HUMANA INCHUM
HUMANA INC Income Taxes Disclosure
INCOME TAXES
The provision for income taxes consisted of the following for the years ended December 31, 2025, 2024 and 2023:
| 2025 | 2024 | 2023 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Current provision | |||||||||||||||||
| Federal | $ | 130 | $ | 566 | $ | 915 | |||||||||||
| State and local | 45 | 39 | 84 | ||||||||||||||
| Foreign | — | — | 1 | ||||||||||||||
| Total current provision | 175 | 605 | 1,000 | ||||||||||||||
| Deferred tax expense (benefit) | |||||||||||||||||
| Federal | 89 | (179) | (178) | ||||||||||||||
| State and local | (14) | (13) | 6 | ||||||||||||||
| Foreign | — | — | 8 | ||||||||||||||
| Total deferred tax expense (benefit) | 75 | (192) | (164) | ||||||||||||||
| Total provision for income taxes | $ | 250 | $ | 413 | $ | 836 | |||||||||||
The reconciliation of the income tax provision at the U.S. statutory rate to the provision for income tax as reported for the years ended December 31, 2025, 2024 and 2023 are as follows:
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| ($ in millions) | |||||||||||||||||||||||||||||||||||
| U.S. federal statutory tax rate | $ | 302 | 21.0 | % | $ | 340 | 21.0 | % | $ | 698 | 21.0 | % | |||||||||||||||||||||||
| State and local income taxes, net of federal income tax effect | (6) | (0.4) | % | 14 | 0.9 | % | 76 | 2.3 | % | ||||||||||||||||||||||||||
| Changes in unrecognized tax benefits | 47 | 3.3 | % | 29 | 1.8 | % | 37 | 1.1 | % | ||||||||||||||||||||||||||
| Gain/loss on acquisitions and dispositions | (102) | (7.1) | % | — | — | % | (1) | — | % | ||||||||||||||||||||||||||
| Other adjustments | 9 | 0.6 | % | 30 | 1.8 | % | 26 | 0.8 | % | ||||||||||||||||||||||||||
| Provision for income taxes and effective income tax rate | $ | 250 | 17.4 | % | $ | 413 | 25.5 | % | $ | 836 | 25.2 | % | |||||||||||||||||||||||
The components of income before provision for income taxes for the years ended December 31, 2025, 2024 and 2023 are as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Domestic | $ | 1,485 | $ | 1,662 | $ | 3,351 | |||||||||||
| Foreign | (47) | (42) | (26) | ||||||||||||||
| Total | $ | 1,438 | $ | 1,620 | $ | 3,325 | |||||||||||
As of December 31, 2025, the Company paid income taxes net of refund of $231 million for federal income taxes and $41 million for state and local income taxes ($20 million for the state of Florida, and $21 million for other states). As of December 31, 2024, the Company paid income taxes net of refund of $506 million for federal income taxes and $64 million for state and local income taxes. As of December 31, 2023, the Company paid income taxes net of refund of $903 million for federal income taxes, $92 million for state and local income taxes, and $2 million for foreign income taxes.
Deferred income tax balances reflect the impact of temporary differences between the tax bases of assets or liabilities and their reported amounts in our consolidated financial statements, and are stated at enacted tax rates expected to be in effect when the reported amounts are actually recovered or settled.
Principal components of our net deferred tax balances at December 31, 2025 and 2024 were as follows:
| Assets (Liabilities) | |||||||||||
| 2025 | 2024 | ||||||||||
| (in millions) | |||||||||||
| Benefits payable | $ | 174 | $ | 217 | |||||||
| Compensation and other accrued expense | 172 | 171 | |||||||||
| Net operating loss carryforward | 148 | 93 | |||||||||
| Deferred acquisition costs | 35 | 39 | |||||||||
| Other | 26 | 6 | |||||||||
| Unearned revenues | 35 | 6 | |||||||||
| Investment securities | 544 | 510 | |||||||||
| Total deferred income tax assets | 1,134 | 1,042 | |||||||||
| Valuation allowance | (139) | (85) | |||||||||
| Total deferred income tax assets, net of valuation allowance | 995 | 957 | |||||||||
| Depreciable property and intangible assets | (523) | (502) | |||||||||
| Prepaid expenses | (353) | (172) | |||||||||
| Other | (35) | (23) | |||||||||
| Total deferred income tax liabilities | (911) | (697) | |||||||||
| Total net deferred income tax assets (liabilities) | $ | 84 | $ | 260 | |||||||
| Amounts recognized in the consolidated balance sheets: | |||||||||||
| Other long-term assets | $ | 84 | $ | 260 | |||||||
All deferred tax assets and liabilities are classified as noncurrent in our consolidated balance sheets as other long-term assets and liabilities at December 31, 2025 and 2024, respectively.
Valuation allowances are provided when it is considered more likely than not deferred tax assets will not be realized. The valuation allowances primarily relate to future tax benefits on certain federal, state and non-U.S. net operating loss carryforwards. At December 31, 2025, we had approximately $0.5 million of federal net operating losses, $2.0 billion of pre-tax state net operating losses, and approximately $141 million of Puerto Rico net operating losses to carry forward. A portion of these loss carryforwards, if not used to offset future taxable income, will expire from 2026 through 2042. The remaining balance of the net operating loss carryforwards has no expiration date. Due to limitations and uncertainty regarding our ability to use some of the loss carryforwards and certain other deferred tax assets, a valuation allowance of $139 million was established. For the remainder of the net operating loss carryforwards and other cumulative temporary differences, based on our historical record of producing taxable income and profitability, we have concluded that future operating income will be sufficient to recover these deferred tax assets.
We file income tax returns in the United States and Puerto Rico. The U.S. Internal Revenue Service, or IRS, has completed its examinations of our consolidated income tax returns for 2022 and prior years. Our 2023 tax return is in the post-filing review period under the Compliance Assurance Process, or CAP, as we received a “no-change” letter in April of 2025. For our 2024 tax return, we received a full acceptance letter under the CAP, indicating that we have completed the advance (pre‑filing) review stage. With a few exceptions, which are immaterial in the aggregate, we are no longer subject to state, local and foreign tax examinations for years before 2021. We are not aware of any material adjustments that may be proposed as a result of any ongoing or future examinations.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 15, 2024 | |
| 2022 | Feb 16, 2023 | |
| 2021 | Feb 17, 2022 | |
| 2020 | Feb 18, 2021 | |
| 2019 | Feb 20, 2020 | |
| 2018 | Feb 21, 2019 | |
| 2017 | Feb 16, 2018 | |
| 2016 | Feb 17, 2017 | |
| 2015 | Feb 18, 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.