M&T BANK CORPMTB

M&T BANK CORP Income Taxes Disclosure

10-KFiled Feb 18, 20265 min read
Income taxes
The Company files a consolidated federal income tax return reflecting taxable income earned by all domestic subsidiaries. The components of income tax expense were as follows:
Year Ended December 31,
(Dollars in millions)202520242023
Current:
Federal$481 $394 $577 
State and local190 169 228 
Foreign2 5 3 
Total current673 568 808 
Deferred:
Federal(17)(21)(63)
State and local(1)(6)(33)
Foreign— — (1)
Total deferred(18)(27)(97)
Amortization of investments in partnerships under proportional
   amortization method		186 181 167 
Total income taxes$841 $722 $878 
Total income taxes differed from the amount computed by applying the statutory federal income tax rate to pre-tax income as follows:
Year Ended December 31,
202520242023
(Dollars in millions)AmountPercentAmountPercentAmountPercent
Federal at statutory rate$775 21.0 %$695 21.0 %$760 21.0 %
State and local income taxes, net of federal benefit (a)153 4.1 136 4.1 161 4.5 
Foreign tax effects1 .1 2 .1 — — 
Tax credits:
 Investments in partnerships under proportional amortization method, net(36)-1.0 (38)-1.2 (26)-.8 
Other(23)-.6 (24)-.7 (1)— 
Nontaxable or nondeductible items:
Tax-exempt income(48)-1.3 (53)-1.6 (51)-1.4 
Other24 .7 28.8 341.0 
Other adjustments(5)-.2 (24)-.7 1— 
Total income taxes$841 22.8 %$722 21.8 %$878 24.3 %
__________________________________________________________________________________
(a)State and local income taxes for New York State, New York City, New Jersey and Maryland comprised greater than 50 percent of the amounts in this category.
Income taxes paid by jurisdiction were as follows:
Year Ended December 31,
(Dollars in millions)202520242023
Federal$347 $89 $264 
State and local:
New York State35 38 51 
New York City29 16 28 
New Jersey21 10 17 
Maryland21 17 22 
Other74 64 67 
Foreign2 2 3 
Total cash taxes paid$529 $236 $452 
The Company believes that it is more likely than not that the deferred tax assets will be realized through taxable earnings or alternative tax strategies. Deferred tax assets (liabilities) were comprised of the following at December 31:
(Dollars in millions)202520242023
Deferred tax assets:
Losses on loans and other assets$681 $671 $686 
Operating lease liabilities164 170 182 
Postretirement and other employee benefits68 63 47 
Incentive and other compensation plans39 36 30 
Unrealized losses— 52 64 
Interest on loans18 28 42 
Losses on cash flow hedges— 34 52 
Stock-based compensation49 49 54 
Depreciation and amortization30 — — 
Other107 139 153 
Gross deferred tax assets1,156 1,242 1,310 
Deferred tax liabilities (a):
Retirement benefits(317)(304)(198)
Leases(142)(150)(171)
Right-of-use assets(139)(147)(165)
Depreciation and amortization— (56)(157)
Capitalized servicing rights(23)(36)(38)
Unrealized gains(53)— — 
Gains on cash flow hedges(23)— — 
Other(70)(68)(59)
Gross deferred tax liabilities(767)(761)(788)
Net deferred tax asset$389 $481 $522 
__________________________________________________________________________________
(a)In prior years, applicable federal tax law allowed certain financial institutions the option of deducting as bad debt expense for tax purposes amounts in excess of actual losses. In accordance with GAAP, such financial institutions were not required to provide deferred income taxes on such excess. Recapture of the excess tax bad debt reserve established under the previously allowed method will result in taxable income if M&T Bank fails to maintain bank status as defined in the Internal Revenue Code or charges are made to the reserve for other than bad debt losses. At December 31, 2025, M&T Bank’s tax bad debt reserve for which no federal income taxes have been provided was $137 million. No actions are planned that would cause this reserve to become wholly or partially taxable.
A reconciliation of the beginning and ending amount of unrecognized tax benefits follows:
(Dollars in millions)
Federal,
State and
Local Tax
Accrued
Interest
Unrecognized
Income Tax
Benefits
Gross unrecognized tax benefits at January 1, 2023$30 $8 $38 
Increases as a result of tax positions taken in prior years5 1 6 
Decreases as a result of tax positions taken in prior years(13)(3)(16)
Gross unrecognized tax benefits at December 31, 202322 6 28 
Increases as a result of tax positions taken in prior years13 7 20 
Decreases as a result of tax positions taken in prior years(10)(2)(12)
Gross unrecognized tax benefits at December 31, 202425 11 36 
Increases as a result of tax positions taken in prior years14 1 15 
Decreases as a result of tax positions taken in prior years(4)(2)(6)
Gross unrecognized tax benefits at December 31, 2025$35 $10 $45 
Less: Federal, state and local income tax benefits(7)
Net unrecognized tax benefits at December 31, 2025 that,
if recognized, would impact the effective income tax rate		$38 
The Company’s policy is to recognize interest and penalties, if any, related to unrecognized tax benefits in Income taxes in the Consolidated Statement of Income. The Company’s federal, state and local income tax returns are routinely subject to examinations from various governmental taxing authorities. Such examinations may result in challenges to the tax return treatment applied by the Company to specific transactions. Management believes that the assumptions and judgment used to record tax-related assets or liabilities have been appropriate. Should determinations rendered by tax authorities ultimately indicate that management’s assumptions were inappropriate, the result and adjustments required could have a material effect on the Company’s results of operations. Examinations by the Internal Revenue Service of the Company’s federal income tax returns have been largely concluded through 2024, although under statute the income tax returns from 2021 through 2024 could be adjusted. The Company also files income tax returns in nearly all fifty states and numerous local jurisdictions. Substantially all material state and local matters have been concluded for years through 2018. It is not reasonably possible to estimate when examinations for any subsequent years will be completed.

Historical Timeline

Fiscal YearFiled
2025Feb 18, 2026Showing above
2024Feb 19, 2025
2023Feb 21, 2024
2022Feb 22, 2023
2021Feb 16, 2022
2020Feb 22, 2021
2019Feb 20, 2020
2018Feb 20, 2019
2017Feb 22, 2018
2016Feb 22, 2017
2015Feb 19, 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.

Other Available Disclosures

RevenueEarnings Per ShareFair ValuePP&EGoodwill & IntangiblesLeasesSegmentsDebtCommitmentsStock CompensationNew Standards