Jackson Financial Inc.JXN
Jackson Financial Inc. Income Taxes Disclosure
Income Taxes
U.S. Tax Law Changes
The One Big Beautiful Bill Act ("OBBBA") was enacted on July 4, 2025 and includes a broad range of tax reform provisions that impact corporations which are effective for the 2025 tax year. As of December 31, 2025, the corporate income tax provision effective for the 2025 tax year did not impact the Company's current income tax liability. As of December 31, 2025, the Company recorded a $2 million valuation allowance expense related to the provision in the law that impacted the Company's ability to utilize the deferred tax asset for the charitable contributions carryover.
Effective Tax Rate
The components of the provision for federal, state and local income taxes were as follows (in millions):
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| U.S. Income (Loss) from continuing operations before income tax (benefit) expense | $ | (159) | $ | 992 | $ | 938 | ||||||||||||||
| Income tax (benefit) expense from continuing operations: | ||||||||||||||||||||
| Current tax (benefit) expense | ||||||||||||||||||||
| Federal | $ | (15) | $ | (250) | $ | 213 | ||||||||||||||
| State and local | 2 | 2 | (2) | |||||||||||||||||
| Total current tax (benefit) expense | (13) | (248) | 211 | |||||||||||||||||
| Deferred tax (benefit) expense | ||||||||||||||||||||
| Federal | (172) | 275 | (205) | |||||||||||||||||
| State and local | (1) | 19 | (2) | |||||||||||||||||
| Total deferred tax (benefit) expense | (173) | 294 | (207) | |||||||||||||||||
| Total income tax (benefit) expense | ||||||||||||||||||||
| Federal | (187) | 25 | 8 | |||||||||||||||||
| State and local | 1 | 21 | (4) | |||||||||||||||||
| Total income tax (benefit) expense | $ | (186) | $ | 46 | $ | 4 | ||||||||||||||
The federal income tax provisions differ from the amounts determined by multiplying pretax income attributable to the Company by the statutory federal income tax rate of 21% as follows (in millions):
| Years Ended December 31, | |||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||
| Amount | Percentage | Amount | Percentage | Amount | Percentage | ||||||||||||||||||||||||
| U.S. Federal Income taxes at statutory rate | $ | (33) | 21.0 | % | $ | 208 | 21.0 | % | $ | 197 | 21.0 | % | |||||||||||||||||
| Domestic Federal | |||||||||||||||||||||||||||||
| Tax Credits | |||||||||||||||||||||||||||||
Foreign tax credits ("FTC") (1) | (64) | 40.0 | % | (37) | (3.7) | % | (48) | (5.1) | % | ||||||||||||||||||||
| Nontaxable and nondeductible items | |||||||||||||||||||||||||||||
| Dividends received deduction | (121) | 75.7 | % | (134) | (13.5) | % | (133) | (14.2) | % | ||||||||||||||||||||
Nondeductible compensation (2) | 9 | (5.8) | % | 11 | 1.1 | % | 5 | 0.5 | % | ||||||||||||||||||||
Other (3) | 2 | (0.6) | % | (4) | (0.5) | % | (8) | (0.8) | % | ||||||||||||||||||||
Net tax refund interest (benefit) (2) | (11) | 7.2 | % | (9) | (0.9) | % | (1) | (0.1) | % | ||||||||||||||||||||
| Valuation allowance | 31 | (19.7) | % | (5) | (0.5) | % | (5) | (0.5) | % | ||||||||||||||||||||
Domestic state and local income taxes, net of federal effect (4) | 1 | (0.8) | % | 16 | 1.6 | % | (3) | (0.3) | % | ||||||||||||||||||||
| Total Income tax (benefit) expense | $ | (186) | 117.0 | % | $ | 46 | 4.6 | % | $ | 4 | 0.5 | % | |||||||||||||||||
Reconciling items recorded in the current year to adjust prior year income taxes for items such as for the return-to-provision true-ups are included in the
reconciling item category in which they would have been included in the prior year.
(1) For the years ended December 31, 2025, 2024 and 2023, this represents the net benefit from foreign tax credits generated by the fund investments of the variable life and annuity contracts.
(2) For the year ending December 31, 2025, the Company has determined this meets the 5% disclosure threshold. As a result, comparative amounts are
presented for the years ending December 31, 2024 and December 31, 2023.
(3) Aggregation of insignificant reconciling items that are less than the 5% of the computed income tax expense (benefit) threshold in each year presented.
(4) For the year ending December 31, 2025, state and local income taxes in Florida and Illinois comprise the majority of the state and local income taxes, net of federal category. For the year ending December 31, 2024, state and local income taxes in Florida comprise the majority of the state and local income taxes net of federal category. For the year ending December 31, 2023, state and local income taxes in New York comprise the majority of the state and local income taxes net of federal category.
The dividends received deduction (“DRD”) reduces the amount of income subject to tax. The DRD for the current period was estimated using information from 2024 and estimates of current year investments results. The actual current year DRD can vary based on factors such as changes in the amount of dividends received that are eligible for the DRD, changes in the amount of distributions received from fund investments, changes in the account balances of variable life and annuity contracts, and the Company’s taxable income before the DRD.
Income Taxes Paid (Refunded)
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
U.S. Federal (1) | $ | (98) | $ | (10) | $ | (21) | ||||||||||||||
U.S. State and Local (2) | 1 | 2 | — | |||||||||||||||||
| Total | $ | (97) | $ | (8) | $ | (21) | ||||||||||||||
(1) The income taxes refunded in 2025, 2024, and 2023 include $(11), $(12), and $(2) million of net IRS interest, respectively.
(2) For the year ending December 31, 2025 and December 31, 2024 payments to Florida comprise the majority of the state and local income taxes paid (refunded).
Deferred Taxes and Assessment of Valuation Allowance
The tax effects of significant temporary differences that gave rise to deferred tax assets and liabilities were as follows (in millions):
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Gross deferred tax asset | ||||||||||||||
| Difference between financial reporting and the tax basis of: | ||||||||||||||
| Policy reserves and other insurance items | $ | 237 | $ | — | ||||||||||
| Employee benefits | 144 | 147 | ||||||||||||
| Derivative investments | 581 | 1,174 | ||||||||||||
Tax Credits Carryforward | 283 | 203 | ||||||||||||
| Net unrealized losses | 684 | 1,013 | ||||||||||||
| Net operating loss carryforward | 2,070 | 1,768 | ||||||||||||
Other | 47 | 64 | ||||||||||||
| Total gross deferred tax asset | 4,046 | 4,369 | ||||||||||||
| Valuation allowance | (486) | (734) | ||||||||||||
| Gross deferred tax asset, net of valuation allowance | $ | 3,560 | $ | 3,635 | ||||||||||
| Gross deferred tax liability | ||||||||||||||
| Difference between financial reporting and the tax basis of: | ||||||||||||||
| Policy reserves and other insurance items | $ | — | $ | (148) | ||||||||||
| Deferred acquisition costs and sales inducements | (2,305) | (2,368) | ||||||||||||
| Other investment items | (468) | (598) | ||||||||||||
| Other | (68) | (41) | ||||||||||||
| Total gross deferred tax liability | (2,841) | (3,155) | ||||||||||||
| Net deferred tax asset | $ | 719 | $ | 480 | ||||||||||
The Company is required to evaluate the recoverability of its deferred tax assets and establish a valuation allowance, if necessary, to reduce its deferred tax asset to an amount that is more likely than not to be realizable. Considerable judgment and the use of estimates are required when determining whether a valuation allowance is necessary and, if so, the amount of such valuation allowance. When evaluating the need for a valuation allowance, the Company considers many factors, including: the nature and character of the deferred tax assets and liabilities; taxable income in prior carryback years; future reversals of temporary differences; the length of time carryovers can be utilized; and any tax planning strategies the Company would employ to avoid a tax benefit from expiring unused. The Company has adopted an accounting policy to analyze the ability to recover the CAMT credit carryover deferred tax asset separately from the deferred tax assets generated under the regular tax system.
The Company utilized a three-year rolling calculation of actual comprehensive income before taxes adjusted for permanent items to measure the cumulative losses in recent years. In 2020, the Company entered into a funds withheld coinsurance agreement with Athene, which results in the cumulative comprehensive income including items that are not indicative of the Company’s ability to generate future taxable income. As such, an adjustment was made to exclude the change in AOCI not attributable to the funds withheld coinsurance agreement with Athene. The change in AOCI attributable to these assets is excluded because our invested assets are generally invested to closely match the duration of our liabilities, which are longer duration in nature, and therefore the Company believes that the period-to-period fair market value fluctuations in AOCI are inconsistent when analyzing trends in our business. The changes in AOCI within the funds withheld account related to the Athene Reinsurance Transaction are not excluded because they offset the related earnings from the Athene Reinsurance Transaction included in pre-tax income and thus appropriately results in removing the impact from the Athene Reinsurance Transaction from the cumulative income test which economically should be minimal over the life of the reinsured business. Based on these factors, it is reasonable for the Company to rely on the estimated projection of future income as evidence in assessing the sources of taxable income available to realize the benefit of deferred tax assets.
The Company evaluated each component of the deferred tax asset and assessed the effects of limitations and/or interpretations on the value of such components to be fully recognized in the future. The Company also evaluated the likelihood of sufficient taxable income in the future to offset the available deferred tax assets based on evidence considered to be objective and verifiable. Based on the analysis at December 31, 2025 and 2024, the Company concluded that it is more likely than not that the $719 million and $480 million, respectively, of net deferred tax assets will be realized through future projected taxable income.
For the year ended December 31, 2025, changes in market conditions and interest rates, impacted the unrealized tax gains and losses in the available for sale securities portfolio resulting in deferred tax assets related to net unrealized tax capital losses for the life insurance group. The deferred tax asset relates to the unrealized losses for which the carryforward period has not yet begun, and as such, when assessing its recoverability, we consider our ability and intent to hold the underlying securities to recovery, our capital loss carryback capacity, along with reversing capital deferred tax liabilities.
As of December 31, 2025, based on all available evidence, the Company concluded that a valuation allowance should be established on a portion of the deferred tax asset related to unrealized losses and charitable contributions carryover, which was impacted by the OBBBA, that are not more likely than not to be realized. For the year ended December 31, 2025, the Company recorded an decrease of $250 million to the valuation allowance associated with the realized capital losses and the unrealized tax losses in the Company’s available for sale securities portfolio, and recorded an increase of $2 million for the charitable contributions carryover. The $248 million decrease for the twelve months ending December 31, 2025 to the valuation allowance consists of $280 million tax benefit recorded to other comprehensive income and $32 million tax expense recorded in the income tax expense. At December 31, 2025 and 2024, the Company has recorded a total valuation allowance of $486 million and $734 million, respectively, primarily associated with the unrealized tax losses in the Life Companies’ available for sale securities portfolio and charitable contributions carryover where it is not more likely than not that the full tax benefit of the losses will be realized.
Carryforwards
The following table sets forth the amount and expiration dates of federal and state operating, capital loss and tax credit carryforwards for tax periods indicated. Included in the table is a Section 382 loss carryforward attributable to a previous acquisition. Section 382 of the Internal Revenue Code imposes limitations on the utilization of net operating loss carryforwards. The Section 382 limitation is an annual limitation on the amount of pre-acquisition net operating losses that a corporation may use to offset post-acquisition income. Section 382 further limits certain unrealized built-in losses at the time of acquisition.
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
Federal net operating and capital loss carryforwards (1) | $ | 9,481 | $ | 8,104 | ||||||||||
Section 382 net operating loss from previous acquisition (2) | 137 | 137 | ||||||||||||
State net operating and capital loss carryforwards (3) | 816 | 594 | ||||||||||||
Federal capital loss carryforwards (4) | 164 | 116 | ||||||||||||
Foreign Tax Credit (5) | 276 | 196 | ||||||||||||
Alternative Minimum Credit (6) | 6 | 6 | ||||||||||||
Other Tax Credits (7) | 1 | — | ||||||||||||
| Total | $ | 10,881 | $ | 9,153 | ||||||||||
(1) Unlimited carryforward. | ||||||||||||||
(2) Subject to annual limitation. $126 million can be used in 2026. $126 million expires in 2026 and $11 million expires in 2027. | ||||||||||||||
(3) For the year ended December 31, 2025, includes $497 million expires in 0-20 years and $319 million unlimited carryforward. | ||||||||||||||
(4) For the year ended December 31, 2025, includes $11 million expires in 2028, $89 million expires in 2029, and $64 million expires in 2030. | ||||||||||||||
(5) 10 year carryforward and begin to expire in 2031. | ||||||||||||||
(6) Subject to Section 383 limitations. | ||||||||||||||
(7) 20 year carryforward and begin to expire in 2041. | ||||||||||||||
Accounting for Uncertainty in Income Taxes
The Company determines whether a tax position is more likely than not to be sustained upon examination by tax authorities. The portion of a tax position that is greater than the 50% likelihood of being realized is recorded on the financial statements and any unrecognized part of a position due to uncertainties are recorded as a liability and are charged to income tax in the period that determination is made. The Company has considered both permanent and temporary positions in determining the unrecognized tax benefit rollforward. At December 31, 2025 and 2024, the Company held no reserves related to unrecognized tax benefits.
The Company recognizes interest and penalties accrued, if any, related to unrecognized tax benefits as a component of income tax (benefit) expense. The Company did not recognize any interest and penalty expense in 2025, 2024 or 2023. For 2025 and 2024, the Company did not accrue any amounts for interest expense or penalties.
Tax Examinations and Litigation
The Company is subject to examination by the Internal Revenue Service and other tax authorities in jurisdictions in which the Company operates. The Company is not currently subject to federal, state or local income tax examination. The IRS completed an examination of the 2019-2023 Brooke Life Insurance Company and Subsidiaries federal consolidated returns during 2025 that resulted in no changes. Tax years from 2022 to 2025 remain open under the statute of limitations.
Organization and Tax Sharing Agreements
Our U.S. federal consolidated income tax group includes both life companies and non-life companies. The Company files separate non-life and life insurance consolidated federal income tax returns with the U.S. federal government and various state and local jurisdictions, as well as certain foreign jurisdictions.
Jackson Financial and its non-life insurance subsidiaries, Jackson Holdings, LLC and PPM, file a consolidated non-life federal income tax return. Brooke Life files a consolidated life insurance company tax return with Jackson, JNY, Squire Re II, Brooke Re, and Hickory Re. VFL International Life Company SPC, LTD is taxed as a controlled foreign corporation of Jackson. With the exception of several insignificant wholly-owned subsidiaries that are not included in the Brooke Life consolidated tax return, all other subsidiaries of Jackson are limited liability companies with all of their interests owned by Jackson. Accordingly, they are not considered separate entities for income tax purposes and, therefore, are taxed as part of the operations of Jackson. Income tax expense is calculated on a separate company basis.
Jackson Financial, Jackson Holdings LLC, and PPM have entered into written tax sharing agreements. These tax sharing agreements are generally based on a separate return basis with benefits for credits and losses.
Brooke Life, Jackson, JNY, Squire RE II, Brooke Re and Hickory Re have entered into written tax sharing agreements. These tax sharing agreements are generally based on a separate return basis with benefits for credits and losses.
CAMT liability is allocated to each company based on its share of the impact of CAMT in the respective consolidated tax return filing group in which it is a member.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 7, 2022 | |
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.