ENBRIDGE INCENB

ENBRIDGE INC Income Taxes Disclosure

10-KFiled Feb 13, 20266 min read

24. INCOME TAXES

 

INCOME TAX RATE RECONCILIATION

 

Year ended December 31,

2025

 

2024

 

2023

 

(millions of Canadian dollars)

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before income taxes

 

9,793

 

 

 

 

7,299

 

 

 

 

7,879

 

 

 

Canadian federal statutory income tax rate1

 

15.0

%

 

 

 

15.0

%

 

 

 

15.0

%

 

 

Expected federal taxes at statutory rate

 

1,469

 

 

15.0

%

 

1,095

 

 

15.0

%

 

1,182

 

 

15.0

%

Increase/(decrease) resulting from:

 

 

 

 

 

 

 

 

 

 

 

 

Provincial income taxes2

 

245

 

 

2.5

%

 

(74

)

 

(1.0

%)

 

161

 

 

2.0

%

Foreign tax effects:

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

 

 

 

 

 

 

 

 

 

 

 

Statutory tax rate difference between US and Canada

 

353

 

 

3.6

%

 

314

 

 

4.3

%

 

276

 

 

3.5

%

State and local income taxes, net of federal income tax effect

 

61

 

 

0.7

%

 

227

 

 

3.1

%

 

226

 

 

2.9

%

Tax Credits

 

 

 

 

 

 

 

 

 

 

 

 

Investment tax credits

 

(153

)

 

(1.6

%)

 

(11

)

 

(0.1

%)

 

(31

)

 

(0.4

%)

Other tax credits

 

(34

)

 

(0.3

%)

 

(12

)

 

(0.2

%)

 

(16

)

 

(0.2

%)

Nontaxable or nondeductible items

 

 

 

 

 

 

 

 

 

 

 

 

Accounting impairment of goodwill3

 

—

 

 

—

 

 

208

 

 

2.9

%

 

(88

)

 

(1.1

%)

Other adjustments

 

 

 

 

 

 

 

 

 

 

 

 

US minimum tax

 

195

 

 

2.0

%

 

163

 

 

2.2

%

 

100

 

 

1.3

%

Effects of rate-regulated accounting

 

(77

)

 

(0.8

%)

 

(110

)

 

(1.5

%)

 

(43

)

 

(0.6

%)

Other

 

9

 

 

0.1

%

 

54

 

 

0.7

%

 

45

 

 

0.6

%

Other jurisdictions

 

(74

)

 

(0.8

%)

 

(26

)

 

(0.4

%)

 

(51

)

 

(0.6

%)

Nontaxable or nondeductible items

 

 

 

 

 

 

 

 

 

 

 

 

Nontaxable portion of gain on sale of investment4

 

—

 

 

—

 

 

(147

)

 

(2.0

%)

 

—

 

 

—

 

Other adjustments

 

 

 

 

 

 

 

 

 

 

 

 

Write-off of regulatory deferrals5

 

32

 

 

0.3

%

 

4

 

 

0.1

%

 

115

 

 

1.5

%

Effects of rate-regulated accounting

 

(87

)

 

(0.9

%)

 

(90

)

 

(1.2

%)

 

(107

)

 

(1.4

%)

Part VI. Tax, net of federal Part 1 deduction6

 

79

 

 

0.8

%

 

73

 

 

1.0

%

 

66

 

 

0.8

%

Other

 

(14

)

 

(0.1

%)

 

—

 

 

—

 

 

(14

)

 

(0.2

%)

Income tax expense and effective tax rate

 

2,004

 

 

20.5

%

 

1,668

 

 

22.9

%

 

1,821

 

 

23.1

%

 

1
Represents the federal statutory rate of Canada of 15%, net of the federal tax abatement and general rate reduction.
2
Provincial taxes in Alberta and Ontario accounted for more than 50% of the total tax effect in 2025. In both 2024 and 2023, provincial taxes in Alberta alone accounted for more than 50% of the total tax effect.
3
The amount in 2024 relates to the federal impact of the nondeductible goodwill impairment in the Gas Transmission segment. Refer to Note 13 - Long-Term Investments and Note 15 - Goodwill.
4
The amount in 2024 relates to the federal component of the nontaxable portion of the gain on sale relating to Alliance Pipeline and Aux Sable. Refer to Note 13 - Long-Term Investments.
5
The amount in 2023 relates to the federal tax impact of the derecognition of rate-regulated accounting for income tax relating to Southern Lights Canada and portions of the Canadian Mainline including Line 9 and Line 3 Replacement.
6
Represents the Part VI.1 tax which is levied on preferred share dividends paid in Canada.

 

COMPONENTS OF PRETAX EARNINGS AND INCOME TAXES

 

Year ended December 31,

 

2025

 

 

2024

 

 

2023

 

(millions of Canadian dollars)

 

 

 

 

 

 

Earnings before income taxes

 

 

 

 

 

 

Canada

 

3,391

 

 

1,035

 

 

2,233

 

US

 

5,920

 

 

5,231

 

 

4,620

 

Other

 

482

 

 

1,033

 

 

1,026

 

 

 

9,793

 

 

7,299

 

 

7,879

 

Income tax expense/(recovery)

 

 

 

 

 

 

Canada

 

 

 

 

 

 

Federal

 

522

 

 

23

 

 

395

 

Provincial

 

245

 

 

(74

)

 

161

 

US

 

1,245

 

 

1,591

 

 

1,165

 

Other

 

(8

)

 

128

 

 

100

 

 

 

2,004

 

 

1,668

 

 

1,821

 

Current income taxes

 

979

 

 

949

 

 

401

 

Deferred income taxes

 

1,025

 

 

719

 

 

1,420

 

 

COMPONENTS OF DEFERRED INCOME TAXES

Deferred income tax assets and liabilities are recognized for the future tax consequences of differences between carrying amounts of assets and liabilities and their respective tax bases. Major components of deferred income tax assets and liabilities are as follows:

 

December 31,

 

2025

 

 

2024

 

(millions of Canadian dollars)

 

 

 

 

Deferred income tax liabilities

 

 

 

 

Property, plant and equipment

 

(10,656

)

 

(11,368

)

Investments

 

(9,538

)

 

(9,043

)

Regulatory assets

 

(2,020

)

 

(1,940

)

Other

 

(392

)

 

(251

)

Total deferred income tax liabilities

 

(22,606

)

 

(22,602

)

Deferred income tax assets

 

 

 

 

Financial instruments

 

363

 

 

740

 

Loss carryforwards1

 

823

 

 

1,272

 

Other

 

2,075

 

 

2,088

 

Total deferred income tax assets

 

3,261

 

 

4,100

 

Less valuation allowance2

 

(236

)

 

(298

)

Total deferred income tax assets, net

 

3,025

 

 

3,802

 

Net deferred income tax liabilities

 

(19,581

)

 

(18,800

)

Presented as follows:

 

 

 

 

Total deferred income tax assets

 

701

 

 

796

 

Total deferred income tax liabilities

 

(20,282

)

 

(19,596

)

Net deferred income tax liabilities

 

(19,581

)

 

(18,800

)

 

1
As at December 31, 2025 and 2024, represents the tax effect related to the benefit of unused tax loss carryforwards in Canada of $1.5 billion and $1.3 billion, respectively, which expire in 2031 and beyond, and in the US of $2.0 billion and $4.2 billion, respectively, with no expiration.
2
A valuation allowance has been established for certain loss and credit carryforwards, and outside basis temporary differences on investments that reduce deferred income tax assets to an amount that will more likely than not be realized.

 

We have not provided for deferred income taxes on the difference between the carrying value of substantially all of our foreign subsidiaries and their corresponding tax basis as the earnings of those subsidiaries are intended to be permanently reinvested in their operations. As such, these investments are not anticipated to give rise to income taxes in the foreseeable future. The difference between the carrying values of the investments and their tax bases is largely a result of unremitted earnings and currency translation adjustments. The determination of the amount of unrecognized deferred income tax liabilities applicable to such amounts is not practicable.

 

Enbridge and certain of our subsidiaries are subject to taxation in Canada, the US and other foreign jurisdictions. The material jurisdictions in which we are subject to potential examinations include the US (Federal) and Canada (Federal, Alberta and Québec). We are open to examination by Canadian tax authorities for the 2018 to 2025 tax years and by US tax authorities for the 2022 to 2025 tax years. We are currently under examination for income tax matters in Canada for the 2019 to 2022 tax years. We are not currently under examination for income tax matters in any other material jurisdiction where we are subject to income tax.

 

INCOME TAXES PAID

 

Year ended December 31,

 

2025

 

 

2024

 

 

2023

 

(millions of Canadian dollars)

 

 

 

 

 

 

Canadian Federal

 

398

 

 

132

 

 

216

 

Canadian Provincial1

 

142

 

 

61

 

 

46

 

United States

 

585

 

 

592

 

 

221

 

Hungary

 

—

 

 

(2

)

 

54

 

Switzerland

 

68

 

 

76

 

 

38

 

Other

 

14

 

 

2

 

 

3

 

Net cash paid for income taxes

 

1,207

 

 

861

 

 

578

 

 

1
Includes income taxes paid to Ontario of $46 million, $46 million, and $12 million for 2025, 2024, and 2023, respectively.

 

UNRECOGNIZED TAX BENEFITS

 

Year ended December 31,

 

2025

 

 

2024

 

(millions of Canadian dollars)

 

 

 

 

Unrecognized tax benefits at beginning of year

 

31

 

 

45

 

Gross decreases for tax positions of prior year

 

(30

)

 

(2

)

Change in translation of foreign currency

 

(1

)

 

4

 

Lapses of statute of limitations

 

—

 

 

(16

)

Unrecognized tax benefits at end of year

 

—

 

 

31

 

 

We recognize accrued interest and penalties related to unrecognized tax benefits as a component of income taxes. Interest and penalties included in income taxes for the years ended December 31, 2025 and 2024 were recoveries of $6 million and $8 million, respectively. As at December 31, 2025 and 2024, interest and penalties of nil and $6 million, respectively, have been accrued.

Historical Timeline

Fiscal YearFiled
2025Feb 13, 2026Showing above
2024Feb 14, 2025
2023Feb 9, 2024
2022Feb 10, 2023
2021Feb 11, 2022
2020Feb 12, 2021
2019Feb 14, 2020
2018Feb 15, 2019
2017Feb 16, 2018

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 SharePP&EGoodwill & IntangiblesLeasesSegmentsDebtCommitmentsStock CompensationNew Standards