ENTERGY CORP /DE/ETR
ENTERGY CORP /DE/ Income Taxes Disclosure
INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Income taxes for Entergy for 2025, 2024, and 2023 consist of the following:
2025 | 2024 | 2023 | |||||||||||||||
| (In Thousands) | |||||||||||||||||
| Current | |||||||||||||||||
| Federal | $3,427 | $66,708 | $60,639 | ||||||||||||||
| State | 6,890 | 44,956 | 23,014 | ||||||||||||||
| Total | 10,317 | 111,664 | 83,653 | ||||||||||||||
| Deferred and non-current - net | |||||||||||||||||
| Federal | 408,851 | 136,671 | (815,222) | ||||||||||||||
| State | 85,757 | 144,519 | 46,281 | ||||||||||||||
| Total | 494,608 | 281,190 | (768,941) | ||||||||||||||
| Investment tax credits - net | |||||||||||||||||
Federal | (6,452) | (10,178) | (4,852) | ||||||||||||||
State | (521) | (1,649) | (395) | ||||||||||||||
Total | (6,973) | (11,827) | (5,247) | ||||||||||||||
| Income taxes | $497,952 | $381,027 | ($690,535) | ||||||||||||||
State income taxes are accrued primarily in the states in which the Registrant Subsidiaries operate, which includes Arkansas, Louisiana, Mississippi, and Texas.
Income taxes for the Registrant Subsidiaries for 2025, 2024, and 2023 consist of the following:
| 2025 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Current | ||||||||||||||||||||||||||||||||||||||
| Federal | ($21,471) | ($104,215) | $49,157 | $18,671 | $4,479 | ($3,190) | ||||||||||||||||||||||||||||||||
| State | (4,595) | (2,779) | 8,905 | 3,169 | 3,442 | (3,115) | ||||||||||||||||||||||||||||||||
| Total | (26,066) | (106,994) | 58,062 | 21,840 | 7,921 | (6,305) | ||||||||||||||||||||||||||||||||
| Deferred and non-current - net | ||||||||||||||||||||||||||||||||||||||
| Federal | 117,798 | 297,466 | 26,320 | (3,398) | 58,464 | 18,485 | ||||||||||||||||||||||||||||||||
| State | 17,379 | 51,897 | 10,991 | (2,387) | (252) | 7,339 | ||||||||||||||||||||||||||||||||
| Total | 135,177 | 349,363 | 37,311 | (5,785) | 58,212 | 25,824 | ||||||||||||||||||||||||||||||||
| Investment tax credits - net | ||||||||||||||||||||||||||||||||||||||
| Federal | (1,231) | (4,556) | (76) | (200) | (767) | 381 | ||||||||||||||||||||||||||||||||
| State | — | — | (196) | — | — | (325) | ||||||||||||||||||||||||||||||||
| Total | (1,231) | (4,556) | (272) | (200) | (767) | 56 | ||||||||||||||||||||||||||||||||
| Income taxes | $107,880 | $237,813 | $95,101 | $15,855 | $65,366 | $19,575 | ||||||||||||||||||||||||||||||||
| 2024 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Current | ||||||||||||||||||||||||||||||||||||||
| Federal | ($10,558) | ($79,519) | $38,680 | ($8,022) | $8,281 | ($5,527) | ||||||||||||||||||||||||||||||||
| State | (2,275) | 1,709 | 2,407 | 5,331 | 5,468 | (396) | ||||||||||||||||||||||||||||||||
| Total | (12,833) | (77,810) | 41,087 | (2,691) | 13,749 | (5,923) | ||||||||||||||||||||||||||||||||
| Deferred and non-current - net | ||||||||||||||||||||||||||||||||||||||
| Federal | 68,988 | 201,737 | 25,316 | 9,297 | 51,588 | 29,470 | ||||||||||||||||||||||||||||||||
| State | 19,649 | 106,098 | 14,292 | (2,916) | 1,114 | 9,939 | ||||||||||||||||||||||||||||||||
| Total | 88,637 | 307,835 | 39,608 | 6,381 | 52,702 | 39,409 | ||||||||||||||||||||||||||||||||
| Investment tax credits - net | ||||||||||||||||||||||||||||||||||||||
| Federal | (1,230) | (4,616) | 3 | (848) | — | (2,716) | ||||||||||||||||||||||||||||||||
| State | — | — | (383) | — | (767) | (1,267) | ||||||||||||||||||||||||||||||||
| Total | (1,230) | (4,616) | (380) | (848) | (767) | (3,983) | ||||||||||||||||||||||||||||||||
| Income taxes | $74,574 | $225,409 | $80,315 | $2,842 | $65,684 | $29,503 | ||||||||||||||||||||||||||||||||
| 2023 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Current | ||||||||||||||||||||||||||||||||||||||
| Federal | $33,100 | ($142,253) | $20,328 | ($99,343) | $2,851 | $337 | ||||||||||||||||||||||||||||||||
| State | (4,201) | (6,397) | 4,142 | (5,854) | 3,719 | (1,570) | ||||||||||||||||||||||||||||||||
| Total | 28,899 | (148,650) | 24,470 | (105,197) | 6,570 | (1,233) | ||||||||||||||||||||||||||||||||
| Deferred and non-current - net | ||||||||||||||||||||||||||||||||||||||
| Federal | (164,493) | (94,167) | 21,244 | (78,442) | 56,496 | 26,528 | ||||||||||||||||||||||||||||||||
| State | 37,615 | 41,716 | 9,446 | (6,302) | 570 | 4,477 | ||||||||||||||||||||||||||||||||
| Total | (126,878) | (52,451) | 30,690 | (84,744) | 57,066 | 31,005 | ||||||||||||||||||||||||||||||||
| Investment tax credits - net | ||||||||||||||||||||||||||||||||||||||
| Federal | (1,231) | (4,680) | (622) | (32) | (764) | 2,482 | ||||||||||||||||||||||||||||||||
| State | — | — | (174) | — | — | (222) | ||||||||||||||||||||||||||||||||
| Total | (1,231) | (4,680) | (796) | (32) | (764) | 2,260 | ||||||||||||||||||||||||||||||||
| Income taxes | ($99,210) | ($205,781) | $54,364 | ($189,973) | $62,872 | $32,032 | ||||||||||||||||||||||||||||||||
State income taxes are accrued primarily based on the retail jurisdiction in which each of the Utility operating companies operates and is subject to retail regulation for ratemaking purposes. Each Utility operating company serves retail customers within a single jurisdiction, which governs the determination of its state income tax cost of service and the related accruals. System Energy’s state income tax accrual pertains solely to Mississippi, the only state in which it operates.
Income taxes paid (received) for Entergy and the Registrant Subsidiaries for 2025 consist of the following:
| 2025 | Entergy | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | |||||||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||||||||
| US Federal (a) | ($519,892) | ($215,224) | ($198,285) | $— | $— | $21,000 | ($133,752) | |||||||||||||||||||||||||||||||||||||
| US Federal - ETAA | — | (25,975) | (146,563) | 82,541 | 7,076 | — | 5,715 | |||||||||||||||||||||||||||||||||||||
| US state | ||||||||||||||||||||||||||||||||||||||||||||
| Arkansas | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Louisiana | 2,726 | — | — | — | 2,550 | — | — | |||||||||||||||||||||||||||||||||||||
| Mississippi | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Texas | 2,077 | — | — | — | — | 2,077 | — | |||||||||||||||||||||||||||||||||||||
| State tax - ETAA | — | (3,712) | 553 | — | 471 | 440 | (3,260) | |||||||||||||||||||||||||||||||||||||
| Other | 18 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Total US state | 4,821 | (3,712) | 553 | — | 3,021 | 2,517 | (3,260) | |||||||||||||||||||||||||||||||||||||
Total income taxes paid (received) | ($515,071) | ($244,911) | ($344,295) | $82,541 | $10,097 | $23,517 | ($131,297) | |||||||||||||||||||||||||||||||||||||
(a)Federal income taxes paid (received) includes the receipt of production tax credit sale proceeds at Entergy of $547 million, including $215 million, $198 million, and $134 million at Entergy Arkansas, Entergy Louisiana, and System Entergy, respectively.
The table above disaggregates income taxes paid (net of refunds) by type, including amounts remitted to U.S. federal and state taxing authorities and amounts paid under the Entergy Tax Allocation Agreement (ETAA). The ETAA governs intercompany settlements of income tax obligations between the Registrant Subsidiaries and Entergy, as if the Registrant Subsidiaries were separate taxpayers on a stand-alone or separate company basis, as applicable. Payments under the ETAA are shown separately to distinguish them from direct remittances to taxing authorities. State income taxes presented reflect amounts attributable to the jurisdiction in which the Registrant Subsidiary has its primary state tax nexus.
Total income taxes for Entergy differ from the amounts computed by applying the statutory income tax rate to income before income taxes. The reasons for the differences for the years 2025, 2024, and 2023 are:
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| (Dollars In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Net income attributable to Entergy Corporation | $1,758,272 | $1,055,590 | $2,356,536 | |||||||||||||||||||||||||||||||||||
| Preferred dividend requirements of subsidiaries and noncontrolling interests | 15,056 | 5,594 | 5,774 | |||||||||||||||||||||||||||||||||||
| Consolidated net income | 1,773,328 | 1,061,184 | 2,362,310 | |||||||||||||||||||||||||||||||||||
| Income taxes | 497,952 | 381,027 | (690,535) | |||||||||||||||||||||||||||||||||||
| Income before income taxes | $2,271,280 | $1,442,211 | $1,671,775 | |||||||||||||||||||||||||||||||||||
| Income taxes computed at Federal Statutory Tax rate | $476,969 | 21% | $302,864 | 21% | $351,073 | 21% | ||||||||||||||||||||||||||||||||
| Increases (reductions) in tax resulting from: | ||||||||||||||||||||||||||||||||||||||
| State income taxes net of federal income tax effect | 92,942 | 4.1% | 81,377 | 5.6% | 70,144 | 4.2% | ||||||||||||||||||||||||||||||||
| Regulatory differences - utility plant items | (30,443) | (1.3%) | (30,288) | (2.1%) | (27,901) | (1.7%) | ||||||||||||||||||||||||||||||||
| Equity component of AFUDC | (37,357) | (1.6%) | (27,343) | (1.9%) | (20,172) | (1.2%) | ||||||||||||||||||||||||||||||||
| Tax credits - amortization of investment tax credits | (8,067) | (0.4%) | (8,808) | (0.6%) | (7,978) | (0.5%) | ||||||||||||||||||||||||||||||||
| Nontaxable or nondeductible items/flow-through | 9,925 | 0.4% | 33 | —% | (1,374) | (0.1%) | ||||||||||||||||||||||||||||||||
| Amortization of deficient/(excess) ADIT (a) | (25,947) | (1.1%) | 19,169 | 1.3% | 9,102 | 0.5% | ||||||||||||||||||||||||||||||||
| IRS audit resolution (b) | — | —% | — | —% | (842,769) | (50.4%) | ||||||||||||||||||||||||||||||||
| Reversal of regulatory liability (c) | — | —% | — | —% | (105,649) | (6.3%) | ||||||||||||||||||||||||||||||||
| Entergy Louisiana securitization (d) | — | —% | — | —% | (129,034) | (7.7%) | ||||||||||||||||||||||||||||||||
| State audit resolution (e) | — | —% | (9,057) | (0.6%) | — | —% | ||||||||||||||||||||||||||||||||
| Enactment of new tax laws - state rate change (a) | — | —% | 28,636 | 2.0% | — | —% | ||||||||||||||||||||||||||||||||
| Changes in unrecognized tax benefits | 12,434 | 0.5% | 21,487 | 1.5% | 18,884 | 1.1% | ||||||||||||||||||||||||||||||||
| Changes in valuation allowances | 4,134 | 0.2% | (780) | (0.1%) | (8,697) | (0.5%) | ||||||||||||||||||||||||||||||||
| Other - net | 3,362 | 0.1% | 3,737 | 0.3% | 3,836 | 0.2% | ||||||||||||||||||||||||||||||||
| Total income taxes / Effective Tax Rate | $497,952 | 21.9% | $381,027 | 26.4% | ($690,535) | (41.3%) | ||||||||||||||||||||||||||||||||
(a)See “Other Tax Matters - Arkansas and Louisiana Corporate Income Tax Rate Changes” below for details.
(b)See “Income Tax Audits - 2016-2018 IRS Audit” below for discussion of the resolution of the 2016-2018 IRS audit in 2023.
(c)See Note 2 to the financial statements for discussion of Entergy Louisiana’s reversal of a regulatory liability, primarily associated with the Hurricane Isaac securitization, initially recognized in 2017 as a result of the Tax Cuts and Jobs Act.
(d)See “Other Tax Matters – Act 293 Securitizations” below for discussion of the Entergy Louisiana March 2023 storm cost securitizations.
(e)See “Income Tax Audits - State Income Tax Audits” below for discussion of the resolution of the 2014-2018 Arkansas Department of Finance and Administration examination in 2024.
Total income taxes for the Registrant Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before taxes. The reasons for the differences for each Registrant Subsidiary for the years 2025, 2024, and 2023 are:
Entergy Arkansas
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| (Dollars In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Earnings applicable to member’s equity | $440,532 | $324,766 | $402,081 | |||||||||||||||||||||||||||||||||||
| Net loss attributable to noncontrolling interest | (3,079) | (5,300) | (5,231) | |||||||||||||||||||||||||||||||||||
| Net income | 437,453 | 319,466 | 396,850 | |||||||||||||||||||||||||||||||||||
| Income taxes | 107,880 | 74,574 | (99,210) | |||||||||||||||||||||||||||||||||||
| Income before income taxes | $545,333 | $394,040 | $297,640 | |||||||||||||||||||||||||||||||||||
| Income taxes computed at Federal Statutory Tax rate statutory rate | $114,520 | 21% | $82,748 | 21% | $62,504 | 21% | ||||||||||||||||||||||||||||||||
| Increases (reductions) in tax resulting from: | ||||||||||||||||||||||||||||||||||||||
| State income taxes net of federal income tax effect | 19,388 | 3.6% | 13,940 | 3.5% | 13,291 | 4.5% | ||||||||||||||||||||||||||||||||
| Regulatory differences - utility plant items | (8,085) | (1.5%) | (9,885) | (2.5%) | (8,812) | (3.0%) | ||||||||||||||||||||||||||||||||
| Equity component of AFUDC | (4,934) | (0.9%) | (6,032) | (1.5%) | (4,093) | (1.4%) | ||||||||||||||||||||||||||||||||
Tax credits - amortization of investment tax credits | (1,201) | (0.2%) | (1,201) | (0.3%) | (1,201) | (0.4%) | ||||||||||||||||||||||||||||||||
Nontaxable or nondeductible items/flow-through | (1,866) | (0.3%) | 214 | 0.1% | 1,105 | 0.4% | ||||||||||||||||||||||||||||||||
| Amortization of deficient/(excess) ADIT (a) | (11,276) | (2.1%) | 10,193 | 2.6% | (6,095) | (2.0%) | ||||||||||||||||||||||||||||||||
| IRS audit resolution (b) | — | —% | — | —% | (159,588) | (53.6%) | ||||||||||||||||||||||||||||||||
| State audit resolution (e) | — | —% | (18,276) | (4.6%) | — | —% | ||||||||||||||||||||||||||||||||
Changes in unrecognized tax benefits | (1,182) | (0.2%) | 1,800 | 0.5% | 2,600 | 0.9% | ||||||||||||||||||||||||||||||||
Changes in valuation allowances | 1,462 | 0.3% | — | —% | — | —% | ||||||||||||||||||||||||||||||||
| Other - net | 1,054 | 0.2% | 1,073 | 0.3% | 1,079 | 0.4% | ||||||||||||||||||||||||||||||||
| Total income taxes / Effective Tax Rate | $107,880 | 19.8% | $74,574 | 18.9% | ($99,210) | (33.3%) | ||||||||||||||||||||||||||||||||
Entergy Louisiana
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| (Dollars In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Earnings applicable to member’s equity | $1,109,948 | $887,645 | $1,270,382 | |||||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | 2,952 | 3,126 | 2,988 | |||||||||||||||||||||||||||||||||||
| Net income | 1,112,900 | 890,771 | 1,273,370 | |||||||||||||||||||||||||||||||||||
| Income taxes | 237,813 | 225,409 | (205,781) | |||||||||||||||||||||||||||||||||||
| Income before income taxes | $1,350,713 | $1,116,180 | $1,067,589 | |||||||||||||||||||||||||||||||||||
| Income taxes computed at Federal Statutory Tax rate statutory rate | $283,650 | 21% | $234,398 | 21% | $224,194 | 21% | ||||||||||||||||||||||||||||||||
| Increases (reductions) in tax resulting from: | ||||||||||||||||||||||||||||||||||||||
| State income taxes net of federal income tax effect | 49,965 | 3.7% | 50,760 | 4.5% | 51,899 | 4.9% | ||||||||||||||||||||||||||||||||
| Regulatory differences - utility plant items | (10,069) | (0.7%) | (9,988) | (0.9%) | (5,535) | (0.5%) | ||||||||||||||||||||||||||||||||
| Equity component of AFUDC | (11,327) | (0.8%) | (7,513) | (0.7%) | (6,754) | (0.6%) | ||||||||||||||||||||||||||||||||
Tax credits - amortization of investment tax credits | (4,502) | (0.3%) | (4,563) | (0.4%) | (4,625) | (0.4%) | ||||||||||||||||||||||||||||||||
Nontaxable or nondeductible items/flow-through | (718) | (0.1%) | (3,244) | (0.3%) | 126 | —% | ||||||||||||||||||||||||||||||||
| Amortization of deficient/(excess) ADIT (a) | (13,327) | (1.0%) | 9,305 | 0.8% | 14,032 | 1.3% | ||||||||||||||||||||||||||||||||
| IRS audit resolution (b) | — | —% | — | —% | (179,111) | (16.8%) | ||||||||||||||||||||||||||||||||
| Reversal of regulatory liability (c) | — | —% | — | —% | (105,649) | (9.9%) | ||||||||||||||||||||||||||||||||
| Entergy Louisiana securitization (d) | — | —% | — | —% | (133,443) | (12.5%) | ||||||||||||||||||||||||||||||||
| Enactment of new tax laws - state rate change (a) | — | —% | 16,307 | 1.5% | — | —% | ||||||||||||||||||||||||||||||||
| Non-taxable dividend income | (61,352) | (4.5%) | (64,982) | (5.8%) | (62,116) | (5.8%) | ||||||||||||||||||||||||||||||||
Changes in unrecognized tax benefits | 4,307 | 0.3% | 3,400 | 0.3% | (400) | —% | ||||||||||||||||||||||||||||||||
Changes in valuation allowances | 5 | —% | — | —% | — | —% | ||||||||||||||||||||||||||||||||
| Other - net | 1,181 | 0.1% | 1,529 | 0.1% | 1,601 | 0.1% | ||||||||||||||||||||||||||||||||
| Total income taxes / Effective Tax Rate | $237,813 | 17.6% | $225,409 | 20.2% | ($205,781) | (19.3%) | ||||||||||||||||||||||||||||||||
Entergy Mississippi
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| (Dollars In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Earnings applicable to member’s equity | $311,864 | $255,958 | $192,271 | |||||||||||||||||||||||||||||||||||
| Net loss attributable to noncontrolling interest | (3,136) | (10,551) | (10,302) | |||||||||||||||||||||||||||||||||||
| Net income | 308,728 | 245,407 | 181,969 | |||||||||||||||||||||||||||||||||||
| Income taxes | 95,101 | 80,315 | 54,364 | |||||||||||||||||||||||||||||||||||
| Income before income taxes | $403,829 | $325,722 | $236,333 | |||||||||||||||||||||||||||||||||||
| Income taxes computed at Federal Statutory Tax rate statutory rate | $84,804 | 21% | $68,402 | 21% | $49,630 | 21% | ||||||||||||||||||||||||||||||||
| Increases (reductions) in tax resulting from: | ||||||||||||||||||||||||||||||||||||||
| State income taxes net of federal income tax effect | 15,876 | 3.9% | 13,210 | 4.1% | 11,133 | 4.7% | ||||||||||||||||||||||||||||||||
| Regulatory differences - utility plant items | (5,400) | (1.3%) | (3,572) | (1.1%) | (5,290) | (2.2%) | ||||||||||||||||||||||||||||||||
| Equity component of AFUDC | (1,984) | (0.5%) | (1,910) | (0.6%) | (1,796) | (0.8%) | ||||||||||||||||||||||||||||||||
Tax credits - amortization of investment tax credits | (228) | (0.1%) | (267) | (0.1%) | (223) | (0.1%) | ||||||||||||||||||||||||||||||||
Nontaxable or nondeductible items/flow-through | 1,581 | 0.4% | 2,987 | 0.9% | 3,534 | 1.5% | ||||||||||||||||||||||||||||||||
| IRS audit resolution (b) | — | —% | — | —% | (3,291) | (1.4%) | ||||||||||||||||||||||||||||||||
Changes in unrecognized tax benefits | 93 | —% | 1,100 | 0.3% | 300 | 0.1% | ||||||||||||||||||||||||||||||||
| Other - net | 359 | 0.1% | 365 | 0.1% | 367 | 0.2% | ||||||||||||||||||||||||||||||||
| Total income taxes / Effective Tax Rate | $95,101 | 23.5% | $80,315 | 24.7% | $54,364 | 23.0% | ||||||||||||||||||||||||||||||||
Entergy New Orleans
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| (Dollars In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Net income | $50,411 | $15,847 | $228,938 | |||||||||||||||||||||||||||||||||||
| Income taxes | 15,855 | 2,842 | (189,973) | |||||||||||||||||||||||||||||||||||
| Income before income taxes | $66,266 | $18,689 | $38,965 | |||||||||||||||||||||||||||||||||||
| Income taxes computed at Federal Statutory Tax rate statutory rate | $13,916 | 21% | $3,925 | 21% | $8,183 | 21% | ||||||||||||||||||||||||||||||||
| Increases (reductions) in tax resulting from: | ||||||||||||||||||||||||||||||||||||||
| State income taxes net of federal income tax effect | 3,985 | 6.0% | 1,248 | 6.7% | 1,907 | 4.9% | ||||||||||||||||||||||||||||||||
| Regulatory differences - utility plant items | (131) | (0.2%) | (830) | (4.4%) | (1,353) | (3.5%) | ||||||||||||||||||||||||||||||||
| Equity component of AFUDC | (390) | (0.6%) | (445) | (2.4%) | (309) | (0.8%) | ||||||||||||||||||||||||||||||||
Tax credits - amortization of investment tax credits | (97) | (0.1%) | (839) | (4.5%) | (25) | (0.1%) | ||||||||||||||||||||||||||||||||
Nontaxable or nondeductible items/flow-through | (1,138) | (1.7%) | (338) | (1.8%) | (1,913) | (4.9%) | ||||||||||||||||||||||||||||||||
| Amortization of deficient/(excess) ADIT (a) | (1,344) | (2.0%) | (332) | (1.8%) | 1,147 | 2.9% | ||||||||||||||||||||||||||||||||
| IRS audit resolution (b) | — | —% | — | —% | (198,424) | (509.2%) | ||||||||||||||||||||||||||||||||
| Enactment of new tax laws - state rate change (a) | — | —% | 242 | 1.3% | — | —% | ||||||||||||||||||||||||||||||||
Changes in unrecognized tax benefits | 847 | 1.3% | — | —% | 600 | 1.5% | ||||||||||||||||||||||||||||||||
| Other - net | 207 | 0.3% | 211 | 1.1% | 214 | 0.5% | ||||||||||||||||||||||||||||||||
| Total income taxes / Effective Tax Rate | $15,855 | 23.9% | $2,842 | 15.2% | ($189,973) | (487.5%) | ||||||||||||||||||||||||||||||||
Entergy Texas
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| (Dollars In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Earnings applicable to common stock | $331,999 | $291,550 | $289,201 | |||||||||||||||||||||||||||||||||||
| Preferred dividend requirements | 2,072 | 2,072 | 2,072 | |||||||||||||||||||||||||||||||||||
| Net income | 334,071 | 293,622 | 291,273 | |||||||||||||||||||||||||||||||||||
| Income taxes | 65,366 | 65,684 | 62,872 | |||||||||||||||||||||||||||||||||||
| Income before income taxes | $399,437 | $359,306 | $354,145 | |||||||||||||||||||||||||||||||||||
| Income taxes computed at Federal Statutory Tax rate statutory rate | $83,882 | 21% | $75,454 | 21% | $74,370 | 21% | ||||||||||||||||||||||||||||||||
| Increases (reductions) in tax resulting from: | ||||||||||||||||||||||||||||||||||||||
| State income taxes net of federal income tax effect | 2,731 | 0.7% | 5,164 | 1.4% | 2,574 | 0.7% | ||||||||||||||||||||||||||||||||
| Regulatory differences - utility plant items | (3,427) | (0.9%) | (4,537) | (1.3%) | (6,394) | (1.8%) | ||||||||||||||||||||||||||||||||
| Equity component of AFUDC | (17,172) | (4.3%) | (10,045) | (2.8%) | (5,920) | (1.7%) | ||||||||||||||||||||||||||||||||
Tax credits - amortization of investment tax credits | (748) | (0.2%) | (748) | (0.2%) | (748) | (0.2%) | ||||||||||||||||||||||||||||||||
Nontaxable or nondeductible items/flow-through | (149) | —% | (760) | (0.2%) | 1,493 | 0.4% | ||||||||||||||||||||||||||||||||
| Amortization of deficient ADIT (a) | —% | 2 | —% | 17 | —% | |||||||||||||||||||||||||||||||||
| IRS audit resolution (b) | —% | — | —% | (3,112) | (0.9%) | |||||||||||||||||||||||||||||||||
Changes in unrecognized tax benefits | (122) | —% | 777 | 0.2% | 211 | 0.1% | ||||||||||||||||||||||||||||||||
| Other - net | 371 | 0.1% | 377 | 0.1% | 381 | 0.1% | ||||||||||||||||||||||||||||||||
| Total income taxes / Effective Tax Rate | $65,366 | 16.4% | $65,684 | 18.3% | $62,872 | 17.8% | ||||||||||||||||||||||||||||||||
System Energy
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| (Dollars In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Net income | $88,095 | $103,500 | $108,772 | |||||||||||||||||||||||||||||||||||
| Income taxes | 19,575 | 29,503 | 32,032 | |||||||||||||||||||||||||||||||||||
| Income before income taxes | $107,670 | $133,003 | $140,804 | |||||||||||||||||||||||||||||||||||
| Income taxes computed at Federal Statutory Tax rate statutory rate | $22,611 | 21% | $27,931 | 21% | $29,569 | 21% | ||||||||||||||||||||||||||||||||
| Increases (reductions) in tax resulting from: | ||||||||||||||||||||||||||||||||||||||
| State income taxes net of federal income tax effect | 4,893 | 4.5% | 4,936 | 3.7% | 5,798 | 4.1% | ||||||||||||||||||||||||||||||||
| Regulatory differences - utility plant items | (3,330) | (3.1%) | (1,475) | (1.1%) | (517) | (0.4%) | ||||||||||||||||||||||||||||||||
| Equity component of AFUDC | (1,549) | (1.4%) | (1,398) | (1.1%) | (1,301) | (0.9%) | ||||||||||||||||||||||||||||||||
| Tax credits - amortization of investment tax credits | (1,155) | (1.1%) | (1,155) | (0.9%) | (1,155) | (0.8%) | ||||||||||||||||||||||||||||||||
| Nontaxable or nondeductible items/flow-through | (1,057) | (1.0%) | (538) | (0.4%) | (191) | (0.1%) | ||||||||||||||||||||||||||||||||
| IRS audit resolution (b) | — | —% | — | —% | (1,575) | (1.1%) | ||||||||||||||||||||||||||||||||
| Changes in unrecognized tax benefits | (1,036) | (1.0%) | 1,000 | 0.8% | 1,200 | 0.9% | ||||||||||||||||||||||||||||||||
| Other - net | 198 | 0.2% | 202 | 0.2% | 204 | 0.1% | ||||||||||||||||||||||||||||||||
| Total income taxes / Effective Tax Rate | $19,575 | 18.2% | $29,503 | 22.2% | $32,032 | 22.7% | ||||||||||||||||||||||||||||||||
(a)See “Other Tax Matters - Arkansas and Louisiana Corporate Income Tax Rate Changes” below for details.
(b)See “Income Tax Audits - 2016-2018 IRS Audit” below for discussion of the resolution of the 2016-2018 IRS audit in 2023.
(c)See Note 2 to the financial statements for discussion of Entergy Louisiana’s reversal of a regulatory liability, primarily associated with the Hurricane Isaac securitization, recognized in 2017 as a result of the Tax Cuts and Jobs Act.
(d)See “Other Tax Matters - Act 293 Securitizations” below for discussion of the Entergy Louisiana March 2023 storm cost securitizations.
(e)See “Income Tax Audits - State Income Tax Audits” below for discussion of the resolution of the 2014-2018 Arkansas Department of Finance and Administration examination in 2024.
Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2025 and 2024 are as follows:
| 2025 | 2024 | ||||||||||
| (In Thousands) | |||||||||||
| Deferred tax liabilities: | |||||||||||
| Plant basis differences - net | ($7,183,430) | ($6,451,189) | |||||||||
| Regulatory assets | (1,030,792) | (1,003,045) | |||||||||
| Nuclear decommissioning trusts/receivables | (601,444) | (563,423) | |||||||||
| Pension, net regulatory asset | (323,779) | (303,007) | |||||||||
| Combined unitary state taxes | (2,911) | (3,600) | |||||||||
| Power purchase agreements | 13,270 | (89,614) | |||||||||
| Deferred fuel | (20,652) | (23,305) | |||||||||
| Other | (161,274) | (206,648) | |||||||||
| Total | (9,311,012) | (8,643,831) | |||||||||
| Deferred tax assets: | |||||||||||
| Regulatory liabilities | 1,325,440 | 1,394,937 | |||||||||
| Nuclear and other decommissioning liabilities | 169,880 | 164,685 | |||||||||
| Pension and other postretirement benefits | 27,723 | 22,646 | |||||||||
| Compensation | 87,837 | 79,580 | |||||||||
| Accumulated deferred investment tax credit | 49,248 | 52,709 | |||||||||
| Provision for allowances and contingencies | 191,295 | 141,769 | |||||||||
| Unbilled/deferred revenues | (3,586) | (9,960) | |||||||||
| Net operating loss carryforwards | 2,761,672 | 2,672,993 | |||||||||
| Capital losses and miscellaneous tax credits | 145,625 | 111,325 | |||||||||
| Valuation allowance | (335,105) | (338,508) | |||||||||
| Other | 167,209 | 212,563 | |||||||||
| Total | 4,587,238 | 4,504,739 | |||||||||
| Non-current accrued taxes (including unrecognized tax benefits) | (853,367) | (309,669) | |||||||||
| Accumulated deferred income taxes and taxes accrued | ($5,577,141) | ($4,448,761) | |||||||||
Entergy’s estimated tax attributes carryovers and their expiration dates as of December 31, 2025 are as follows:
| Carryover Description | Carryover Amount | Year(s) of expiration | ||||||||||||
| Federal net operating losses before 1/1/2018 | $4.4 billion | 2028-2037 | ||||||||||||
| Federal net operating losses - 1/1/2018 forward | $14.4 billion | N/A | ||||||||||||
| State net operating losses | $4.3 billion | 2028-2045 | ||||||||||||
| State net operating losses with no expiration | $9.0 billion | N/A | ||||||||||||
| Other federal and state carryforwards | $128.5 million | 2026-2030 | ||||||||||||
| Miscellaneous federal and state credits | $413.3 million | 2026-2045 | ||||||||||||
As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers, tax credit carryovers, and other tax attributes generated and reflected on income tax returns. Entergy evaluates the available positive and negative evidence to estimate whether sufficient future taxable income of the appropriate character will be generated to realize the benefits of existing deferred tax assets. When the evaluation indicates that Entergy will not be able to realize the existing benefits, a valuation allowance is recorded to reduce deferred tax assets to the realizable amount.
Because it is more likely than not that the benefits from certain state net operating losses and other federal and state deferred tax assets will not be utilized, valuation allowances totaling $335 million as of December 31, 2025 and $339 million as of December 31, 2024 have been provided on the deferred tax assets related to federal and state jurisdictions in which Entergy does not currently expect to be able to utilize certain separate company tax return attributes, preventing realization of such deferred tax assets. Certain accelerated tax deductions which generated taxable losses in various taxing jurisdictions, and which have a limited term carryover period, have resulted in the impairment of the realizability of such carryovers and are reflected in the valuation allowance disclosed above.
Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2025 and 2024 are as follows:
| 2025 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Deferred tax liabilities: | ||||||||||||||||||||||||||||||||||||||
| Plant basis differences - net | ($1,752,176) | ($2,993,462) | ($927,853) | ($243,442) | ($788,106) | ($473,895) | ||||||||||||||||||||||||||||||||
| Regulatory assets | (237,989) | (469,902) | (39,316) | (53,375) | (111,154) | (119,157) | ||||||||||||||||||||||||||||||||
| Nuclear decommissioning trusts/receivables | (223,747) | (202,364) | — | — | — | (175,341) | ||||||||||||||||||||||||||||||||
| Pension, net regulatory asset | (102,847) | (87,917) | (26,416) | (8,725) | (15,642) | — | ||||||||||||||||||||||||||||||||
| Power purchase agreements | 13,633 | (76,837) | 1,140 | (11,226) | (4,578) | — | ||||||||||||||||||||||||||||||||
| Deferred fuel | (6,775) | (9,718) | (3,186) | (1) | (943) | (17) | ||||||||||||||||||||||||||||||||
| Other | (20,874) | (88,305) | (4,763) | (2,208) | (6,158) | (10,214) | ||||||||||||||||||||||||||||||||
| Total | (2,330,775) | (3,928,505) | (1,000,394) | (318,977) | (926,581) | (778,624) | ||||||||||||||||||||||||||||||||
| Deferred tax assets: | ||||||||||||||||||||||||||||||||||||||
| Regulatory liabilities | 348,063 | 595,662 | 51,201 | 70,190 | 35,726 | 226,660 | ||||||||||||||||||||||||||||||||
| Nuclear and other decommissioning liabilities | 138,516 | 14,616 | (155) | (407) | (449) | 17,220 | ||||||||||||||||||||||||||||||||
| Pension and other postretirement benefits | (31,745) | 41,555 | (7,377) | (15,975) | (24,479) | (27,660) | ||||||||||||||||||||||||||||||||
| Compensation | 4,418 | 5,764 | 3,196 | 1,077 | 2,531 | 139 | ||||||||||||||||||||||||||||||||
| Accumulated deferred investment tax credit | 6,067 | 23,882 | 3,291 | 3,909 | 1,358 | 10,740 | ||||||||||||||||||||||||||||||||
Valuation allowance | (1,727) | (5) | — | — | — | — | ||||||||||||||||||||||||||||||||
| Provision for allowances and contingencies | 49,359 | 70,167 | 32,112 | 36,608 | 16,701 | 225 | ||||||||||||||||||||||||||||||||
| Unbilled/deferred revenues | 5,490 | (18,816) | 897 | (129) | 8,561 | — | ||||||||||||||||||||||||||||||||
| Net operating loss carryforwards | 169,743 | 360,028 | — | 6,803 | 54 | 84,302 | ||||||||||||||||||||||||||||||||
| Capital losses and miscellaneous tax credits | 45,982 | 18,554 | 8,795 | 16,693 | 1,125 | 11,245 | ||||||||||||||||||||||||||||||||
| Other | 10,373 | 40,459 | (1,193) | 612 | 404 | 36 | ||||||||||||||||||||||||||||||||
| Total | 744,539 | 1,151,866 | 90,767 | 119,381 | 41,532 | 322,907 | ||||||||||||||||||||||||||||||||
| Non-current accrued taxes (including unrecognized tax benefits) | (260,477) | (316,579) | (17,107) | (1,749) | (62,018) | (169,448) | ||||||||||||||||||||||||||||||||
| Accumulated deferred income taxes and taxes accrued | ($1,846,713) | ($3,093,218) | ($926,734) | ($201,345) | ($947,067) | ($625,165) | ||||||||||||||||||||||||||||||||
| 2024 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Deferred tax liabilities: | ||||||||||||||||||||||||||||||||||||||
| Plant basis differences - net | ($1,530,196) | ($2,729,299) | ($849,623) | ($272,182) | ($727,242) | ($466,361) | ||||||||||||||||||||||||||||||||
| Regulatory assets | (219,773) | (497,177) | (37,374) | (72,389) | (100,959) | (75,606) | ||||||||||||||||||||||||||||||||
| Nuclear decommissioning trusts/receivables | (185,725) | (202,364) | — | — | — | (175,341) | ||||||||||||||||||||||||||||||||
| Pension, net regulatory asset | (101,887) | (84,732) | (26,064) | (9,687) | (16,569) | — | ||||||||||||||||||||||||||||||||
| Power purchase agreements | 11,993 | (97,846) | 1,140 | (12,385) | (5,148) | — | ||||||||||||||||||||||||||||||||
| Deferred fuel | — | (4,785) | (17,234) | (1,247) | — | (78) | ||||||||||||||||||||||||||||||||
| Other | (24,430) | (106,590) | (5,231) | (5,133) | (4,512) | (13,572) | ||||||||||||||||||||||||||||||||
| Total | (2,050,018) | (3,722,793) | (934,386) | (373,023) | (854,430) | (730,958) | ||||||||||||||||||||||||||||||||
| Deferred tax assets: | ||||||||||||||||||||||||||||||||||||||
| Regulatory liabilities | 310,621 | 678,086 | 53,046 | 89,385 | 37,325 | 229,065 | ||||||||||||||||||||||||||||||||
| Nuclear and other decommissioning liabilities | 127,933 | 18,649 | — | (407) | 97 | 17,956 | ||||||||||||||||||||||||||||||||
| Pension and other postretirement benefits | (29,923) | 39,379 | (8,989) | (19,443) | (23,403) | (24,642) | ||||||||||||||||||||||||||||||||
| Compensation | 4,851 | 7,119 | 3,277 | 1,394 | 2,596 | 515 | ||||||||||||||||||||||||||||||||
| Accumulated deferred investment tax credit | 6,360 | 26,549 | 3,355 | 4,205 | 1,515 | 10,724 | ||||||||||||||||||||||||||||||||
| Provision for allowances and contingencies | 31,686 | 59,448 | 11,361 | 23,998 | 4,358 | 225 | ||||||||||||||||||||||||||||||||
| Unbilled/deferred revenues | 3,546 | (24,017) | 1,274 | 715 | 7,925 | — | ||||||||||||||||||||||||||||||||
| Net operating loss carryforwards | 126,255 | 336,128 | 305 | 30,740 | 50 | 69,611 | ||||||||||||||||||||||||||||||||
| Capital losses and miscellaneous tax credits | 14,489 | 17,029 | 8,206 | 16,220 | 1,273 | 10,788 | ||||||||||||||||||||||||||||||||
| Other | 11,608 | 54,207 | 1,096 | 1,692 | 1,189 | — | ||||||||||||||||||||||||||||||||
| Total | 607,426 | 1,212,577 | 72,931 | 148,499 | 32,925 | 314,242 | ||||||||||||||||||||||||||||||||
| Non-current accrued taxes (including unrecognized tax benefits) | (46,577) | 32,262 | (8,661) | 22,983 | (47,344) | (35,114) | ||||||||||||||||||||||||||||||||
| Accumulated deferred income taxes and taxes accrued | ($1,489,169) | ($2,477,954) | ($870,116) | ($201,541) | ($868,849) | ($451,830) | ||||||||||||||||||||||||||||||||
The Registrant Subsidiaries’ estimated tax attributes carryovers and their expiration dates as of December 31, 2025 are as follows:
| Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | |||||||||||||||||||||||||||||||||
| Federal net operating losses before 1/1/2018 | $— million | $812.8 million | $— million | $— million | $— million | $— million | ||||||||||||||||||||||||||||||||
| Year(s) of expiration | N/A | 2035-2037 | N/A | 2037 | N/A | N/A | ||||||||||||||||||||||||||||||||
| Federal net operating losses - 1/1/2018 forward | $802.9 million | $2.2 billion | $— million | $— million | $1.4 billion | $357.1 million | ||||||||||||||||||||||||||||||||
| Year(s) of expiration | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||
| State net operating losses | $628.1 million | $6 billion | $— million | $181.3 million | $1.1 million | $314.2 million | ||||||||||||||||||||||||||||||||
| Year(s) of expiration | 2028-2032 | N/A | N/A | N/A | 2028 | 2042-2045 | ||||||||||||||||||||||||||||||||
| Misc. federal credits | $16.1 million | $24.5 million | $6.2 million | $17.4 million | $1.1 million | $6.3 million | ||||||||||||||||||||||||||||||||
| Year(s) of expiration | 2038-2045 | 2035-2045 | 2038-2045 | 2037-2045 | 2039-2045 | 2029-2045 | ||||||||||||||||||||||||||||||||
| State credits | $— million | $1.1 million | $8.6 million | $— million | $0.6 million | $19 million | ||||||||||||||||||||||||||||||||
| Year(s) of expiration | N/A | N/A | 2026-2028 | N/A | 2027-2033 | 2026-2028 | ||||||||||||||||||||||||||||||||
Unrecognized tax benefits
Accounting standards establish a “more-likely-than-not” recognition threshold that must be met before a tax benefit can be recognized in the financial statements. If a tax deduction is taken on a tax return but does not meet the more-likely-than-not recognition threshold, an increase in income tax liability, above what is payable on the tax return, is required to be recorded. A reconciliation of Entergy’s beginning and ending amount of unrecognized tax benefits is as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| (In Thousands) | |||||||||||||||||
| Gross balance at January 1 | $2,354,867 | $2,439,910 | $6,393,599 | ||||||||||||||
| Additions based on tax positions related to the current year (a) | 272,758 | 12,731 | 332,884 | ||||||||||||||
| Additions for tax positions of prior years (a) | 590,465 | 21,149 | 194,894 | ||||||||||||||
| Reductions for tax positions of prior years (b) | (23,168) | (85,715) | (1,300,381) | ||||||||||||||
| Settlements (b) | — | (33,208) | (3,181,086) | ||||||||||||||
| Gross balance at December 31 | 3,194,922 | 2,354,867 | 2,439,910 | ||||||||||||||
| Offsets to gross unrecognized tax benefits: | |||||||||||||||||
| Loss and tax credit carryovers | (2,332,640) | (2,079,778) | (2,160,484) | ||||||||||||||
| Cash paid to taxing authorities | (54,000) | (27,000) | — | ||||||||||||||
| Unrecognized tax benefits net of unused tax attributes and payments (c) | $808,282 | $248,089 | $279,426 | ||||||||||||||
(a)Amounts in 2025 are primarily related to production tax credits generated in 2024 and 2025. See “Other Tax Matters - Inflation Reduction Act of 2022” below.
(b)Amounts in 2023 are primarily related to the resolution of the 2016-2018 IRS audit as discussed in “Income Tax Audits - 2016-2018 IRS Audit” below. Amounts in 2024 are primarily related to the resolution of 2014-2018 Arkansas tax examination as discussed in “Income Tax Audits - State Income Tax Audits” below.
(c)Potential tax liability above what is payable on tax returns.
The balances of unrecognized tax benefits include $2,781 million, $1,900 million, and $1,899 million as of December 31, 2025, 2024, and 2023, respectively, which, if recognized, would lower the effective income tax rates. Because of the effect of deferred tax accounting, the remaining balances of unrecognized tax benefits of $414 million, $455 million, and $541 million as of December 31, 2025, 2024, and 2023, respectively, if disallowed, would not affect the annual effective income tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.
Entergy accrues interest expense, if any, related to unrecognized tax benefits in income tax expense. Entergy’s December 31, 2025, 2024, and 2023 accrued balance for the possible payment of interest is approximately $42 million, $32 million, and $39 million, respectively. Interest (net-of-tax) of $10 million, ($7) million, and ($11) million was recorded in 2025, 2024, and 2023, respectively.
A reconciliation of the Registrant Subsidiaries’ beginning and ending amount of unrecognized tax benefits for 2025, 2024, and 2023 is as follows:
| 2025 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Gross balance at January 1, 2025 | $45,413 | $867,116 | $5,989 | $19,508 | $384,333 | $16,415 | ||||||||||||||||||||||||||||||||
| Additions based on tax positions related to the current year (a) | 112,354 | 75,825 | 1,768 | 871 | 1,934 | 74,391 | ||||||||||||||||||||||||||||||||
| Additions for tax positions of prior years (a) | 221,636 | 210,263 | 709 | 22 | 4,048 | 142,840 | ||||||||||||||||||||||||||||||||
| Reductions for tax positions of prior years | (1,152) | (6,167) | (555) | (847) | (887) | (165) | ||||||||||||||||||||||||||||||||
| Gross balance at December 31, 2025 | 378,251 | 1,147,037 | 7,911 | 19,554 | 389,428 | 233,481 | ||||||||||||||||||||||||||||||||
| Offsets to gross unrecognized tax benefits: | ||||||||||||||||||||||||||||||||||||||
| Loss and tax credit carryovers | (142,860) | (721,552) | (6,000) | (4,744) | (285,936) | (92,561) | ||||||||||||||||||||||||||||||||
| Unrecognized tax benefits net of unused tax attributes | $235,391 | $425,485 | $1,911 | $14,810 | $103,492 | $140,920 | ||||||||||||||||||||||||||||||||
| 2024 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Gross balance at January 1, 2024 | $69,197 | $864,043 | $5,653 | $19,331 | $415,205 | $14,301 | ||||||||||||||||||||||||||||||||
| Additions based on tax positions related to the current year | 2,732 | 1,921 | 237 | 163 | 378 | 833 | ||||||||||||||||||||||||||||||||
| Additions for tax positions of prior years | 25,784 | 10,357 | 536 | 153 | 560 | 1,281 | ||||||||||||||||||||||||||||||||
| Reductions for tax positions of prior years | (52,300) | (9,205) | (437) | (139) | (31,810) | — | ||||||||||||||||||||||||||||||||
| Gross balance at December 31, 2024 | 45,413 | 867,116 | 5,989 | 19,508 | 384,333 | 16,415 | ||||||||||||||||||||||||||||||||
| Offsets to gross unrecognized tax benefits: | ||||||||||||||||||||||||||||||||||||||
| Loss and tax credit carryovers | (30,333) | (753,101) | (4,997) | (11,639) | (314,446) | (16,415) | ||||||||||||||||||||||||||||||||
| Unrecognized tax benefits net of unused tax attributes | $15,080 | $114,015 | $992 | $7,869 | $69,887 | $— | ||||||||||||||||||||||||||||||||
| 2023 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Gross balance at January 1, 2023 | $1,452,819 | $1,350,836 | $547,548 | $638,726 | $389,366 | $23,702 | ||||||||||||||||||||||||||||||||
| Additions based on tax positions related to the current year (b) | 2,249 | 332,320 | 209 | 78 | 196 | 752 | ||||||||||||||||||||||||||||||||
| Additions for tax positions of prior years | — | — | — | — | 94,793 | — | ||||||||||||||||||||||||||||||||
| Reductions for tax positions of prior years (c) | (148,558) | (458,072) | (16,853) | (191,336) | (67,156) | (9,532) | ||||||||||||||||||||||||||||||||
| Settlements (c) | (1,237,313) | (361,041) | (525,251) | (428,137) | (1,994) | (621) | ||||||||||||||||||||||||||||||||
| Gross balance at December 31, 2023 | 69,197 | 864,043 | 5,653 | 19,331 | 415,205 | 14,301 | ||||||||||||||||||||||||||||||||
| Offsets to gross unrecognized tax benefits: | ||||||||||||||||||||||||||||||||||||||
| Loss and tax credit carryovers | (34,683) | (735,612) | (3,778) | (11,721) | (381,561) | (14,301) | ||||||||||||||||||||||||||||||||
| Unrecognized tax benefits net of unused tax attributes | $34,514 | $128,431 | $1,875 | $7,610 | $33,644 | $— | ||||||||||||||||||||||||||||||||
(a)Amounts in 2025 are primarily related to production tax credits generated in 2024 and 2025. See “Other Tax Matters - Inflation Reduction Act of 2022” below.
(b)The primary additions for Entergy Louisiana in 2023 are related to the Entergy Louisiana storm cost securitizations as discussed in “Other Tax Matters - Act 293 Securitizations” below.
(c)Amounts in 2023 are primarily related to the resolution of the 2016-2018 IRS audit as discussed in “Income Tax Audits - 2016-2018 IRS Audit” below.
The Registrant Subsidiaries’ balances of unrecognized tax benefits included amounts which, if recognized, would have reduced income tax expense as follows:
| December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (In Millions) | |||||||||||||||||
| Entergy Arkansas | $360.3 | $32.6 | $57.2 | ||||||||||||||
| Entergy Louisiana | $1,141.9 | $868.2 | $862.5 | ||||||||||||||
| Entergy Mississippi | $1.7 | $1.3 | $1.0 | ||||||||||||||
| Entergy New Orleans | $18.1 | $18.3 | $18.2 | ||||||||||||||
| Entergy Texas | $113.6 | $50.3 | $2.9 | ||||||||||||||
| System Energy | $218.0 | $4.0 | $3.1 | ||||||||||||||
Accrued balances for the possible payment of interest related to unrecognized tax benefits for the Registrant Subsidiaries are as follows:
| December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (In Millions) | |||||||||||||||||
| Entergy Arkansas | $9.5 | $8.4 | $7.8 | ||||||||||||||
| Entergy Louisiana | $13.7 | $5.1 | $1.5 | ||||||||||||||
| Entergy Mississippi | $4.5 | $3.2 | $2.1 | ||||||||||||||
| Entergy New Orleans | $1.9 | $0.6 | $0.6 | ||||||||||||||
| Entergy Texas | $1.3 | $0.5 | $— | ||||||||||||||
| System Energy | $2.3 | $2.9 | $1.9 | ||||||||||||||
The Registrant Subsidiaries record interest and penalties related to unrecognized tax benefits in income tax expense. No penalties were recorded in 2025, 2024, and 2023. Interest (net-of-tax) was recorded as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| (In Millions) | |||||||||||||||||
| Entergy Arkansas | $1.1 | $0.6 | $3.5 | ||||||||||||||
| Entergy Louisiana | $8.6 | $3.6 | ($2.6) | ||||||||||||||
| Entergy Mississippi | $1.3 | $1.1 | ($1.0) | ||||||||||||||
| Entergy New Orleans | $1.3 | $— | ($5.8) | ||||||||||||||
| Entergy Texas | $0.8 | $0.5 | ($1.1) | ||||||||||||||
| System Energy | ($0.6) | $1.0 | $— | ||||||||||||||
Income Tax Audits
Entergy and its subsidiaries file U.S. federal and various state income tax returns. IRS examinations are complete for years before 2019. All state taxing authorities’ examinations are complete for years before 2016. Entergy regularly defends its positions and works with the IRS to resolve audits. The resolution of audit issues could result in significant changes to the amounts of unrecognized tax benefits in the next twelve months.
2016-2018 IRS Audit
The IRS completed its examination of the 2016 through 2018 tax years and issued a Revenue Agent Report (RAR) for each federal filer under audit in November 2023. Entergy agreed to all adjustments contained in the RARs. Entergy and the Registrant Subsidiaries recorded all the material effects resulting from the RARs in the fourth quarter of 2023.
Utility Restructurings
In 2017, Entergy New Orleans undertook an internal restructuring, and in 2018, Entergy Arkansas and Entergy Mississippi also participated in internal restructurings under which these three Utility operating companies joined Entergy Louisiana as wholly-owned subsidiaries of Entergy Utility Holding Company, LLC. The change in ownership required Entergy to recognize Entergy Arkansas’s nuclear decommissioning liabilities for income tax purposes, which resulted in recognition of a gain for income tax purposes and a corresponding increase in the tax basis of assets, in accordance with the Internal Revenue Code and Treasury Regulations. Entergy determined that there was uncertainty regarding the treatment of certain aspects of the restructurings and recorded provisions for uncertain tax positions which are now considered to be effectively settled in accordance with accounting standards. The reversal of such provisions for uncertain tax positions resulted in a reduction of income tax expense of $156 million for Entergy Arkansas, $1 million for Entergy Mississippi, and $6 million for Entergy New Orleans.
The IRS also required Entergy New Orleans to reverse a tax gain associated with the 2017 restructuring that had been previously recognized, allowing Entergy New Orleans to reduce its tax expense by $39 million.
After the restructuring, Entergy Arkansas adopted a new method of accounting for income tax purposes in which its nuclear decommissioning costs are treated as production costs of electricity includable in cost of goods sold, which resulted in a $1.8 billion reduction in taxable income on its 2018 tax return that was treated as an unrecognized tax benefit. In conjunction with the audit, Entergy agreed with the IRS adjustments concerning the nuclear decommissioning tax position allowing Entergy Arkansas to include $102 million of its decommissioning liability in cost of goods sold.
Mark-to-Market Method of Accounting
In 2016, Entergy Louisiana elected mark-to-market income tax treatment for various wholesale electric power purchase and sale agreements, including Entergy Louisiana’s contract to purchase electricity from the Vidalia hydroelectric facility and from System Energy under the Unit Power Sales Agreement as well as other intercompany power purchase agreements. The election resulted in a $2 billion deduction upon which a deferred tax liability was recorded. The IRS allowed the mark-to-market tax method of accounting associated with the Vidalia contract and various other third-party and intercompany wholesale electric power purchase and sale agreements. The IRS disallowed the net deductions associated with the Unit Power Sales Agreement, which did not have an effect on net tax expense. The net allowance resulted in a reversal of a provision for uncertain tax positions of $132 million and a corresponding reduction of income tax expense.
In 2017, Entergy New Orleans also elected mark-to-market income tax treatment for the Unit Power Sales Agreement and various intercompany wholesale electric contracts which resulted in a $1 billion deduction upon which a deferred tax liability was recorded. The IRS allowed the mark-to-market tax method of accounting associated with various intercompany and third-party wholesale electric contracts. The IRS disallowed the net deductions associated with the Unit Power Sales Agreement, which did not have an effect on net tax expense. The net allowance resulted in a reversal of a provision for uncertain tax positions of $139 million and a corresponding reduction of income tax expense.
In 2018, Entergy Arkansas and Entergy Mississippi each accrued approximately $2 billion in deductions upon which deferred tax liabilities were recorded related to mark-to-market tax accounting for the Unit Power Sales Agreement and various wholesale electric contracts. The IRS allowed the mark-to-market tax method of accounting associated with various intercompany and third-party wholesale electric contracts. The IRS disallowed the net deductions associated with the Unit Power Sales Agreement, which did not have an effect on net tax expense. The effective settlement of the mark-to-market tax position for Entergy Arkansas resulted in the accrual of an increase to tax expense of $40 million, which was offset by approximately $5 million of miscellaneous excess ADIT recognized as a result of the 2016-2018 IRS audit resolution. The net increase to tax expense is deferred as a regulatory asset, as discussed within the “Regulatory and Other Matters” section below.
Restructuring of Entergy’s Non-Utility Operations Business
During the 2016 to 2018 audit period, the ownership of certain of Entergy’s non-utility operations business nuclear power plants (previously reported as part of Entergy Wholesale Commodities) was restructured. Such restructuring transactions required Entergy to recognize the plants’ nuclear decommissioning liabilities for income tax purposes. The accrual of the nuclear decommissioning liabilities also required Entergy to recognize a gain for income tax purposes, a significant portion of which resulted in an increase in the tax basis of the assets. Because certain aspects of the restructuring transactions involved uncertainty, Entergy recorded a provision for uncertain tax positions. The IRS did not propose adjustments to the tax treatment of the restructuring transactions resulting in a net decrease to income tax expense of $288 million from the reversal of the provision for uncertain tax positions in fourth quarter 2023.
Reduction of Net Operating Loss Carryovers
The IRS audit reduced Entergy’s net operating loss carryover by $8 billion. A portion of Entergy’s audit adjustments were not offset by losses which resulted in a tax liability of $79 million, which was fully offset by prior deposits made by Entergy. Entergy received an assessment of interest in excess of prior deposits of $13 million in December 2023, and such interest was paid in January 2024.
Net operating loss carryovers were reduced by $4 billion for Entergy Arkansas, $1 billion for Entergy Louisiana, $2 billion for Entergy Mississippi, $1 billion for Entergy New Orleans, and $40 million for System
Energy. The IRS audit adjustments were also factored into the settle-up required under Entergy’s ETAA, and such amounts were settled in the fourth quarter of 2023.
Regulatory and Other Matters
In accordance with prior regulatory agreements associated with the Entergy Louisiana and Entergy Gulf States Louisiana business combination and Entergy New Orleans restructuring and general rate-making principles, Entergy Louisiana and Entergy New Orleans, respectively, recorded a regulatory liability and an associated regulatory charge of $38 million and $60 million ($28 million and $44 million net-of-tax), in December 2023.
Additionally, in December 2023, a regulatory asset for income tax associated with deficient ADIT of $35 million, $2 million, and $3 million, was recorded for Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi, respectively. See Note 2 to the financial statements for discussion of Entergy Arkansas’s regulatory activity related to the Tax Cuts and Jobs Act and discussion of the settlement of Entergy Arkansas’s 2023 formula rate plan.
As noted above, Entergy accrues interest expense related to unrecognized tax benefits in income tax expense. As a result of the IRS audit resolution, Entergy reversed approximately $24 million of interest related to the allowance of previously unrecognized tax benefits in December 2023.
Reversal of net deferred credits associated with the accounting for income taxes upon the resolution of the IRS audit resulted in a reduction/(increase) in income tax expense in December 2023 of $9 million, $42 million, ($2) million, $2 million, $2 million, and $1 million for Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy, respectively.
In April 2024, Entergy New Orleans and the City Council entered into a settlement in principle whereby Entergy New Orleans agreed to share with customers $138 million of income tax benefits from the resolution of the 2016–2018 IRS audit. Based on this settlement in principle, in first quarter 2024 Entergy New Orleans increased the associated regulatory liability from $60 million to $138 million and recorded a corresponding $78 million regulatory charge ($57 million net-of-tax). The settlement in principle requires that the regulatory liability be amortized over 25 years beginning January 2025 with the unamortized balance included in rate base and the amortization treated as a reduction to Entergy New Orleans’s retail revenue requirement. In May 2024 the City Council approved the settlement.
In September 2024 the LPSC unanimously approved a jointly filed global stipulated settlement agreement between Entergy Louisiana and the LPSC staff whereby Entergy Louisiana agreed to $184 million of customer rate credits to be given over two years, including customer sharing of income tax benefits resulting from the 2016-2018 IRS audit. See Note 2 to the financial statements for further discussion of the Entergy Louisiana agreement in principle and the subsequently filed global stipulated settlement agreement.
Included in the effect of the IRS audit on the results of operations was the measurement of deferred tax assets and liabilities influenced by the 2017 enactment of the Tax Cuts and Jobs Act income tax rate change discussed below. With the conclusion of the audit, there are no remaining federal unrecognized tax benefits affected by the rate differential which could impact income tax expense and the regulatory liability for income taxes in future periods.
State Income Tax Audits
In the third quarter 2024, Entergy and the Arkansas Department of Finance and Administration resolved the terms of the Arkansas Department of Finance and Administration’s outstanding tax assessments related to the examination of the 2014 through 2018 tax years. The agreement resulted in a payment of tax of approximately $8 million by Entergy. As a result of the income tax audit adjustments and the reversal of a provision for uncertain
tax positions, Entergy Arkansas recorded a net reduction in income tax expense of approximately $18 million, which was offset by approximately $9 million of income tax expense recorded by other Entergy subsidiaries, resulting in a net reduction in income tax expense for Entergy of $9 million.
Other Tax Matters
Tax Cuts and Jobs Act (TCJA)
The most significant effect of the TCJA for Entergy and the Registrant Subsidiaries was the change in the federal corporate income tax rate from 35% to 21%, effective January 1, 2018. Entergy had net regulatory liability balances of $1.1 billion and $1.2 billion as of December 31, 2025 and December 31, 2024, respectively. These liabilities were primarily associated with the re-measurement of deferred tax assets and liabilities due to the income tax rate change and subsequent amortization of excess ADIT. In addition to the unamortized protected excess ADIT amounts, the net regulatory liability for income taxes includes other regulatory assets and liabilities for income taxes that are primarily for the regulatory asset related to AFUDC, as described in Note 1 to the financial statements.
Excess ADIT is generally classified into two categories: (1) the portion that is subject to the normalization requirements of the TCJA, referred to as “protected”, and (2) the portion that is not subject to such normalization provisions, referred to as “unprotected”. The majority of the remaining unamortized excess ADIT as of December 31, 2025 is classified as protected. The TCJA mandates the normalization method of accounting for income taxes for excess ADIT associated with public utility property. The TCJA specifies the use of the average rate assumption method (ARAM) to determine the timing of the return of excess ADIT associated with such property. Under ARAM, the excess ADIT is reduced over the remaining life of the asset. Remaining asset lives vary for each Registrant Subsidiary, but the average life of public utility property is typically 30 years or longer. Entergy will amortize the protected portion of the excess ADIT in compliance with the normalization requirements.
Entergy’s net regulatory liability for income taxes includes a gross-up using the applicable tax rate to account for the effect of income taxes on the revenue requirement in the ratemaking formula. The Registrant Subsidiaries’ December 31, 2025 and December 31, 2024 balance sheets reflect net regulatory liabilities for income taxes as follows:
2025 | 2024 | ||||||||||
| (In Millions) | |||||||||||
| Entergy Arkansas | $423 | $418 | |||||||||
| Entergy Louisiana | $313 | $355 | |||||||||
| Entergy Mississippi | $171 | $181 | |||||||||
| Entergy New Orleans | $16 | $15 | |||||||||
| Entergy Texas | $58 | $94 | |||||||||
| System Energy | $100 | $105 | |||||||||
Inflation Reduction Act of 2022
The Inflation Reduction Act of 2022, signed into law on August 16, 2022, significantly expanded federal tax incentives for clean energy production, including the extension of production tax credits to solar projects and certain qualified nuclear power facilities.
Entergy Arkansas accrued solar production tax credits associated with the Walnut Bend Solar facility, the Driver Solar facility, and the West Memphis Solar facility of approximately $5 million in 2024 and approximately $35 million in 2025. As the value of such credits is expected to be provided to customers, a regulatory liability has been recorded for all credits recognized.
In second quarter 2025, Entergy, Entergy Arkansas, Entergy Louisiana, and System Energy determined, based on current analysis and evolving regulatory developments, that it was appropriate to record zero-emission nuclear production tax credits under Internal Revenue Code section 45U for electricity generated in 2024 by their respective nuclear power facilities. Such credits have been claimed on the Entergy 2024 federal income tax return. Because the U.S. Treasury and the IRS have not issued final guidance regarding the application of Internal Revenue Code section 45U, including the definition of “gross receipts,” Entergy treated the full amount of the Internal Revenue Code section 45U credits as an uncertain tax position in accordance with the income tax accounting standards.
The value of the nuclear production tax credits was calculated based on the amount of electricity generated and sold by each nuclear generating unit owned by Entergy Arkansas, Entergy Louisiana, and System Energy during the year, multiplied by the applicable credit rate (i.e., dollars per kWh). The applicable credit rate included the incremental amount of credit for meeting the “prevailing wages” criteria under the Inflation Reduction Act. Entergy also applied the statutorily required reduction amount in arriving at the value of the nuclear production tax credits. This reduction amount was driven by the “gross receipts” received by each unit for its yearly energy production. For credits claimed on the Entergy 2024 federal income tax return, Entergy Arkansas, Entergy Louisiana, and System Energy recognized nuclear production tax credits of $221.4 million, $208.9 million, and $140.9 million, respectively, resulting in Entergy consolidated nuclear production tax credits of $571.2 million recognized in second quarter 2025. Additionally, in fourth quarter 2025, Entergy Arkansas, Entergy Louisiana, and System Energy recognized nuclear production tax credits expected to be claimed on the Entergy 2025 federal income tax return of $104.4 million, $58.6 million, and $72.1 million, respectively, resulting in Entergy consolidated nuclear production tax credits of $235.1 million. Entergy also treated the full amount of the 2025 Internal Revenue Code section 45U credits as an uncertain tax position in accordance with the income tax accounting standards. To the extent future guidance allows Entergy to recognize the value of the credits under the provisions of income tax accounting standards, the monetized value of the production tax credits, net of applicable expenses, is expected to be shared with customers.
During September and October 2025, Entergy Arkansas, Entergy Louisiana, and System Energy transferred the 2024 nuclear production tax credits to third parties and received cash of $210.1 million, $198.3 million, and $133.8 million, respectively, resulting in total Entergy cash receipts of $542.2 million. In addition, Entergy Arkansas sold its 2024 solar production tax credits to a third party and received cash receipts of approximately $5.1 million. The proceeds from the transfers reflected a market-based discount. In accordance with the Unit Power Sales Agreement and the MSS-4 replacement tariff, portions of the net proceeds from the transfers of the production tax credits were paid by Entergy Arkansas, Entergy Louisiana, and System Energy to the buyers of energy and capacity under those wholesale agreements. These provisions include the right to recover the transferred proceeds from the 2024 nuclear production tax credits and associated costs if all or a portion of the value of the credits is disallowed by the IRS. Based on these provisions and the uncertainty regarding the tax position, Entergy Arkansas, Entergy Louisiana, and System Energy recognized regulatory assets upon flowing through the proceeds of the credits. The Utility operating companies receiving the proceeds from the nuclear production tax credits recognized corresponding regulatory liabilities. These intercompany balances are eliminated on Entergy’s consolidated balance sheet.
In August 2025 the LPSC issued an order approving an agreement between Entergy Louisiana and the LPSC staff regarding the monetization of 2024 nuclear production tax credits. The order allows Entergy Louisiana to retain the net proceeds of the nuclear production tax credits while the associated tax position remains uncertain. While it retains the net proceeds, Entergy Louisiana will accrue a liability to its customers at its weighted average cost of capital. It further provides that customers will be responsible for the associated costs should the IRS reduce some or all of the value of the nuclear production tax credits transferred to third parties. Once the IRS makes a final determination affirming the value of the nuclear production tax credits or the audit period expires without the IRS making a final determination disallowing some or all of the value of the nuclear production tax credits, Entergy Louisiana will commence flowing to its customers the value of the nuclear production tax credits, including carrying charges. In January 2026 the APSC opened a docket to investigate the sale of Entergy Arkansas’s nuclear
production tax credits and the appropriate ratemaking treatment of production tax credits for all of Entergy Arkansas’s eligible resources, including how the proceeds of any sales should flow through to customers. As directed by the APSC, in February 2026, Entergy Arkansas submitted a compliance filing to the APSC verifying the status of the solar production tax credits. The filing also verified that the net proceeds from the sale of the nuclear production tax credits were recorded in FERC accounts that are accruing a return for customers’ benefit at a rate that is above the customer deposit rate. Entergy will continue to monitor further developments and reassess the uncertain tax position as additional guidance or other information emerges.
Tax Accounting Methods
Certain Entergy subsidiaries have elected to apply the mark-to-market method of accounting for income tax return purposes to wholesale power purchase agreements as appropriate under the Internal Revenue Code and U.S. Treasury Regulations. The mark-to-market tax gain or loss computed each year is based on an estimated fair market valuation which includes analyses of market prices and conditions.
In 2020, Entergy Texas elected mark-to-market income tax treatment for wholesale electric power purchase and sale agreements which resulted in a $2.5 billion deduction upon which a deferred tax liability was recorded.
Arkansas and Louisiana Corporate Income Tax Rate Changes
Since 2019, the State of Arkansas has enacted corporate income tax law changes that have phased in rate reductions from the former rate of 6.5% to the currently enacted rate of 4.3%. As a result of the rate reductions, Entergy Arkansas has recorded regulatory liabilities for income taxes of approximately $29 million, $26 million, and $15 million in 2024, 2023, and 2022, respectively, and a total of $32 million for years prior to 2022. The regulatory liabilities include a tax gross-up related to the treatment of income taxes in the retail and wholesale ratemaking formulas and have been or are scheduled to be included in future rate mechanisms.
In November 2024, during the Louisiana Third Special Legislative Session of 2024, the Louisiana legislature enacted comprehensive tax reform measures that impact corporate income taxes through a reduction in rates to a flat 5.5% (from the then-current highest marginal rate of 7.5%), effective January 1, 2025. Accordingly, deferred tax assets and liabilities were adjusted, with associated regulatory assets and liabilities for income taxes, to reflect the new applicable state rate. As a result of the rate reduction, Entergy Louisiana and Entergy New Orleans recorded regulatory liabilities for income taxes of approximately $179 million and $9 million, respectively. The regulatory liabilities include a tax gross-up related to the treatment of income taxes in the retail and wholesale ratemaking formulas and have been or are scheduled to be included in future rate mechanisms. In fourth quarter 2024, as a result of the net reduction in certain deferred tax assets and liabilities, Entergy Louisiana and Entergy New Orleans recorded an increase of income tax expense of approximately $16.3 million and $0.2 million, respectively, with an additional $12.1 million increase of income tax expense recorded by other Entergy subsidiaries.
Act 293 Securitizations
As described in Note 2 to the financial statements, in March of 2023, Entergy Louisiana implemented a securitization transaction authorized under Act 293 of the Louisiana Legislature’s Regular Session of 2021. Act 293 provides that the LURC contribute the net bond proceeds to a LURC-sponsored trust. Over the 15-year term of the Act 293 bonds, the respective storm trusts will make distributions to Entergy Louisiana, a beneficiary of the storm trusts, that will not be taxable to Entergy Louisiana. Additionally, Entergy Louisiana will not include the receipt of the system restoration charges in taxable income because the right to receive the system restoration charges has been granted directly to the LURC, and Entergy Louisiana only acts as an agent to collect those charges on behalf of the LURC.
Accordingly, the securitizations provided for a tax accounting permanent difference resulting in net reductions of income tax expense for Entergy Louisiana of approximately $133 million after taking into account a provision for uncertain tax positions. Entergy’s recognition of reduced income tax expense was offset by other tax changes resulting in a net reduction of income tax expense for Entergy of approximately $129 million after taking into account a provision for uncertain tax positions.
In recognition of its obligations described in LPSC ancillary orders issued as part of the securitization regulatory proceedings, Entergy Louisiana recorded regulatory liabilities of $103 million ($76 million net-of-tax) in first quarter 2023 to reflect its obligation to provide credits to its customers. See Note 2 to the financial statements for further discussion of the Entergy Louisiana March 2023 storm cost securitizations.
Sale of Natural Gas Distribution Business
See Note 14 to the financial statements for discussion of the sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses on July 1, 2025. Entergy recognized a gain of approximately $328 million for federal tax purposes, with Entergy Louisiana and Entergy New Orleans recognizing $149 million and $179 million, respectively. Both Entergy and Entergy Louisiana have sufficient federal tax net operating loss carryforwards to offset their respective gains. Accordingly, Entergy does not have a resulting federal income tax obligation as a result of the transaction, nor will Entergy Louisiana be required to make a federal tax payment under the terms of the ETAA. Entergy New Orleans fully absorbed its federal tax net operating loss carryforward in 2025, and its resulting federal tax payment under the ETAA will be dependent upon its results of operations reflected on its 2025 income tax returns.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 18, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Feb 26, 2018 | |
| 2016 | Feb 24, 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.