MBIA INC Income Taxes Disclosure
Note 10: Income Taxes
Income (loss) from continuing operations before income taxes consisted of:
|
|
Years Ended December 31, |
|
|||||||||
In millions |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Domestic |
|
$ |
(181 |
) |
|
$ |
(441 |
) |
|
$ |
(484 |
) |
Foreign |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Income (loss) from continuing operations before income taxes |
|
$ |
(181 |
) |
|
$ |
(441 |
) |
|
$ |
(484 |
) |
The Company files a consolidated tax return that includes all of its U.S. subsidiaries and foreign branches. The Company also filed tax returns in Mexico and in various state and local jurisdictions. Income tax expense (benefit) on income (loss) and shareholder's equity, net of changes in the Company's valuation allowance, was not material for the years ended December 31, 2025, 2024, and 2023 and did not have any material impact on the Company's financial results.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 10: Income Taxes (continued)
A reconciliation of the U.S. federal statutory tax rate to the Company's effective income tax rate for the years ended December 31, 2025, 2024 and 2023 is presented in the following table:
|
|
|
Years Ended December 31, |
|
||||||||||||||||||
|
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
||||||||||||
$ In millions |
|
Tax Effected |
|
Rate |
|
|
Tax Effected |
|
Rate |
|
|
Tax Effected |
|
Rate |
|
|||||||
. Federal statutory tax rate |
|
$ |
(38 |
) |
|
21.0 |
% |
|
$ |
(93 |
) |
|
21.0 |
% |
|
$ |
(101 |
) |
|
21.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Changes in valuation allowance |
|
|
33 |
|
|
(18.2 |
)% |
|
|
88 |
|
|
(19.9 |
)% |
|
|
95 |
|
|
(19.7 |
)% |
|
Non-taxable or non-deductible items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Executive compensation |
|
|
4 |
|
|
(2.2 |
)% |
|
|
2 |
|
|
(0.5 |
)% |
|
|
5 |
|
|
(1.1 |
)% |
|
Share-based compensation |
|
|
(2 |
) |
|
1.1 |
% |
|
|
- |
|
|
0.0 |
% |
|
|
- |
|
|
0.0 |
% |
|
GAAP-only gains/losses |
|
|
2 |
|
|
(1.1 |
)% |
|
|
2 |
|
|
(0.4 |
)% |
|
|
- |
|
|
0.0 |
% |
|
Other |
|
|
1 |
|
|
(0.6 |
)% |
|
|
- |
|
|
0.0 |
% |
|
|
- |
|
|
0.0 |
% |
Other adjustments |
|
|
- |
|
|
0.0 |
% |
|
|
1 |
|
|
(0.2 |
)% |
|
|
1 |
|
|
(0.2 |
)% |
|
Effective tax rate |
|
$ |
- |
|
|
0.0 |
% |
|
$ |
- |
|
|
0.0 |
% |
|
$ |
- |
|
|
0.0 |
% |
|
Deferred Tax Asset, Net of Valuation Allowance
The tax effects of temporary differences that give rise to deferred tax assets and liabilities as of December 31, 2025 and 2024 are presented in the following table:
|
|
|
|
As of |
|
|||||
In millions |
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
|||
Deferred tax liabilities: |
|
|
|
|
|
|
|
|||
|
Unearned premium revenue |
|
|
$ |
28 |
|
|
$ |
30 |
|
|
Deferred acquisition costs |
|
|
|
5 |
|
|
|
6 |
|
|
Net gains on financial instruments at fair value and foreign exchange |
|
|
|
31 |
|
|
|
32 |
|
|
Net deferred taxes on VIEs |
|
|
|
2 |
|
|
|
2 |
|
Total gross deferred tax liabilities |
|
|
|
66 |
|
|
|
70 |
|
|
|
|
|
|
|
|
|
|
|
||
Deferred tax assets: |
|
|
|
|
|
|
|
|||
|
Compensation and employee benefits |
|
|
|
7 |
|
|
|
4 |
|
|
Accrued interest |
|
|
|
357 |
|
|
|
326 |
|
|
Loss and loss adjustment expense reserves |
|
|
|
33 |
|
|
|
40 |
|
|
Net operating loss |
|
|
|
911 |
|
|
|
918 |
|
|
Foreign tax credits |
|
|
|
55 |
|
|
|
55 |
|
|
Capital loss carryforward |
|
|
|
53 |
|
|
|
51 |
|
|
Net unrealized gains and losses in accumulated other comprehensive income |
|
|
|
21 |
|
|
|
27 |
|
|
Other |
|
|
|
38 |
|
|
|
29 |
|
Total gross deferred tax assets |
|
|
|
1,475 |
|
|
|
1,450 |
|
|
|
Valuation allowance |
|
|
|
1,409 |
|
|
|
1,380 |
|
Net deferred tax asset |
|
|
$ |
- |
|
|
$ |
- |
|
|
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 10: Income Taxes (continued)
The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of its existing deferred tax assets. A significant piece of objective negative evidence evaluated was the Company having a three-year cumulative loss. Such objective evidence limits the ability to consider other subjective evidence, such as the Company’s projections of pre-tax income. On the basis of this evaluation, the Company has recorded a full valuation allowance against its net deferred tax asset of $1.4 billion as of December 31, 2025 and 2024. The Company will continue to analyze the valuation allowance on a quarterly basis.
Net operating losses (“NOLs”) of property and casualty insurance companies are permitted to be carried back two years and carried forward 20 years. NOLs of property and casualty insurance companies are not subject to the 80 percent taxable income limitation and indefinite lived carryforward period required by the Tax Cuts and Jobs Act applicable to general corporate NOLs.
Federal income tax returns through 2011 have been examined or surveyed. As of December 31, 2025, the Company’s NOL is approximately $4.3 billion. NOLs generated prior to tax reform and property and casualty NOLs generated after tax reform will expire between tax years 2026 through 2044. As of December 31, 2025, the Company has a foreign tax credit carryforward of $55 million, which will expire between tax years 2026 through 2033.
Section 382 of the Internal Revenue Code
Included in the Company’s Amended By-Laws are restrictions on certain acquisitions of Company stock that otherwise may have increased the likelihood of an ownership change within the meaning of Section 382 of the Internal Revenue Code. With certain exceptions, the By-Laws generally prohibit a person from becoming a “Section 382 five-percent shareholder” by acquiring, directly or by attribution, 5% or more of the outstanding shares of the Company’s common stock.
One Big Beautiful Bill Act
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law and includes permanent extensions, with certain updates, of several individual, business, and international tax measures originally established under the 2017 Tax Cuts and Jobs Act and set to change at the end of 2025. The OBBBA did not have a material impact on the Company’s financial results.
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.