GE Vernova Inc.GEV
GE Vernova Inc. Income Taxes Disclosure
INCOME TAXES
The Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures on a prospective basis for the
year ended December 31, 2025.
Components of Income Taxes. The components of income (loss) before income taxes and the provision (benefit) for income taxes,
excluding other comprehensive income (loss) and changes in equity attributable to noncontrolling interests recorded after-tax, for the years
ended December 31 were as follows:
INCOME (LOSS) BEFORE INCOME TAXES | 2025 (a) | 2024 | 2023 |
U.S. | $78 | $1,285 | $(357) |
Non-U.S. | 2,750 | 1,213 | 227 |
Total | $2,828 | $2,498 | $(130) |
(a) On a prospective basis, our U.S. income before income taxes does not include flow-through income from non-U.S. operations which is
also taxed in the U.S.
PROVISION (BENEFIT) FOR INCOME TAXES | 2025 | 2024 | 2023 |
Current | |||
U.S. Federal | $280 | $272 | $(184) |
U.S. State and Local | 77 | 55 | — |
Non-U.S. | 866 | 636 | 500 |
Deferred | |||
U.S. Federal | (3,069) | (10) | — |
U.S. State and Local | (511) | (1) | — |
Non-U.S. | 306 | (13) | 28 |
Total | $(2,051) | $939 | $344 |
Effective Tax Rate Reconciliation. In accordance with the updated requirements of ASU 2023-09 for the year ended December 31, 2025,
a reconciliation of the U.S. federal statutory income tax rate to the effective tax rate was as follows:
2025 | |||
Amount | Rate | ||
U.S. federal statutory income tax rate | $594 | 21.0% | |
U.S. tax effects: | |||
State taxes, net of federal benefit(a) | (343) | (12.1) | |
Effect of cross-border tax laws: | |||
Foreign flow-through income, net of credits | 60 | 2.1 | |
Global Intangible Low-taxed Income, net of credits | 53 | 1.9 | |
Subpart F income, net of credits | 81 | 2.9 | |
Other foreign tax credits | (199) | (7.0) | |
Foreign currency | (39) | (1.4) | |
Other | (22) | (0.8) | |
Non-taxable or non-deductible items: | |||
Non-taxable business incentives | (80) | (2.8) | |
Non-deductible foreign payments | 41 | 1.4 | |
Other | 38 | 1.3 | |
Share-based compensation | (93) | (3.3) | |
Tax credits | (22) | (0.8) | |
Changes in valuation allowance | (2,600) | (91.9) | |
Other | (39) | (1.4) | |
Foreign tax effects: | |||
Brazil | |||
Changes in valuation allowance | 27 | 1.0 | |
Other | (8) | (0.3) | |
Canada | 36 | 1.3 | |
Denmark | |||
Changes in valuation allowance | 52 | 1.8 | |
Other | (2) | (0.1) | |
France | |||
Changes in valuation allowance | 98 | 3.5 | |
Other | (20) | (0.7) | |
Ireland | |||
Affiliate financing | (130) | (4.6) | |
Other | (11) | (0.4) | |
Mexico | 42 | 1.5 | |
Netherlands | |||
Affiliate financing | (140) | (5.0) | |
Changes in valuation allowance | 55 | 1.9 | |
Other | (40) | (1.4) | |
Singapore | |||
Portfolio investments | (36) | (1.3) | |
Other | 5 | 0.2 | |
Spain | |||
Withholding taxes | 54 | 1.9 | |
Changes in valuation allowance | (14) | (0.5) | |
Other | 6 | 0.2 | |
Switzerland | |||
National tax rate differential | (155) | (5.5) | |
Local taxes | 52 | 1.8 | |
Withholding taxes | 306 | 10.8 | |
Changes in valuation allowance | (35) | (1.2) | |
Affiliate operational transactions | (125) | (4.4) | |
Other | (12) | (0.4) | |
Other foreign jurisdictions | 191 | 6.8 | |
Changes in unrecognized tax benefits | 323 | 11.4 | |
Effective tax rate | $(2,051) | (72.5)% | |
(a) State and local taxes in California, Florida, Georgia, Illinois, Louisiana, Massachusetts, Pennsylvania, and South Carolina comprise the
majority of the state taxes, net of federal benefit category.
As previously disclosed for the years ended December 31, 2024, and 2023, a reconciliation of the U.S. federal statutory income tax rate to
the effective tax rate was as follows:
2024 | 2023 | |||||
Amount | Rate | Amount | Rate | |||
U.S. federal statutory income tax rate | $525 | 21.0% | $(27) | 21.0% | ||
State taxes, net of federal benefit | 43 | 1.7 | (46) | 35.3 | ||
Tax on global activities including exports | 80 | 3.2 | (83) | 64.0 | ||
Tax on undistributed foreign earnings | 103 | 4.1 | — | — | ||
Share-based compensation | (37) | (1.5) | — | — | ||
Uncertain tax positions | (101) | (4.0) | (61) | 47.2 | ||
U.S. business credits and incentives(a) | (126) | (5.0) | (208) | 160.0 | ||
Valuation allowances | 647 | 25.9 | 774 | (594.5) | ||
Business disposition(b) | (193) | (7.7) | — | — | ||
All other – net | (2) | (0.1) | (5) | 2.9 | ||
Effective tax rate | $939 | 37.6% | $344 | (264.1)% | ||
(a)U.S. business credits and incentives primarily includes the tax benefit of the advanced manufacturing credit, tax credits for energy
produced from renewable sources, and tax credits for research performed in the U.S. The Company uses the flow-through method to
account for investment tax credits. Under this method, the investment tax credits are recognized as a reduction to income tax expense.
(b)Business disposition resulted from a pre-tax gain with an insignificant tax impact from the sale of a portion of Steam Power nuclear
activities to Electricité de France S.A. (EDF).
Deferred Income Taxes. The components of the net deferred tax asset (liability) for the years ended December 31 were as follows:
December 31 | 2025 | 2024 |
Deferred tax assets | ||
Contract liabilities, contract assets and deferred income | $3,254 | $2,633 |
Principal pension plans | 332 | 381 |
Other compensation and benefits | 493 | 451 |
Accrued expenses | 349 | 313 |
Intangible assets | 563 | 503 |
Tax loss carryforwards(a) | 4,949 | 5,722 |
Tax credit carryforwards | 77 | 208 |
Other | 100 | 124 |
Total deferred tax assets | $10,117 | $10,335 |
Valuation allowances(b) | (4,816) | (8,420) |
Total deferred tax assets after valuation allowances | $5,301 | $1,915 |
Deferred tax liabilities | ||
Global investments, partnerships, joint ventures and non-consolidated | $(901) | $(709) |
Other | (241) | (394) |
Total deferred tax (liabilities) | $(1,142) | $(1,103) |
Net deferred tax asset (liability) | $4,159 | $812 |
(a)Tax loss carryforwards as of December 31, 2025 are primarily related to Switzerland and other foreign jurisdictions, which if unused,
approximately $1,220 million will expire between 2026-2045 and $3,729 million do not expire.
(b) Valuation allowances decreased by $3,604 million in 2025 primarily due to a change in judgment regarding the realizability of deferred
tax assets in the U.S. and certain foreign jurisdictions and the expiration of certain foreign tax attributes, partially offset by additional tax
loss carryforwards in certain foreign jurisdictions where it is more likely than not the tax benefits will not be realized.
We regularly assess the realizability of our deferred tax assets based on all available evidence, both positive and negative. As of
December 31, 2025, we concluded it was more likely than not that we will recognize the benefit for a significant portion of our U.S. federal
and state deferred tax assets, primarily due to multiple years of profitability in our operations taxed in the U.S. and anticipated future U.S.
taxable income driven primarily by forecasted energy demand growth. As a result, we recorded a $2,907 million income tax benefit in the
fourth quarter of 2025.
As of December 31, 2025, we continue to maintain valuation allowances against certain foreign deferred tax assets, primarily due to
cumulative losses in those jurisdictions.
Income Taxes Paid. The Company's portion of income taxes for U.S. and certain foreign jurisdictions prior to the separation were deemed
settled at the date of the Spin-Off. In accordance with the updated requirements of ASU 2023-09 for the year ended December 31, 2025,
cash paid for income taxes was as follows:
CASH PAID FOR INCOME TAXES | 2025 |
U.S. federal | $— |
U.S. state and local | 127 |
Non-U.S. | |
Algeria | 44 |
Canada | 44 |
India | 121 |
Italy | 48 |
Other foreign jurisdictions | 446 |
Total | $830 |
As previously disclosed, cash paid directly to tax authorities for income taxes was $872 million in 2024 and was not significant in 2023.
Income Tax Contingencies. A reconciliation of the beginning and ending unrecognized tax benefits follows:
UNRECOGNIZED TAX BENEFITS RECONCILIATION | 2025 | 2024 | 2023 |
Balance at January 1 | $452 | $643 | $763 |
Additions for tax positions of the current year | 185 | 1 | 6 |
Additions for tax positions of prior years | 161 | 30 | 63 |
Reductions for tax positions of prior years | (10) | (133) | (92) |
Settlements with tax authorities | (44) | (10) | (55) |
Expiration of statutes of limitation | (58) | (55) | (51) |
Foreign currency effect | 22 | (24) | 9 |
Balance at December 31 | $708 | $452 | $643 |
Accrued interest on unrecognized tax benefits | 112 | 116 | 151 |
Accrued penalties on unrecognized tax benefits | 101 | 70 | 92 |
Balance at December 31, including interest and penalties | $921 | $638 | $886 |
Of the $921 million and $638 million unrecognized tax benefits including interest and penalties at December 31, 2025 and 2024,
respectively, $661 million and $434 million, respectively, are recorded in All other liabilities and $260 million and $204 million, respectively,
are recorded as a net offset to Deferred income taxes in our Consolidated and Combined Statement of Financial Position. If recognized,
$445 million of the unrecognized tax benefits at December 31, 2025 would impact our effective tax rate.
For the years ended December 31, 2025, 2024, and 2023, net interest expense (income) of $(6) million, $(19) million, and $20 million,
respectively, was recognized in Interest and other financial income (charges) – net and penalty expense (benefit) of $45 million, $(21)
million, and $8 million, respectively, was recognized in our Provision (benefit) for income taxes in our Consolidated and Combined
Statement of Income (Loss).
Annually, we file income tax returns in over 250 global taxing jurisdictions and we are under examination or engaged in tax litigation in
many of these jurisdictions. The IRS is currently auditing the combined GE U.S. income tax returns for 2016 through 2020. The Company
has provided for its potential tax exposure from uncertain tax positions as part of the combined GE U.S. income tax returns as an
indemnification obligation with GE in accordance with the Tax Matters Agreement.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Jan 29, 2026 | Showing above |
| 2024 | Feb 6, 2025 | |
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.