DOMINION ENERGY, INC Income Taxes Disclosure
Note 5. Income Taxes
Judgment and the use of estimates are required in developing the provision for income taxes and reporting of tax-related assets and liabilities. The interpretation of tax laws and associated regulations involves uncertainty, since tax authorities may interpret the laws differently. The Companies are routinely audited by federal and state tax authorities. Ultimate resolution of income tax matters may result in favorable or unfavorable impacts to net income and cash flows, and adjustments to tax-related assets and liabilities could be material.
As indicated in Note 2, certain of the Companies’ operations, including accounting for income taxes, are subject to regulatory accounting treatment. For regulated operations, many of the changes in deferred taxes from the 2017 Tax Reform Act represent amounts probable of collection from or return to customers and are presented as components of regulatory assets or liabilities. See Note 12 for additional information.
Continuing Operations
Details of income tax expense for continuing operations including noncontrolling interests were as follows:
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||||||||||
Year Ended December 31, |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Federal |
|
$ |
(580 |
) |
|
$ |
(204 |
) |
|
$ |
(361 |
) |
|
$ |
163 |
|
|
$ |
(6 |
) |
|
$ |
(102 |
) |
State |
|
|
54 |
|
|
|
37 |
|
|
|
(97 |
) |
|
|
39 |
|
|
|
67 |
|
|
|
6 |
|
Total current expense (benefit) |
|
|
(526 |
) |
|
|
(167 |
) |
|
|
(458 |
) |
|
|
202 |
|
|
|
61 |
|
|
|
(96 |
) |
Deferred: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Federal |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Taxes before operating loss carryforwards and investment tax credits |
|
|
539 |
|
|
|
521 |
|
|
|
815 |
|
|
|
167 |
|
|
|
324 |
|
|
|
403 |
|
Tax utilization expense of operating loss carryforwards |
|
|
35 |
|
|
|
40 |
|
|
|
45 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
State |
|
|
61 |
|
|
|
52 |
|
|
|
270 |
|
|
|
103 |
|
|
|
59 |
|
|
|
107 |
|
Total deferred expense |
|
|
635 |
|
|
|
613 |
|
|
|
1,130 |
|
|
|
270 |
|
|
|
383 |
|
|
|
510 |
|
Investment tax credits |
|
|
423 |
|
|
|
(35 |
) |
|
|
(28 |
) |
|
|
(24 |
) |
|
|
(21 |
) |
|
|
(14 |
) |
Total income tax expense |
|
$ |
532 |
|
|
$ |
411 |
|
|
$ |
644 |
|
|
$ |
448 |
|
|
$ |
423 |
|
|
$ |
400 |
|
In 2025, Dominion Energy’s current income taxes reflect a benefit from continuing operations primarily related to income tax credits generated during 2025. At December 31, 2025, Dominion Energy’s Consolidated Balance Sheet includes $402 million, presented in tax receivables, for the amount of credits generated in 2025 and expected to be carried back to tax year 2024 and refunded. Additionally, Dominion Energy and Virginia Power have recognized a current tax benefit from tax credits generated and transferred to third parties during 2025, as further discussed below.
In 2024, Dominion Energy’s current income taxes reflect a benefit from continuing operations as the income tax expense associated with the East Ohio, PSNC and Questar Gas Transactions, is reflected in discontinued operations. Dominion Energy’s income tax expense from continuing operations reflects the utilization of tax credit carryforwards to offset a portion of the federal tax on the gains from the East Ohio, PSNC and Questar Gas Transactions, presented in discontinued operations.
In 2023, Dominion Energy’s current income taxes reflect a benefit from continuing operations as the income tax expense associated with the East Ohio, PSNC and Questar Gas Transactions and Cove Point operations, including the Cove Point gain, is reflected in discontinued operations. Dominion Energy’s income tax expense from continuing operations reflects the utilization of investment tax credit carryforwards to offset a portion of the federal tax on the Cove Point gain, presented in discontinued operations.
Discontinued Operations
Income tax expense reflected in discontinued operations is $5 million, $31 million and $1.3 billion for the years ended December 31, 2025, 2024 and 2023, respectively. See Note 3 for a discussion of tax expense reflected in discontinued operations during the years ended December 31, 2024 and 2023. In addition, Dominion Energy recorded tax expense of $278 million associated with completing the sale in September 2023 of its remaining 50% noncontrolling partnership interest in Cove Point to BHE as discussed in Note 9.
Continuing Operations
For continuing operations including noncontrolling interests for the year ended December 31, 2025, the statutory U.S. federal income tax rate reconciles to the Companies’ effective income tax rate as follows:
Year Ended December 31, 2025 |
|
Dominion Energy |
|
|
|
Virginia Power |
|
|
||||||||||
(millions, except percentages) |
|
Amount |
|
|
Rate |
|
|
|
Amount |
|
|
Rate |
|
|
||||
U.S. federal statutory tax |
|
$ |
758 |
|
|
|
21.0 |
|
% |
|
$ |
549 |
|
|
|
21.0 |
|
% |
State and local income taxes, net of federal income tax effect(1) |
|
|
109 |
|
|
|
3.0 |
|
|
|
|
112 |
|
|
|
4.3 |
|
|
Tax credits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Production tax credits |
|
|
(210 |
) |
|
|
(5.8 |
) |
|
|
|
(115 |
) |
|
|
(4.4 |
) |
|
Investment tax credit amortization |
|
|
(87 |
) |
|
|
(2.4 |
) |
|
|
|
(21 |
) |
|
|
(0.8 |
) |
|
Nontaxable or nondeductible items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Regulatory deferrals: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Reversal of excess deferred income taxes |
|
|
(62 |
) |
|
|
(1.7 |
) |
|
|
|
(45 |
) |
|
|
(1.7 |
) |
|
AFUDC—equity |
|
|
(28 |
) |
|
|
(0.8 |
) |
|
|
|
(27 |
) |
|
|
(1.0 |
) |
|
Absence of tax on noncontrolling interest |
|
|
(14 |
) |
|
|
(0.4 |
) |
|
|
|
(14 |
) |
|
|
(0.5 |
) |
|
Changes in unrecognized tax benefits |
|
|
(28 |
) |
|
|
(0.8 |
) |
|
|
|
1 |
|
|
|
0.1 |
|
|
Other adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Qualified nuclear decommissioning trust net gains (losses) |
|
|
87 |
|
|
|
2.4 |
|
|
|
|
11 |
|
|
|
0.4 |
|
|
Other |
|
|
7 |
|
|
|
0.2 |
|
|
|
|
(3 |
) |
|
|
(0.3 |
) |
|
Effective tax(2) |
|
$ |
532 |
|
|
|
14.7 |
|
% |
|
$ |
448 |
|
|
|
17.1 |
|
% |
For continuing operations including noncontrolling interests for the years ended December 31, 2024 and 2023, the statutory U.S. federal income tax rate reconciles to the Companies’ effective income tax rate as follows:
|
|
Dominion Energy |
|
|
|
Virginia Power |
|
|
||||||||||
Year Ended December 31, |
|
2024 |
|
|
2023 |
|
|
|
2024 |
|
|
2023 |
|
|
||||
U.S. federal statutory tax |
|
|
21.0 |
|
% |
|
21.0 |
|
% |
|
|
21.0 |
|
% |
|
21.0 |
|
% |
Increases (reductions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
State taxes, net of |
|
|
3.6 |
|
|
|
3.9 |
|
|
|
|
4.5 |
|
|
|
4.7 |
|
|
Investment tax credits |
|
|
(1.6 |
) |
|
|
(1.0 |
) |
|
|
|
(0.9 |
) |
|
|
(0.8 |
) |
|
Production tax credits |
|
|
(4.8 |
) |
|
|
(0.6 |
) |
|
|
|
(4.5 |
) |
|
|
(0.8 |
) |
|
Reversal of excess |
|
|
(3.1 |
) |
|
|
(2.6 |
) |
|
|
|
(2.0 |
) |
|
|
(2.6 |
) |
|
State legislative change |
|
|
— |
|
|
|
(0.1 |
) |
|
|
|
— |
|
|
|
— |
|
|
Qualified nuclear |
|
|
4.4 |
|
|
|
2.7 |
|
|
|
|
0.6 |
|
|
|
0.6 |
|
|
Changes in state |
|
|
— |
|
|
|
1.1 |
|
|
|
|
|
|
|
|
|
||
AFUDC—equity |
|
|
(0.7 |
) |
|
|
— |
|
|
|
|
(0.7 |
) |
|
|
— |
|
|
Settlements of |
|
|
(0.7 |
) |
|
|
(0.4 |
) |
|
|
|
— |
|
|
|
— |
|
|
Employee stock |
|
|
(0.3 |
) |
|
|
(0.3 |
) |
|
|
|
|
|
|
|
|
||
Other, net |
|
|
0.9 |
|
|
|
(0.1 |
) |
|
|
|
0.6 |
|
|
|
(0.4 |
) |
|
Effective tax rate |
|
|
18.7 |
|
% |
|
23.6 |
|
% |
|
|
18.6 |
|
% |
|
21.7 |
|
% |
The IRA created a nuclear production tax credit for electricity produced and sold beginning in 2024 and a clean fuel production tax credit for clean fuel produced and sold beginning in 2025. Dominion Energy’s and Virginia Power’s 2025 effective tax rate includes an $89 million income tax benefit for the nuclear production tax credit, and Dominion Energy’s effective tax rate also includes a $79 million income tax benefit for the clean fuel production tax credit.
In 2025, Dominion Energy and Virginia Power entered into agreements with third parties to transfer tax credits generated in 2024 and 2025. During 2025, Dominion Energy and Virginia Power received cash proceeds of $184 million and $168 million, respectively, related to the transfer of tax credits. In addition, Dominion Energy and Virginia Power expect to receive an additional $108 million and $18 million, respectively, in 2026 which are reflected in other receivables in the Companies’ Consolidated Balance Sheets at December 31, 2025. The Companies expect to continue to explore the ability to efficiently monetize their tax credits through third-party transfer agreements.
Dominion Energy’s and Virginia Power’s 2024 effective tax rate includes an $89 million tax benefit for the estimated net realizable value of the nuclear production tax credit.
The ultimate nuclear and clean fuel production tax credits realized by the Companies could vary significantly based on pending final U.S. Treasury guidance.
Dominion Energy’s 2023 effective tax rate includes a net income tax expense of $29 million associated with the remeasurement of consolidated state deferred taxes as a result of the East Ohio, PSNC and Questar Gas Transactions and sale of Dominion Energy’s 50% noncontrolling partnership interest in Cove Point as discussed in Notes 3 and 9, respectively.
The Companies’ income tax payments (net of refunds received and excluding amounts related to transfers of tax credits) for the year ended December 31, 2025, consist of the following:
|
|
Dominion Energy |
|
|
Virginia Power(1) |
|
||
(millions) |
|
|
|
|
|
|
||
Federal(2) |
|
$ |
115 |
|
|
$ |
348 |
|
State: |
|
|
|
|
|
|
||
Virginia(3) |
|
|
68 |
|
|
|
36 |
|
Other states(4) |
|
|
3 |
|
|
|
1 |
|
Total tax payments |
|
$ |
186 |
|
|
$ |
385 |
|
The Companies’ deferred income taxes consist of the following:
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||
At December 31, |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred income taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total deferred income tax assets |
|
$ |
2,062 |
|
|
$ |
1,854 |
|
|
$ |
1,139 |
|
|
$ |
1,082 |
|
Total deferred income tax liabilities |
|
|
9,947 |
|
|
|
8,989 |
|
|
|
6,060 |
|
|
|
5,558 |
|
Total net deferred income tax liabilities |
|
$ |
7,885 |
|
|
$ |
7,135 |
|
|
$ |
4,921 |
|
|
$ |
4,476 |
|
Total deferred income taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation method and plant basis differences |
|
$ |
5,557 |
|
|
$ |
4,878 |
|
|
$ |
3,899 |
|
|
$ |
3,765 |
|
Excess deferred income taxes |
|
|
(768 |
) |
|
|
(790 |
) |
|
|
(570 |
) |
|
|
(587 |
) |
Unrecovered nuclear plant cost |
|
|
391 |
|
|
|
420 |
|
|
|
|
|
|
|
||
DESC rate refund |
|
|
(34 |
) |
|
|
(49 |
) |
|
|
|
|
|
|
||
Toshiba Settlement |
|
|
(119 |
) |
|
|
(133 |
) |
|
|
|
|
|
|
||
Nuclear decommissioning |
|
|
2,038 |
|
|
|
1,973 |
|
|
|
899 |
|
|
|
781 |
|
Deferred state income taxes |
|
|
1,154 |
|
|
|
1,010 |
|
|
|
789 |
|
|
|
672 |
|
Federal benefit of deferred state income taxes |
|
|
(250 |
) |
|
|
(222 |
) |
|
|
(166 |
) |
|
|
(141 |
) |
Deferred fuel, purchased energy and gas costs |
|
|
323 |
|
|
|
189 |
|
|
|
315 |
|
|
|
178 |
|
Pension benefits |
|
|
382 |
|
|
|
345 |
|
|
|
(126 |
) |
|
|
(116 |
) |
Other postretirement benefits |
|
|
226 |
|
|
|
174 |
|
|
|
155 |
|
|
|
141 |
|
Loss and credit carryforwards |
|
|
(790 |
) |
|
|
(680 |
) |
|
|
— |
|
|
|
— |
|
Deferred unamortized investment tax credits |
|
|
(352 |
) |
|
|
(250 |
) |
|
|
(153 |
) |
|
|
(159 |
) |
Valuation allowances |
|
|
143 |
|
|
|
113 |
|
|
|
— |
|
|
|
— |
|
Partnership basis differences |
|
|
(91 |
) |
|
|
(30 |
) |
|
|
(159 |
) |
|
|
(98 |
) |
Other |
|
|
75 |
|
|
|
187 |
|
|
|
38 |
|
|
|
40 |
|
Total net deferred income tax liabilities |
|
$ |
7,885 |
|
|
$ |
7,135 |
|
|
$ |
4,921 |
|
|
$ |
4,476 |
|
At December 31, 2025, Dominion Energy had the following deductible loss and credit carryforwards:
|
|
Deductible Amount |
|
|
Deferred Tax Asset |
|
|
Valuation Allowance |
|
|
Expiration Period |
|||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|||
Federal losses |
|
$ |
222 |
|
|
$ |
47 |
|
|
$ |
— |
|
|
2037 |
Federal production and other credits |
|
— |
|
|
|
61 |
|
|
— |
|
|
2036-2045 |
||
State losses |
|
|
2,389 |
|
|
|
119 |
|
|
|
(63 |
) |
|
2026-2045 |
State minimum tax credits |
|
— |
|
|
|
444 |
|
|
— |
|
|
No expiration |
||
State investment and other credits |
|
— |
|
|
|
119 |
|
|
|
(69 |
) |
|
2026-2034 |
|
Total |
|
$ |
2,611 |
|
|
$ |
790 |
|
|
$ |
(132 |
) |
|
|
At December 31, 2025, Virginia Power had no deductible loss or credit carryforwards.
A reconciliation of changes in the Companies’ unrecognized tax benefits follows:
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance at January 1, |
|
$ |
170 |
|
|
$ |
194 |
|
|
$ |
197 |
|
|
$ |
56 |
|
|
$ |
52 |
|
|
$ |
50 |
|
Prior period positions - increases |
|
|
7 |
|
|
|
13 |
|
|
|
5 |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
Prior period positions - decreases |
|
|
(45 |
) |
|
|
(18 |
) |
|
|
(12 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Current period positions - increases |
|
|
— |
|
|
|
8 |
|
|
|
4 |
|
|
|
— |
|
|
|
4 |
|
|
|
2 |
|
Settlements with tax authorities |
|
|
— |
|
|
|
(13 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Expiration of statutes of limitations |
|
|
— |
|
|
|
(14 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Balance at December 31, |
|
$ |
132 |
|
|
$ |
170 |
|
|
$ |
194 |
|
|
$ |
57 |
|
|
$ |
56 |
|
|
$ |
52 |
|
Certain unrecognized tax benefits, or portions thereof, if recognized, would affect the effective tax rate. Changes in these unrecognized tax benefits may result from remeasurement of amounts expected to be realized, settlements with tax authorities and expiration of statutes of limitations. For Dominion Energy and its subsidiaries, these unrecognized tax benefits were $59 million, $87 million and $104 million at December 31, 2025, 2024 and 2023, respectively. For Virginia Power, these unrecognized tax benefits were $36 million, $35 million and $32 million at December 31, 2025, 2024 and 2023, respectively. In discontinued operations, these unrecognized tax benefits were $30 million, $32 million and $38 million at December 31, 2025, 2024 and 2023, respectively. For Dominion Energy, the change in these unrecognized tax benefits decreased income tax expense by $28 million, $19 million and $7 million in 2025, 2024 and 2023, respectively. For Virginia Power, the change in these unrecognized tax benefits increased income tax expense by $1 million in 2025 and by an inconsequential amount in 2024 and 2023.
Dominion Energy participates in the IRS Compliance Assurance Process, which provides the opportunity to resolve complex tax matters with the IRS before filing its federal income tax returns, thus achieving certainty for such tax return filing positions agreed to by the IRS. The IRS has completed its audit of tax years through 2019. The statute of limitations has not yet expired for years after 2019. Although Dominion Energy has not received a final letter indicating no changes to its taxable income for tax years 2020 through 2024, no material adjustments are expected. The IRS examination of tax year 2025 is ongoing.
For each of the major states in which Dominion Energy operates or previously operated, the earliest tax year remaining open for examination is as follows:
State |
|
Earliest Open Tax Year |
Pennsylvania(1) |
|
2012 |
Connecticut |
|
2022 |
Virginia(2) |
|
2022 |
Utah(1) |
|
2022 |
South Carolina |
|
2022 |
The Companies are also obligated to report adjustments resulting from IRS settlements to state tax authorities. In addition, if Dominion Energy utilizes operating losses or tax credits generated in years for which the statute of limitations has expired, such amounts are generally subject to examination.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 23, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 21, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Feb 27, 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.