EDISON INTERNATIONALEIX
EDISON INTERNATIONAL Income Taxes Disclosure
Income Taxes
Current and Deferred Taxes
The components of income tax expense (benefit) by location of taxing jurisdiction are:
| Edison International | SCE | ||||||||||||||||||||||||||||||||||
| Years ended December 31, | |||||||||||||||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||
| Current: | |||||||||||||||||||||||||||||||||||
| Federal | $ | — | $ | 1 | $ | — | $ | 28 | $ | 3 | $ | — | |||||||||||||||||||||||
| State | 83 | 7 | — | 99 | 48 | 5 | |||||||||||||||||||||||||||||
| 83 | 8 | — | 127 | 51 | 5 | ||||||||||||||||||||||||||||||
| Deferred: | |||||||||||||||||||||||||||||||||||
| Federal | 925 | 59 | 101 | 976 | 118 | 149 | |||||||||||||||||||||||||||||
| State | 308 | (50) | 7 | 337 | (49) | 30 | |||||||||||||||||||||||||||||
| 1,233 | 9 | 108 | 1,313 | 69 | 179 | ||||||||||||||||||||||||||||||
Tax Credits | (25) | — | — | (25) | — | — | |||||||||||||||||||||||||||||
| Total | $ | 1,291 | $ | 17 | $ | 108 | $ | 1,415 | $ | 120 | $ | 184 | |||||||||||||||||||||||
The components of net accumulated deferred income tax liability are:
| Edison International | SCE | ||||||||||||||||||||||
| December 31, | |||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Deferred tax assets: | |||||||||||||||||||||||
| Property | $ | 1,005 | $ | 943 | $ | 992 | $ | 929 | |||||||||||||||
Wildfire-related1 | 339 | 254 | 336 | 251 | |||||||||||||||||||
| Nuclear decommissioning trust assets in excess of nuclear ARO liability | 455 | 373 | 455 | 373 | |||||||||||||||||||
Loss and credit carryforwards2 | 3,246 | 3,703 | 1,702 | 2,242 | |||||||||||||||||||
| Regulatory balances | 600 | 610 | 600 | 610 | |||||||||||||||||||
| Pension and postretirement benefits other than pensions, net | 115 | 117 | 21 | 21 | |||||||||||||||||||
| Leases | 331 | 335 | 331 | 335 | |||||||||||||||||||
| Other | 199 | 177 | 188 | 167 | |||||||||||||||||||
| Sub-total | 6,290 | 6,512 | 4,625 | 4,928 | |||||||||||||||||||
Less: valuation allowance3 | 14 | 17 | — | — | |||||||||||||||||||
| Total | 6,276 | 6,495 | 4,625 | 4,928 | |||||||||||||||||||
| Deferred tax liabilities: | |||||||||||||||||||||||
| Property | 11,618 | 11,220 | 11,598 | 11,202 | |||||||||||||||||||
| Regulatory balances | 2,551 | 1,299 | 2,551 | 1,299 | |||||||||||||||||||
| Nuclear decommissioning trust assets | 455 | 373 | 455 | 373 | |||||||||||||||||||
| Leases | 331 | 335 | 331 | 335 | |||||||||||||||||||
| Other | 195 | 187 | 162 | 155 | |||||||||||||||||||
| Total | 15,150 | 13,414 | 15,097 | 13,364 | |||||||||||||||||||
Accumulated deferred income tax liability, net4 | $ | 8,874 | $ | 6,919 | $ | 10,472 | $ | 8,436 | |||||||||||||||
1Relates to estimated losses accrual for wildfire-related claims, net of expected insurance and regulatory recoveries, and contributions to the Wildfire Fund. For further information, see Note 12 and Note 1.
2As of December 31, 2025, unrecognized tax benefits of $404 million and $326 million for Edison International and SCE, respectively, are presented net against the deferred tax asset for the loss and tax credit carryforwards. As of December 31, 2024, the unrecognized tax benefits netted against deferred tax assets and tax credit carryforwards were $397 million and $327 million for Edison International and SCE, respectively.
3As of December 31, 2025 and 2024, Edison International has recorded $14 million and $17 million valuation allowance on deferred tax assets. The valuation allowance is related to non-California state net operating loss carryforwards which are expected to expire before being utilized.
4Included in "Deferred income taxes and credits" on the consolidated balance sheets.
Net Operating Loss and Tax Credit Carryforwards
The amounts of net operating loss and tax credit carryforwards (after-tax) are as follows:
| Edison International | SCE | ||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||
| (in millions) | Loss Carryforwards | Credit Carryforwards | Loss Carryforwards | Credit Carryforwards | |||||||||||||||||||
| Expire between 2027 to 2030 | $ | 10 | $ | 96 | $ | — | $ | — | |||||||||||||||
| Expire between 2031 to 2045 | 1,527 | 381 | 725 | 32 | |||||||||||||||||||
No expiration date1 | 1,623 | 13 | 1,269 | 2 | |||||||||||||||||||
| Total | $ | 3,160 | $ | 490 | $ | 1,994 | $ | 34 | |||||||||||||||
1Under the Tax Cut and Jobs Act signed into law on December 22, 2017 ("Tax Reform"), net operating losses generated after December 31, 2017 can carryforward indefinitely.
Edison International consolidates for federal income tax purposes, but not for financial accounting purposes, a group of wind projects referred to as "Capistrano Wind." The amount of net operating loss and tax credit carryforwards recognized as part of deferred income taxes includes $106 million and $107 million related to Capistrano Wind for 2025 and 2024, respectively. The tax attributes not utilized as of December 31, 2025 will be available for the Edison International consolidated group to utilize in the future. When the remaining Capistrano tax attributes are used in the future by Edison International, payments will be made to those entities under a tax allocation agreement. Under the tax allocation agreement, Edison International has recorded a corresponding liability as part of other long-term liabilities related to its obligation to make payments to Capistrano Wind when these tax benefits are realized.
Effective Tax Rate
The table below provides a reconciliation of income tax expense computed at the federal statutory income tax rate to the income tax provision:
| Edison International | SCE | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Years ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Amount | % | Amount | % | Amount | % | Amount | % | Amount | % | Amount | % | |||||||||||||||||||||||||||||||||||||||||
| Income from operations before income taxes | $ | 5,992 | $ | 1,563 | $ | 1,515 | $ | 6,448 | $ | 1,914 | $ | 1,781 | |||||||||||||||||||||||||||||||||||||||||
| $ | 1,258 | 21.0% | $ | 328 | 21.0% | $ | 318 | 21.0% | $ | 1,354 | 21.0% | $ | 402 | 21.0% | $ | 374 | 21.0% | ||||||||||||||||||||||||||||||||||||
State Income Taxes, Net of Federal Income Tax Effect1 | 308 | 5.1% | (24) | (1.5)% | 3 | 0.2% | 342 | 5.3% | — | —% | 23 | 1.3% | |||||||||||||||||||||||||||||||||||||||||
Tax Credits | (25) | (0.4)% | — | —% | — | —% | (25) | (0.4)% | — | —% | — | —% | |||||||||||||||||||||||||||||||||||||||||
Other Adjustments | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Property-related | (251) | (4.2)% | (279) | (17.9)% | (205) | (13.5)% | (251) | (3.9)% | (279) | (14.6)% | (205) | (11.5)% | |||||||||||||||||||||||||||||||||||||||||
Other | 1 | —% | (8) | (0.5)% | (8) | (0.6)% | (5) | (0.1)% | (3) | (0.1)% | (8) | (0.5)% | |||||||||||||||||||||||||||||||||||||||||
Effective Tax Rate | $ | 1,291 | 21.5% | $ | 17 | 1.1% | $ | 108 | 7.1% | $ | 1,415 | 21.9% | $ | 120 | 6.3% | $ | 184 | 10.3% | |||||||||||||||||||||||||||||||||||
1State taxes in California represents substantially all of the tax effect in this category.
The CPUC requires flow-through ratemaking treatment for the current tax benefit arising from certain property-related and other temporary differences which reverse over time. Flow-through items reduce current authorized revenue requirements in SCE's rate cases and result in a regulatory asset for recovery of deferred income taxes in future periods. The difference between the authorized amounts as determined in SCE's rate cases, adjusted for balancing and memorandum account activities, and the recorded flow-through items also result in increases or decreases in regulatory assets with a corresponding impact on the effective tax rate to the extent that recorded deferred amounts are expected to be recovered in future rates. For further information, see Note 11.
The IRA imposes a 15% corporate alternative minimum tax ("CAMT") on adjusted financial statement income ("AFSI") of corporations with average AFSI exceeding $1.0 billion over the three preceding calendar years. The CAMT was effective beginning January 1, 2023. Based on the current interpretation of the law and historical financial data, Edison International estimates that it will exceed the $1.0 billion threshold and be subject to CAMT on its consolidated federal tax returns beginning in 2026. SCE will also be subject to CAMT in 2026.
Under the IRA, SCE generated investment tax credits of approximately $231 million in 2024 related to utility owned storage projects and $29 million in nuclear production tax credits. In 2025, SCE monetized the majority of these credits for $236 million. SCE expects to pass the proceeds, net of transaction fees, back to customers.
Income taxes Paid/(Refunded)
The components of income tax paid net of (refunds) by location of taxing jurisdiction are:
| Edison International | SCE | ||||||||||||||||||||||||||||||||||
| Years ended December 31, | |||||||||||||||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||
| Federal | $ | (236) | $ | — | $ | — | $ | (236) | $ | 4 | $ | — | |||||||||||||||||||||||
| California | — | 51 | — | 8 | 74 | — | |||||||||||||||||||||||||||||
SCE makes tax-allocation payments to Edison International under the applicable tax-allocation agreement. It does not make payments to the tax authorities directly. The amount included in 2025 relates to proceeds from the monetization of investment and production tax credits.
Accounting for Uncertainty in Income Taxes
Authoritative guidance related to accounting for uncertainty in income taxes requires an enterprise to recognize, in its financial statements, the best estimate of the impact of a tax position by determining if the weight of available evidence indicates it is more likely than not, based solely on the technical merits, that the position will be sustained upon examination. The guidance requires the disclosure of all unrecognized tax benefits, which includes both the reserves recorded for tax positions on filed tax returns and the unrecognized portion of affirmative claims.
Unrecognized Tax Benefits
The following table provides a reconciliation of unrecognized tax benefits:
| Edison International | SCE | ||||||||||||||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||
| Balance at January 1, | $ | 463 | $ | 430 | $ | 646 | $ | 457 | $ | 418 | $ | 374 | |||||||||||||||||||||||
| Tax positions taken during the current year: | |||||||||||||||||||||||||||||||||||
| Increases | 50 | 66 | 65 | 50 | 66 | 65 | |||||||||||||||||||||||||||||
| Tax positions taken during a prior year: | |||||||||||||||||||||||||||||||||||
| Increases | — | 1 | 13 | — | — | 4 | |||||||||||||||||||||||||||||
Decreases1 | (30) | (34) | (294) | (30) | (27) | (25) | |||||||||||||||||||||||||||||
| Balance at December 31, | $ | 483 | $ | 463 | $ | 430 | $ | 477 | $ | 457 | $ | 418 | |||||||||||||||||||||||
1The Edison International decrease in 2023 was mainly related to a write-off of a reserve for a claim related to the Edison Mission Energy bankruptcy.
As of December 31, 2025, if recognized, $70 million of unrecognized tax benefits would impact Edison International's effective tax rate and $64 million of the unrecognized tax benefits would impact SCE's effective tax rate.
Tax Disputes
Tax years that remain open for examination by the Internal Revenue Service and Franchise Tax Board are 2022 – 2024 and 2013 – 2018 & 2021 - 2024, respectively.
Accrued Interest and Penalties
The total amount of accrued interest and penalties related to unrecognized tax benefits are:
| Edison International | SCE | ||||||||||||||||||||||
| December 31, | |||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Accrued interest and penalties | $ | 2 | $ | — | $ | 42 | $ | 36 | |||||||||||||||
The net after-tax interest and penalties recognized in income tax expense are:
| Edison International | SCE | ||||||||||||||||||||||||||||||||||
| Years ended December 31, | |||||||||||||||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||
| Net after-tax interest and penalties tax expense | $ | 2 | $ | — | $ | — | $ | 4 | $ | 7 | $ | 4 | |||||||||||||||||||||||
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 18, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 25, 2021 | |
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.