net unrecognized tax benefits, including penalties and interest, of $24 million, which were included in Other non-current liabilities in the Consolidated Balance Sheets. Included in the balance of uncertain tax positions as of December 31, 2025 were $17 million of tax benefits that, if recognized, would affect the effective tax rate. The Registrants recognize interest accrued related to unrecognized tax benefits and penalties as income tax expense. The above table does not include $7 million of accrued penalties and interest as of December 31, 2025.
Tax Audits and Settlements. Tax years through 2022 have been audited and settled with the IRS for CenterPoint Energy. For tax years 2023, 2024 and 2025, the Registrants are participants in the IRS’s Compliance Assurance Process.
Income Taxes Payments and Refunds. For income taxes paid or refunds received for the years ended December 31, 2025, 2024 and 2023, see Note 17.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2022 | Feb 17, 2023 | |
| 2019 | Feb 27, 2020 | |
| 2017 | Feb 22, 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.