OGE ENERGY CORP. Income Taxes Disclosure
7. Income Taxes
Income Tax Expense
The following table presents the components of income tax expense.
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OGE Energy |
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OG&E |
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Year Ended December 31 (In millions) |
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2025 |
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2024 |
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2023 |
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|
2025 |
|
|
2024 |
|
|
2023 |
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Provision for current income taxes: |
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|
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|
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Federal |
|
$ |
29.3 |
|
|
$ |
62.0 |
|
|
$ |
46.1 |
|
|
$ |
39.9 |
|
|
$ |
72.7 |
|
|
$ |
48.9 |
|
State |
|
|
0.3 |
|
|
|
0.8 |
|
|
|
(2.2 |
) |
|
|
2.7 |
|
|
|
3.0 |
|
|
|
3.7 |
|
Total provision for current income taxes |
|
|
29.6 |
|
|
|
62.8 |
|
|
|
43.9 |
|
|
|
42.6 |
|
|
|
75.7 |
|
|
|
52.6 |
|
Provision for deferred income taxes, net: |
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|
|
|
|
|
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|
|
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Federal |
|
|
49.7 |
|
|
|
8.0 |
|
|
|
18.1 |
|
|
|
51.9 |
|
|
|
9.0 |
|
|
|
18.8 |
|
State |
|
|
10.5 |
|
|
|
8.3 |
|
|
|
(5.8 |
) |
|
|
10.6 |
|
|
|
8.5 |
|
|
|
(2.6 |
) |
Total provision for deferred income taxes, net |
|
|
60.2 |
|
|
|
16.3 |
|
|
|
12.3 |
|
|
|
62.5 |
|
|
|
17.5 |
|
|
|
16.2 |
|
Total income tax expense |
|
$ |
89.8 |
|
|
$ |
79.1 |
|
|
$ |
56.2 |
|
|
$ |
105.1 |
|
|
$ |
93.2 |
|
|
$ |
68.8 |
|
OGE Energy files consolidated income tax returns in the U.S. federal jurisdiction and various state jurisdictions. OG&E is a part of the consolidated income tax return of OGE Energy. With few exceptions, the Registrants are no longer subject to U.S. federal tax or state and local examinations by tax authorities for years prior to 2022. Income taxes are generally allocated to each company in the affiliated group, including OG&E, based on its stand-alone taxable income or loss. Federal investment tax credits previously claimed on electric utility property have been deferred and will be amortized to income over the life of the related property. Oklahoma investment tax credits are also earned on investments at electric generating facilities which further reduce OG&E's effective tax rate.
The following tables present a reconciliation of the statutory tax rates to the effective income tax rate.
OGE Energy |
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Year Ended December 31 (Dollars in millions) |
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2025 |
|
2024 |
|
2023 |
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Statutory federal tax rate |
|
117.7 |
|
|
21.0 |
% |
109.3 |
|
|
21.0 |
% |
99.3 |
|
|
21.0 |
% |
|||
State income taxes, net of federal income tax |
|
|
8.5 |
|
|
1.5 |
|
|
7.3 |
|
|
1.4 |
|
|
(12.6 |
) |
|
(2.7 |
) |
Amortization of net unfunded deferred taxes |
|
|
(32.3 |
) |
|
(5.7 |
) |
|
(32.6 |
) |
|
(6.3 |
) |
|
(33.2 |
) |
|
(7.0 |
) |
Federal tax credits |
|
|
(2.6 |
) |
|
(0.5 |
) |
|
(2.6 |
) |
|
(0.5 |
) |
|
(3.6 |
) |
|
(0.8 |
) |
Uncertain tax position |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
6.2 |
|
|
1.3 |
|
Nontaxable or nondeductible items |
|
|
(1.5 |
) |
|
(0.3 |
) |
|
(2.3 |
) |
|
(0.4 |
) |
|
0.1 |
|
|
0.1 |
|
Effective income tax rate |
|
$ |
89.8 |
|
|
16.0 |
% |
$ |
79.1 |
|
|
15.2 |
% |
$ |
56.2 |
|
|
11.9 |
% |
OG&E |
|
|
|
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Year Ended December 31 (Dollars in millions) |
|
2025 |
|
2024 |
|
2023 |
|
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Statutory federal tax rate |
|
$ |
127.0 |
|
|
21.0 |
% |
$ |
118.3 |
|
|
21.0 |
% |
$ |
104.0 |
|
|
21.0 |
% |
State income taxes, net of federal income tax |
|
|
10.5 |
|
|
1.8 |
|
|
9.1 |
|
|
1.6 |
|
|
0.8 |
|
|
0.2 |
|
Amortization of net unfunded deferred taxes |
|
|
(32.3 |
) |
|
(5.3 |
) |
|
(32.6 |
) |
|
(5.8 |
) |
|
(33.2 |
) |
|
(6.7 |
) |
Federal tax credits |
|
|
(2.6 |
) |
|
(0.5 |
) |
|
(2.6 |
) |
|
(0.4 |
) |
|
(3.6 |
) |
|
(0.8 |
) |
Nontaxable or nondeductible items |
|
|
2.5 |
|
|
0.4 |
|
|
1.0 |
|
|
0.2 |
|
|
0.8 |
|
|
0.2 |
|
Effective income tax rate |
|
$ |
105.1 |
|
|
17.4 |
% |
$ |
93.2 |
|
|
16.6 |
% |
$ |
68.8 |
|
|
13.9 |
% |
The deferred tax provisions are recognized as costs in the ratemaking process by the commissions having jurisdiction over the rates charged by OG&E. The following table presents the components of Deferred Income Taxes at December 31, 2025 and 2024.
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OGE Energy |
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OG&E |
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December 31 (In millions) |
|
2025 |
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|
2024 |
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|
2025 |
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|
2024 |
|
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Deferred income tax liabilities, net: |
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|
|
|
|
|
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|
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Accelerated depreciation and other property related differences |
|
$ |
1,907.6 |
|
|
$ |
1,809.5 |
|
|
$ |
1,907.6 |
|
|
$ |
1,809.5 |
|
Regulatory assets |
|
|
66.6 |
|
|
|
65.6 |
|
|
|
66.6 |
|
|
|
65.6 |
|
Pension Plan |
|
|
21.5 |
|
|
|
22.0 |
|
|
|
38.5 |
|
|
|
38.6 |
|
Corporate owned life insurance |
|
|
3.1 |
|
|
|
2.8 |
|
|
|
— |
|
|
|
— |
|
Bond redemption-unamortized costs |
|
|
1.0 |
|
|
|
1.2 |
|
|
|
1.0 |
|
|
|
1.2 |
|
State tax credits |
|
|
(223.6 |
) |
|
|
(223.8 |
) |
|
|
(208.6 |
) |
|
|
(208.5 |
) |
Income taxes recoverable from customers, net |
|
|
(173.6 |
) |
|
|
(188.6 |
) |
|
|
(173.6 |
) |
|
|
(188.6 |
) |
Regulatory liabilities |
|
|
(59.8 |
) |
|
|
(57.3 |
) |
|
|
(59.8 |
) |
|
|
(57.3 |
) |
Asset retirement obligations |
|
|
(18.8 |
) |
|
|
(20.9 |
) |
|
|
(18.8 |
) |
|
|
(20.9 |
) |
Postretirement medical and life insurance benefits |
|
|
(21.5 |
) |
|
|
(19.1 |
) |
|
|
(15.1 |
) |
|
|
(12.6 |
) |
Accrued liabilities |
|
|
(9.0 |
) |
|
|
(15.7 |
) |
|
|
(2.7 |
) |
|
|
(9.8 |
) |
Deferred federal investment tax credits |
|
|
(2.4 |
) |
|
|
(2.5 |
) |
|
|
(2.4 |
) |
|
|
(2.5 |
) |
Accrued vacation |
|
|
(1.7 |
) |
|
|
(1.9 |
) |
|
|
(1.7 |
) |
|
|
(1.9 |
) |
Uncollectible accounts |
|
|
(1.0 |
) |
|
|
(0.5 |
) |
|
|
(1.0 |
) |
|
|
(0.5 |
) |
Other |
|
|
0.9 |
|
|
|
0.3 |
|
|
|
1.3 |
|
|
|
(1.6 |
) |
Total deferred income tax liabilities, net |
|
$ |
1,489.3 |
|
|
$ |
1,371.1 |
|
|
$ |
1,531.3 |
|
|
$ |
1,410.7 |
|
As of December 31, 2025, the Registrants have classified $14.7 million of unrecognized tax benefits as a reduction of deferred tax assets recorded. Management is currently unaware of any issues under review that could result in significant additional payments, accruals or other material deviation from this amount.
The following table presents a reconciliation of the Registrants' total gross unrecognized tax benefits as of the years ended December 31, 2025, 2024 and 2023.
(In millions) |
|
2025 |
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2024 |
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2023 |
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|||
Balance at January 1 |
|
$ |
28.6 |
|
|
$ |
28.6 |
|
|
$ |
20.7 |
|
Tax positions related to current year: |
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|||
Additions |
|
|
— |
|
|
|
— |
|
|
|
7.9 |
|
Balance at December 31 |
|
$ |
28.6 |
|
|
$ |
28.6 |
|
|
$ |
28.6 |
|
The Registrants recognize tax benefits from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by taxing authorities based on the technical merits of the position. The tax benefits in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50 percent likelihood of being realized on settlement. In 2023, the Registrants recorded a $7.9 million reserve related to a state tax position taken associated with the sale of Energy Transfer units.
Where applicable, the Registrants classify income tax-related interest and penalties as interest expense and other expense, respectively. With regard to uncertain tax positions, there were $0.6 million in income tax-related interest and no penalties recorded during both of the years ended December 31, 2025 and 2024 and no interest or penalties recorded during the year ended December 31, 2023.
At each of December 31, 2025, 2024 and 2023, there were $22.6 million of unrecognized tax benefits that, if recognized, would affect the annual effective tax rate.
The following table presents a summary of the Registrants' tax credits carried forward as deferred tax assets. Under current law, the Registrants expect future taxable income will be sufficient to utilize all credits before they expire.
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OGE Energy |
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OG&E |
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(In millions) |
|
Carry Forward Amount |
|
|
Deferred Tax Asset |
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|
Carry Forward Amount |
|
|
Deferred Tax Asset |
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|
Earliest Expiration Date |
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State tax credits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Oklahoma investment tax credits |
|
$ |
268.5 |
|
|
$ |
210.8 |
|
|
$ |
249.6 |
|
|
$ |
195.8 |
|
|
N/A |
Oklahoma capital investment board credits |
|
$ |
12.8 |
|
|
$ |
12.8 |
|
|
$ |
12.8 |
|
|
$ |
12.8 |
|
|
N/A |
N/A - not applicable
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 18, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Feb 21, 2019 | |
| 2017 | Feb 22, 2018 | |
| 2016 | Feb 23, 2017 | |
| 2015 | Feb 26, 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.