GEORGIA POWER COGPJA
GEORGIA POWER CO Income Taxes Disclosure
INCOME TAXES
Southern Company files a consolidated federal income tax return, and the Registrants file various state income tax returns, some of which are combined or unitary. Under a joint consolidated income tax allocation agreement, each Southern Company subsidiary's current and deferred tax expense is computed on a stand-alone basis, and each subsidiary is allocated an amount of tax similar to that which would be paid if it filed a separate income tax return except for certain credit utilization and state apportionment results. In accordance with IRS regulations, each company is jointly and severally liable for the federal tax liability.
Current and Deferred Income Taxes
Details of income tax provisions are as follows:
| 2025 | ||||||||||||||||||||
Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas | |||||||||||||||
| (in millions) | ||||||||||||||||||||
| Federal — | ||||||||||||||||||||
| Current | $ | 139 | $ | 110 | $ | 99 | $ | 57 | $ | 71 | $ | 28 | ||||||||
| Deferred | 399 | 192 | 346 | (6) | (133) | 98 | ||||||||||||||
Total federal | 538 | 302 | 445 | 51 | (62) | 126 | ||||||||||||||
| State — | ||||||||||||||||||||
| Current | 94 | 95 | 32 | (1) | (3) | 32 | ||||||||||||||
| Deferred | 196 | 28 | 125 | 15 | 4 | 24 | ||||||||||||||
Total state | 290 | 123 | 157 | 14 | 1 | 56 | ||||||||||||||
| Total | $ | 828 | $ | 425 | $ | 602 | $ | 65 | $ | (61) | $ | 182 | ||||||||
| 2024 | ||||||||||||||||||||
Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas | |||||||||||||||
| (in millions) | ||||||||||||||||||||
| Federal — | ||||||||||||||||||||
| Current | $ | 221 | $ | 357 | $ | 200 | $ | 32 | $ | (112) | $ | 84 | ||||||||
| Deferred | 387 | (111) | 211 | 2 | 106 | 86 | ||||||||||||||
Total federal | 608 | 246 | 411 | 34 | (6) | 170 | ||||||||||||||
| State — | ||||||||||||||||||||
| Current | 152 | 103 | 52 | (1) | 6 | 42 | ||||||||||||||
| Deferred | 209 | 11 | 140 | 14 | (13) | 46 | ||||||||||||||
Total state | 361 | 114 | 192 | 13 | (7) | 88 | ||||||||||||||
| Total | $ | 969 | $ | 360 | $ | 603 | $ | 47 | $ | (13) | $ | 258 | ||||||||
| 2023 | ||||||||||||||||||||
Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas | |||||||||||||||
| (in millions) | ||||||||||||||||||||
| Federal — | ||||||||||||||||||||
| Current | $ | 54 | $ | 242 | $ | 205 | $ | 49 | $ | (320) | $ | 62 | ||||||||
| Deferred | 299 | (257) | 195 | (26) | 334 | 68 | ||||||||||||||
Total federal | 353 | (15) | 400 | 23 | 14 | 130 | ||||||||||||||
| State — | ||||||||||||||||||||
| Current | 41 | 82 | 37 | 1 | (1) | 24 | ||||||||||||||
| Deferred | 102 | 14 | 11 | 12 | (1) | 57 | ||||||||||||||
Total state | 143 | 96 | 48 | 13 | (2) | 81 | ||||||||||||||
| Total | $ | 496 | $ | 81 | $ | 448 | $ | 36 | $ | 12 | $ | 211 | ||||||||
Southern Company's and Southern Power's ITCs and PTCs generated in the current tax year and carried forward from prior tax years that cannot be utilized or transferred in the current tax year are reclassified from current to deferred taxes in federal income tax expense in the tables above. Southern Power's ITCs and PTCs reclassified in this manner were $95 million for 2025 and were immaterial for 2024 and 2023. See "Cash Paid for Income Taxes" and "Deferred Tax Assets and Liabilities" herein for additional information.
Under current tax law, certain projects are eligible for ITCs. The Registrants use the deferral method to account for federal and state ITCs, whereby the ITCs are recorded as a deferred credit and amortized to income tax expense over the useful life of the respective asset. In accordance with regulatory requirements, certain state ITCs at Georgia Power are recognized as an income tax benefit in the year the credit is generated through the establishment of a regulatory asset. ITCs amortized in 2025, 2024, and 2023 were immaterial for the traditional electric operating companies and Southern Company Gas and were as follows for Southern Company and Southern Power:
| Southern Company | Southern Power | |||||||
| (in millions) | ||||||||
| 2025 | $ | 84 | $ | 58 | ||||
| 2024 | 109 | 58 | ||||||
| 2023 | 84 | 58 | ||||||
When Southern Company recognizes tax credits, the tax basis of the asset is reduced by 50% of the ITCs received, which, together with the deferred credit, results in a net deferred tax asset. Southern Power has elected to recognize the tax benefit of this basis difference as a reduction to income tax expense in the year in which the plant reaches commercial operation.
Georgia Power's state ITCs and other state credits, which are recognized in the period in which the credits are generated, reduced Georgia Power's income tax expense by $31 million in 2025, $44 million in 2024, and $49 million in 2023.
Southern Power's federal and state PTCs, which are recognized in the period in which the credits are generated, reduced Southern Power's income tax expense by $33 million in 2025, $32 million in 2024, and $26 million in 2023.
Cash Paid for Income Taxes
The following table disaggregates income taxes paid, excluding credit transfers, (net of refunds) by federal, state, and foreign taxes for the periods presented:
Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas | |||||||||||||||
(in millions) | ||||||||||||||||||||
| 2025 | ||||||||||||||||||||
| Federal | $ | 170 | $ | 150 | $ | 53 | $ | 43 | $ | 162 | $ | 9 | ||||||||
| State | 114 | 93 | 76 | (1) | (14) | 20 | ||||||||||||||
| Total cash taxes paid | $ | 284 | $ | 243 | $ | 129 | $ | 42 | $ | 148 | $ | 29 | ||||||||
| 2024 | ||||||||||||||||||||
| Federal | $ | 123 | $ | 289 | $ | (21) | $ | 51 | $ | (22) | $ | 53 | ||||||||
| State | 53 | 98 | 7 | — | (10) | 6 | ||||||||||||||
| Total cash taxes paid (received) | $ | 176 | $ | 387 | $ | (14) | $ | 51 | $ | (32) | $ | 59 | ||||||||
| 2023 | ||||||||||||||||||||
| Federal | $ | 78 | $ | 256 | $ | 178 | $ | 52 | $ | (252) | $ | 71 | ||||||||
| State | 51 | 59 | 42 | — | (2) | 20 | ||||||||||||||
| Foreign | 3 | — | — | — | — | — | ||||||||||||||
| Total cash taxes paid (received) | $ | 132 | $ | 315 | $ | 220 | $ | 52 | $ | (254) | $ | 91 | ||||||||
Income taxes paid (net of refunds) exceeded 5% of total income taxes paid (net of refunds) in the following jurisdictions for the periods presented:
Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas | |||||||||||||||
(in millions) | ||||||||||||||||||||
| 2025 | ||||||||||||||||||||
State — | ||||||||||||||||||||
Alabama | $ | 92 | $ | 91 | $ (*) | $ (*) | $ (*) | $ (*) | ||||||||||||
Georgia | (*) | (*) | 74 | (*) | (11) | (*) | ||||||||||||||
Oklahoma | (*) | (*) | (*) | (*) | (9) | (*) | ||||||||||||||
Illinois | 20 | (*) | (*) | (*) | (*) | 20 | ||||||||||||||
| 2024 | ||||||||||||||||||||
| State — | ||||||||||||||||||||
| Alabama | $ | 99 | $ | 98 | $ (*) | $ (*) | $ (*) | $ (*) | ||||||||||||
| Georgia | (35) | (*) | 7 | (*) | 6 | 7 | ||||||||||||||
| Oklahoma | (18) | (*) | (*) | (*) | (18) | (*) | ||||||||||||||
| 2023 | ||||||||||||||||||||
| State — | ||||||||||||||||||||
| Alabama | $ | 60 | $ | 57 | $ (*) | $ (*) | $ (*) | $ (*) | ||||||||||||
| Georgia | (13) | (*) | 42 | (*) | (*) | 8 | ||||||||||||||
| Oklahoma | (9) | (*) | (*) | (*) | (*) | (*) | ||||||||||||||
Illinois | 13 | (*) | (*) | (*) | (*) | 13 | ||||||||||||||
(*)Jurisdiction is either not applicable or below the threshold for the period presented.
Southern Power, in 2025, paid back $95 million and, in 2024 and 2023, received $71 million and $332 million, respectively, of cash related to federal ITCs under renewable energy initiatives. See "Deferred Tax Assets and Liabilities" herein for additional information.
Alabama Power, Georgia Power, and Southern Power have entered into transferability agreements with non-affiliated parties to sell ITCs and PTCs at a discount to the generated credit value in 2024, 2025, and 2026. During 2025, Alabama Power, Georgia Power, and Southern Power received cash of $80 million, $64 million, and $24 million, respectively, from credits transferred. During 2024, Georgia Power and Southern Power received cash of $11 million and $24 million, respectively, from credits transferred. The discount is recorded as a reduction in tax credits recognized in the financial statements and does not have a material impact on results of operations. The Southern Company system continues to explore the ability to efficiently monetize its tax credits through third-party transfer agreements.
Pursuant to the Vogtle Joint Ownership Agreements, Georgia Power paid $156 million in 2025, $131 million in 2024, and $39 million in 2023 to the other Vogtle Owners for advanced nuclear PTCs for Plant Vogtle Unit 3 and 4, which were utilized and not reflected as a reduction to current income tax expense. The gains recognized in all periods were recorded in income tax benefit and were immaterial.
Effective Tax Rate
Southern Company's effective tax rate is typically lower than the statutory rate due to the flowback of excess deferred income taxes at the regulated utilities, federal income tax benefits from ITCs and PTCs primarily at Southern Power, Georgia Power, and Alabama Power, and non-taxable AFUDC equity at the traditional electric operating companies.
A reconciliation of the federal statutory income tax rate to the effective income tax (benefit) rate is as follows:
| 2025 | ||||||||||||||||||||||||||||||||||||||
Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas | |||||||||||||||||||||||||||||||||
| (in millions, except percentages) | ||||||||||||||||||||||||||||||||||||||
| Federal statutory rate | $ | 1,050 | 21.0 | % | $ | 408 | 21.0 | % | $ | 725 | 21.0 | % | $ | 59 | 21.0 | % | $ | (22) | (21.0 | %) | $ | 192 | 21.0 | % | ||||||||||||||
State and local income tax, net of federal income tax effect(*) | 254 | 5.1 | 97 | 5.0 | 149 | 4.3 | 11 | 4.0 | 1 | 1.0 | 44 | 4.8 | ||||||||||||||||||||||||||
| Tax credits — | ||||||||||||||||||||||||||||||||||||||
| Amortization of ITCs | (56) | (1.1) | (2) | (0.1) | (2) | (0.1) | — | — | (46) | (43.7) | — | — | ||||||||||||||||||||||||||
| Federal PTCs | (166) | (3.3) | — | — | (137) | (4.0) | — | — | (28) | (26.8) | — | — | ||||||||||||||||||||||||||
| Other | (2) | — | (1) | — | (1) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Nontaxable or nondeductible items — | ||||||||||||||||||||||||||||||||||||||
| AFUDC equity | (67) | (1.3) | (14) | (0.7) | (52) | (1.5) | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Other | 19 | 0.4 | 12 | 0.6 | 21 | 0.6 | 2 | 0.6 | — | — | (5) | (0.5) | ||||||||||||||||||||||||||
| Changes in unrecognized tax benefits | (26) | (0.5) | — | — | (26) | (0.7) | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Other adjustments — | ||||||||||||||||||||||||||||||||||||||
| Noncontrolling interests | 36 | 0.7 | — | — | — | — | — | — | 36 | 33.9 | — | — | ||||||||||||||||||||||||||
| Federal flowback of excess deferreds | (170) | (3.4) | (58) | (3.0) | (57) | (1.7) | (5) | (1.9) | — | — | (45) | (4.9) | ||||||||||||||||||||||||||
| Other | (44) | (1.0) | (17) | (0.9) | (18) | (0.5) | (2) | (0.5) | (2) | (1.2) | (4) | (0.5) | ||||||||||||||||||||||||||
| Effective income tax (benefit) rate | $ | 828 | 16.6 | % | $ | 425 | 21.9 | % | $ | 602 | 17.4 | % | $ | 65 | 23.2 | % | $ | (61) | (57.8 | %) | $ | 182 | 19.9 | % | ||||||||||||||
(*)The following states made up the majority (greater than 50%) of the tax effect in this category: for Southern Company and Georgia Power, Georgia; for Alabama Power, Alabama; for Mississippi Power, Mississippi; for Southern Power, Alabama, California, Delaware, Georgia, North Carolina, Oklahoma, and Tennessee; and for Southern Company Gas, Illinois.
| 2024 | ||||||||||||||||||||||||||||||||||||||
Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas | |||||||||||||||||||||||||||||||||
| (in millions, except percentages) | ||||||||||||||||||||||||||||||||||||||
| Federal statutory rate | $ | 1,098 | 21.0 | % | $ | 370 | 21.0 | % | $ | 661 | 21.0 | % | $ | 52 | 21.0 | % | $ | 36 | 21.0 | % | $ | 209 | 21.0 | % | ||||||||||||||
State and local income tax, net of federal income tax effect(*) | 305 | 5.8 | 89 | 5.0 | 184 | 5.9 | 11 | 4.4 | (4) | (2.3) | 62 | 6.2 | ||||||||||||||||||||||||||
| Foreign tax effects | 6 | 0.1 | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Effect of cross-border tax laws | (1) | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Tax credits — | ||||||||||||||||||||||||||||||||||||||
| Amortization of ITCs | (61) | (1.2) | (1) | (0.1) | (7) | (0.2) | — | — | (46) | (26.4) | — | — | ||||||||||||||||||||||||||
| Federal PTCs | (147) | (2.8) | (1) | (0.1) | (116) | (3.7) | — | — | (30) | (17.2) | — | — | ||||||||||||||||||||||||||
| Other | (3) | (0.1) | (1) | — | (1) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Nontaxable or nondeductible items — | — | |||||||||||||||||||||||||||||||||||||
| AFUDC equity | (44) | (0.8) | (12) | (0.7) | (32) | (1.0) | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Other | 30 | 0.6 | 12 | 0.7 | 26 | 0.8 | 1 | 0.6 | 1 | 0.2 | 1 | 0.1 | ||||||||||||||||||||||||||
| Changes in unrecognized tax benefits — | ||||||||||||||||||||||||||||||||||||||
| State changes in unrecognized tax benefits from prior periods, net of federal income tax effect | (25) | (0.5) | — | — | (33) | (1.0) | — | — | — | — | 8 | 0.8 | ||||||||||||||||||||||||||
| Other adjustments — | ||||||||||||||||||||||||||||||||||||||
| Noncontrolling interests | 30 | 0.6 | — | — | — | — | — | — | 30 | 17.1 | — | — | ||||||||||||||||||||||||||
| Federal flowback of excess deferreds | (206) | (3.9) | (94) | (5.3) | (70) | (2.2) | (16) | (6.5) | — | — | (22) | (2.2) | ||||||||||||||||||||||||||
| Other | (13) | (0.3) | (2) | (0.1) | (9) | (0.4) | (1) | (0.3) | — | — | — | (0.1) | ||||||||||||||||||||||||||
| Effective income tax (benefit) rate | $ | 969 | 18.5 | % | $ | 360 | 20.4 | % | $ | 603 | 19.2 | % | $ | 47 | 19.2 | % | $ | (13) | (7.6 | %) | $ | 258 | 25.8 | % | ||||||||||||||
(*)The following states made up the majority (greater than 50%) of the tax effect in this category: for Southern Company and Georgia Power, Georgia; for Alabama Power, Alabama; for Mississippi Power, Mississippi; for Southern Power, Georgia and Oklahoma; and for Southern Company Gas, Illinois.
| 2023 | ||||||||||||||||||||||||||||||||||||||
Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas | |||||||||||||||||||||||||||||||||
| (in millions, except percentages) | ||||||||||||||||||||||||||||||||||||||
| Federal statutory rate | $ | 912 | 21.0 | % | $ | 305 | 21.0 | % | $ | 531 | 21.0 | % | $ | 47 | 21.0 | % | $ | 51 | 21.0 | % | $ | 174 | 21.0 | % | ||||||||||||||
State and local income tax, net of federal income tax effect(*) | 117 | 2.7 | 75 | 5.2 | 45 | 1.8 | 11 | 4.9 | (2) | (0.7) | 62 | 7.6 | ||||||||||||||||||||||||||
| Tax credits — | ||||||||||||||||||||||||||||||||||||||
| Amortization of ITCs | (56) | (1.3) | (1) | (0.1) | (2) | (0.1) | — | — | (46) | (19.0) | — | — | ||||||||||||||||||||||||||
| Federal PTCs | (52) | (1.2) | — | — | (35) | (1.4) | — | — | (18) | (7.4) | — | — | ||||||||||||||||||||||||||
| Other | (4) | (0.1) | (2) | (0.1) | (2) | (0.1) | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Nontaxable or nondeductible items — | ||||||||||||||||||||||||||||||||||||||
| AFUDC equity | (48) | (1.1) | (17) | (1.2) | (31) | (1.2) | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Other | 23 | 0.5 | 14 | 1.0 | 21 | 0.8 | 1 | 0.5 | 1 | 0.4 | 1 | 0.1 | ||||||||||||||||||||||||||
| Changes in unrecognized tax benefits | (5) | (0.1) | — | — | (6) | (0.2) | — | — | — | — | 2 | 0.2 | ||||||||||||||||||||||||||
| Other adjustments — | ||||||||||||||||||||||||||||||||||||||
| Noncontrolling interests | 27 | 0.6 | — | — | — | — | — | — | 27 | 11.1 | — | — | ||||||||||||||||||||||||||
| Federal flowback of excess deferreds | (401) | (9.2) | (287) | (19.8) | (64) | (2.6) | (23) | (10.2) | — | — | (22) | (2.6) | ||||||||||||||||||||||||||
| Other | (17) | (0.4) | (6) | (0.4) | (9) | (0.2) | — | — | (1) | (0.3) | (6) | (0.7) | ||||||||||||||||||||||||||
| Effective income tax rate | $ | 496 | 11.4 | % | $ | 81 | 5.6 | % | $ | 448 | 17.8 | % | $ | 36 | 16.2 | % | $ | 12 | 5.1 | % | $ | 211 | 25.6 | % | ||||||||||||||
(*)The following states made up the majority (greater than 50%) of the tax effect in this category: for Southern Company and Alabama Power, Alabama; for Georgia Power, Georgia; for Mississippi Power, Mississippi; for Southern Power, Georgia and Oklahoma; and for Southern Company Gas, Illinois.
Deferred Tax Assets and Liabilities
The tax effects of temporary differences between the carrying amounts of assets and liabilities in the financial statements of the Registrants and their respective tax bases, which give rise to deferred tax assets and liabilities, are as follows:
| At December 31, 2025 | ||||||||||||||||||||
| Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas | |||||||||||||||
| (in millions) | ||||||||||||||||||||
| Deferred tax liabilities — | ||||||||||||||||||||
| Accelerated depreciation | $ | 10,234 | $ | 2,641 | $ | 4,035 | $ | 363 | $ | 1,345 | $ | 1,675 | ||||||||
| Property basis differences | 3,090 | 1,394 | 1,099 | 177 | — | 418 | ||||||||||||||
| Employee benefit obligations | 1,223 | 434 | 501 | 66 | 15 | 64 | ||||||||||||||
| AROs | 710 | 422 | 242 | — | — | — | ||||||||||||||
| Under recovered fuel and natural gas costs | 195 | 45 | 135 | 15 | — | — | ||||||||||||||
| Regulatory assets — | ||||||||||||||||||||
| AROs | 1,809 | 590 | 1,191 | 28 | — | — | ||||||||||||||
| Employee benefit obligations | 699 | 190 | 221 | 34 | — | 33 | ||||||||||||||
| Remaining book value of retired assets | 395 | 229 | 161 | 5 | — | — | ||||||||||||||
| Storm damage reserves | 236 | — | 236 | — | — | — | ||||||||||||||
| Premium on reacquired debt | 53 | 8 | 44 | 1 | — | — | ||||||||||||||
| Other | 644 | 141 | 211 | 32 | 26 | 175 | ||||||||||||||
| Total deferred income tax liabilities | 19,288 | 6,094 | 8,076 | 721 | 1,386 | 2,365 | ||||||||||||||
| Deferred tax assets — | ||||||||||||||||||||
| AROs | 2,519 | 1,012 | 1,433 | 28 | — | — | ||||||||||||||
| ITC and PTC carryforwards | 1,427 | 31 | 683 | 2 | 481 | — | ||||||||||||||
| Employee benefit obligations | 837 | 188 | 261 | 47 | 17 | 77 | ||||||||||||||
| Estimated loss on plants under construction | 679 | — | 679 | — | — | — | ||||||||||||||
| Estimated loss on regulatory disallowance | 38 | — | — | — | — | 38 | ||||||||||||||
| Other state deferred tax attributes | 346 | — | 25 | 211 | 48 | 12 | ||||||||||||||
| Federal effect of net state deferred tax liabilities | 460 | 201 | 141 | — | 24 | 114 | ||||||||||||||
| Other property basis differences | 159 | — | 73 | — | 73 | — | ||||||||||||||
| State effect of federal deferred taxes | 136 | 136 | — | — | — | — | ||||||||||||||
| Other partnership basis differences | 149 | — | — | — | 149 | — | ||||||||||||||
| Regulatory liability associated with the Tax Reform Legislation (not subject to normalization) | 18 | 18 | — | — | — | — | ||||||||||||||
| Long-term debt fair value adjustment | 67 | — | — | — | — | 67 | ||||||||||||||
| Other comprehensive losses | 51 | 2 | — | — | — | — | ||||||||||||||
| Other | 780 | 297 | 237 | 49 | 44 | 92 | ||||||||||||||
| Total deferred income tax assets | 7,666 | 1,885 | 3,532 | 337 | 836 | 400 | ||||||||||||||
| Valuation allowance | (445) | — | (267) | (41) | (29) | (6) | ||||||||||||||
| Net deferred income tax assets | 7,221 | 1,885 | 3,265 | 296 | 807 | 394 | ||||||||||||||
| Net deferred income taxes (assets)/liabilities | $ | 12,067 | $ | 4,209 | $ | 4,811 | $ | 425 | $ | 579 | $ | 1,971 | ||||||||
| Recognized in the balance sheets: | ||||||||||||||||||||
| Accumulated deferred income taxes – assets | $ | (66) | $ | — | $ | — | $ | (66) | $ | — | $ | — | ||||||||
| Accumulated deferred income taxes – liabilities | $ | 12,133 | $ | 4,209 | $ | 4,811 | $ | 491 | $ | 579 | $ | 1,971 | ||||||||
| At December 31, 2024 | ||||||||||||||||||||
| Southern Company | Alabama Power | Georgia Power | Mississippi Power | Southern Power | Southern Company Gas | |||||||||||||||
| (in millions) | ||||||||||||||||||||
| Deferred tax liabilities — | ||||||||||||||||||||
| Accelerated depreciation | $ | 9,828 | $ | 2,583 | $ | 3,810 | $ | 344 | $ | 1,309 | $ | 1,575 | ||||||||
| Property basis differences | 3,025 | 1,497 | 918 | 192 | — | 412 | ||||||||||||||
| Employee benefit obligations | 1,067 | 362 | 470 | 54 | 13 | 60 | ||||||||||||||
| AROs | 727 | 458 | 221 | — | — | — | ||||||||||||||
| Under recovered fuel and natural gas costs | 318 | 13 | 305 | — | — | — | ||||||||||||||
| Regulatory assets — | ||||||||||||||||||||
| AROs | 1,886 | 658 | 1,193 | 35 | — | — | ||||||||||||||
| Employee benefit obligations | 746 | 191 | 237 | 35 | — | 35 | ||||||||||||||
| Remaining book value of retired assets | 360 | 168 | 187 | 5 | — | — | ||||||||||||||
| Storm damage reserves | 216 | — | 216 | — | — | — | ||||||||||||||
| Premium on reacquired debt | 57 | 8 | 48 | 1 | — | — | ||||||||||||||
| Other | 678 | 171 | 187 | 61 | 1 | 201 | ||||||||||||||
| Total deferred income tax liabilities | 18,908 | 6,109 | 7,792 | 727 | 1,323 | 2,283 | ||||||||||||||
| Deferred tax assets — | ||||||||||||||||||||
| AROs | 2,613 | 1,116 | 1,414 | 35 | — | — | ||||||||||||||
| CAMT carryforwards | 40 | — | 18 | — | — | 104 | ||||||||||||||
| ITC and PTC carryforwards | 1,380 | 48 | 719 | — | 384 | — | ||||||||||||||
| Employee benefit obligations | 897 | 196 | 279 | 49 | 16 | 87 | ||||||||||||||
| Estimated loss on plants under construction | 773 | — | 773 | — | — | — | ||||||||||||||
| Estimated loss on regulatory disallowance | 20 | — | — | — | — | 20 | ||||||||||||||
| Other state deferred tax attributes | 366 | — | 26 | 224 | 49 | 16 | ||||||||||||||
| Federal effect of net state deferred tax liabilities | 402 | 197 | 100 | — | 23 | 107 | ||||||||||||||
| Other property basis differences | 176 | — | 75 | — | 85 | — | ||||||||||||||
| State effect of federal deferred taxes | 126 | 126 | — | — | — | — | ||||||||||||||
| Other partnership basis differences | 60 | — | — | — | 60 | — | ||||||||||||||
| Regulatory liability associated with the Tax Reform Legislation (not subject to normalization) | 18 | 18 | — | — | — | — | ||||||||||||||
| Long-term debt fair value adjustment | 73 | — | — | — | — | 73 | ||||||||||||||
| Other comprehensive losses | 48 | 3 | — | — | 1 | — | ||||||||||||||
| Other | 601 | 227 | 160 | 50 | 20 | 86 | ||||||||||||||
| Total deferred income tax assets | 7,593 | 1,931 | 3,564 | 358 | 638 | 493 | ||||||||||||||
| Valuation allowance | (333) | — | (157) | (41) | (27) | (6) | ||||||||||||||
| Net deferred income tax assets | 7,260 | 1,931 | 3,407 | 317 | 611 | 487 | ||||||||||||||
| Net deferred income taxes (assets)/liabilities | $ | 11,648 | $ | 4,178 | $ | 4,385 | $ | 410 | $ | 712 | $ | 1,796 | ||||||||
| Recognized in the balance sheets: | ||||||||||||||||||||
| Accumulated deferred income taxes – assets | $ | (82) | $ | — | $ | — | $ | (82) | $ | — | $ | — | ||||||||
| Accumulated deferred income taxes – liabilities | $ | 11,730 | $ | 4,178 | $ | 4,385 | $ | 492 | $ | 712 | $ | 1,796 | ||||||||
The traditional electric operating companies and the natural gas distribution utilities have tax-related regulatory assets (deferred income tax charges) and regulatory liabilities (deferred income tax credits). The regulatory assets are primarily attributable to tax benefits flowed through to customers in prior years, deferred taxes previously recognized at rates lower than the current enacted tax law, and taxes applicable to capitalized interest. The regulatory liabilities are primarily attributable to deferred taxes previously recognized at rates higher than the current enacted tax law, certain tax credits deferred for future customer benefit, and unamortized ITCs. See Note 2 for each Registrant's related balances at December 31, 2025 and 2024.
Tax Credit Carryforwards
Federal ITC/PTC carryforwards at December 31, 2025 were as follows:
Southern Company | Alabama Power | Georgia Power | Southern Power | |||||||||||
| (in millions) | ||||||||||||||
| Federal ITC/PTC carryforwards | $ | 850 | $ | 31 | $ | 152 | $ | 481 | ||||||
Tax year(s) in which federal ITC/PTC carryforwards expire(*) | 2031-2045 | 2032-2045 | 2031-2045 | 2035-2045 | ||||||||||
| Year by which federal ITC/PTC carryforwards are expected to be utilized | 2031 | 2031 | 2031 | 2031 | ||||||||||
(*)The federal ITC/PTC carryforwards at Alabama Power and Georgia Power expiring in 2031-2034 are immaterial to their respective financial statements.
The estimated tax credit utilization reflects the various transactions described in Note 15 and could be impacted by numerous factors, including the acquisition or construction of additional renewable projects, changes in taxable income projections, transfer of eligible credits, potential income tax rate changes, and remaining final guidance on the IRA. In the third quarter 2023 and the second quarter 2024, Georgia Power started generating advanced nuclear PTCs for Plant Vogtle Units 3 and 4, respectively, beginning on each unit's respective in-service date. In addition, pursuant to the Vogtle Joint Ownership Agreements, Georgia Power is purchasing advanced nuclear PTCs for Plant Vogtle Unit 3 and 4 from the other Vogtle Owners. See Note 2 under "Georgia Power – Nuclear Construction" for additional information on Plant Vogtle Units 3 and 4.
At December 31, 2025, Southern Company and Georgia Power also had approximately $483 million and $438 million, respectively, in net state investment and other net state tax credit carryforwards for the State of Georgia that will expire between tax years 2025 and 2033 and are not expected to be fully utilized. Southern Company and Georgia Power have a net state valuation allowance of $248 million and $211 million, respectively, associated with these carryforwards, both of which increased during 2025 by $87 million.
The ultimate outcome of these matters cannot be determined at this time.
Net Operating Loss Carryforwards
At December 31, 2025, the net state income tax benefit of state and local NOL carryforwards and associated valuation allowances for Southern Company's subsidiaries were as follows:
| Company/Jurisdiction | Approximate Net State Income Tax Benefit of NOL Carryforwards | Tax Year NOL Begins Expiring | Net State Valuation Allowance for NOL Carryforwards | ||||||||
| (in millions) | (in millions) | ||||||||||
| Mississippi Power | |||||||||||
| Mississippi | $ | 167 | 2032 | $ | (32) | ||||||
| Southern Power | |||||||||||
| Oklahoma | $ | 25 | 2035 | $ | (13) | ||||||
| Florida | 10 | 2034 | (10) | ||||||||
| Other states | 2 | 2034 | — | ||||||||
Southern Power total | $ | 37 | $ | (23) | |||||||
Other(*) | |||||||||||
| New York | $ | 11 | 2036 | $ | (11) | ||||||
| New York City | 14 | 2036 | (14) | ||||||||
| Other states | 21 | 2026 | (5) | ||||||||
Southern Company total | $ | 250 | $ | (85) | |||||||
(*)Represents other non-registrant Southern Company subsidiaries. Alabama Power, Georgia Power, and Southern Company Gas did not have material state or local NOL carryforwards at December 31, 2025.
Certain state NOLs are not expected to be fully utilized prior to expiration. The ultimate outcome of these matters cannot be determined at this time.
Unrecognized Tax Benefits
Changes in unrecognized tax benefits for the periods presented were as follows:
Southern Company | Alabama Power | Georgia Power | Southern Company Gas | |||||||||||
| (in millions) | ||||||||||||||
Unrecognized tax benefits at December 31, 2022 | $ | 80 | $ | — | $ | — | $ | 32 | ||||||
Tax positions changes — | ||||||||||||||
| Increase from prior periods | 88 | — | 86 | 2 | ||||||||||
| Statute of limitations expiration | (52) | — | (9) | — | ||||||||||
Unrecognized tax benefits at December 31, 2023 | 116 | — | 77 | 34 | ||||||||||
Tax positions changes — | ||||||||||||||
| Increase from prior periods | 10 | — | — | 10 | ||||||||||
Decrease from prior periods | (44) | — | (43) | — | ||||||||||
Unrecognized tax benefits at December 31, 2024 | 82 | — | 34 | 44 | ||||||||||
Tax positions changes — | ||||||||||||||
| Statute of limitations expiration | (34) | — | (34) | — | ||||||||||
Increase from current period | 122 | 50 | 72 | — | ||||||||||
Unrecognized tax benefits at December 31, 2025 | $ | 170 | $ | 50 | $ | 72 | $ | 44 | ||||||
The unrecognized tax positions increase from prior periods for 2023 is primarily related to the amendment of certain 2019 through 2021 state tax filing positions related to tax credit utilization, a portion of which decreased in the fourth quarter 2023 due to a statute of limitations expiration. If effective settlement of the positions is favorable, these positions would decrease Southern Company's and Georgia Power's annual effective tax rates. The ultimate outcome of this unrecognized tax benefit, which is expected to be resolved within the next 12 months, is dependent on acceptance by the state or expiration of related statute of limitations.
The unrecognized tax positions reductions due to statute of limitations expiration for 2023 primarily relate to a 2019 state tax filing position to exclude certain gains from 2019 dispositions from taxation in a certain unitary state. This tax position and related interest was recognized in the fourth quarter 2023 and decreased Southern Company's annual effective tax rate.
The unrecognized tax positions increase from prior periods for 2024 is primarily related to a certain state tax filing position at Southern Company Gas. If effective settlement of this position is favorable, this position would decrease Southern Company's and Southern Company Gas' annual effective tax rates. The ultimate outcome is dependent on acceptance by the state.
The unrecognized tax positions decrease from prior periods and statute of limitations expiration for 2024 and 2025, respectively, are primarily related to the 2019 through 2021 amended state filing positions related to tax credit utilization at Georgia Power.
Alabama Power and Georgia Power recorded an unrecognized tax position in the second quarter 2025 for zero-emission nuclear power PTCs generated on the consolidated 2024 federal income tax return due to the uncertainty to meet the prevailing wage requirements. In the fourth quarter 2025, the unrecognized tax position at Alabama Power and Georgia Power was reversed as Southern Company received the acceptance letter from the IRS on these PTCs for the 2024 tax year. The reversal of the unrecognized tax position did not impact Southern Company's, Alabama Power's, and Georgia Power's effective tax rates.
The unrecognized tax positions increase from the current period is related to the Alabama Power and Georgia Power zero-emission nuclear power PTCs for the 2025 tax year of $50 million and $72 million, respectively.
All of the Registrants classify interest on tax uncertainties as interest expense. Accrued interest for all tax positions was immaterial for all periods presented. None of the Registrants accrued any penalties on uncertain tax positions.
The IRS has finalized its audits of Southern Company's consolidated federal income tax returns through 2024. Southern Company is a participant in the Compliance Assurance Process of the IRS. The IRS selected six Southern Power partnership returns for exam for the 2020 and 2021 tax years. One audit for 2020 is still under review, and the remaining audits have been closed with no change. The ultimate outcome of this matter cannot be determined at this time. The audits for the Registrants' state income tax returns have either been concluded, or the statute of limitations has expired, for years prior to 2018.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 15, 2024 | |
| 2022 | Feb 16, 2023 | |
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.