OneMain Holdings, Inc.OMF
OneMain Holdings, Inc. Income Taxes Disclosure
14. Income Taxes | ||
OMH and all of its eligible domestic U.S. subsidiaries file a consolidated life/non-life federal tax return with the IRS. Income taxes from the consolidated federal and state tax returns are allocated to our eligible subsidiaries under a tax sharing agreement with OMH.
The Company’s foreign subsidiaries/branches file tax returns in Canada, Puerto Rico, and the U.S. Virgin Islands. The Company recognizes a deferred tax liability for the undistributed earnings of its foreign operations, if any, as we do not consider the amounts to be permanently reinvested. As of December 31, 2025, the Company had no undistributed foreign earnings.
Components of income before income tax expense were as follows:
| (dollars in millions) | ||||||||||||||||||||
| Years Ended December 31, | 2025 | 2024 | 2023 | |||||||||||||||||
| Income before income tax expense - U.S. operations | $ | 981 | $ | 647 | $ | 817 | ||||||||||||||
| Income before income tax expense - foreign operations | 20 | 20 | 23 | |||||||||||||||||
| Total | $ | 1,001 | $ | 667 | $ | 840 | ||||||||||||||
Components of income tax expense (benefit) were as follows:
| (dollars in millions) | ||||||||||||||||||||
| Years Ended December 31, | 2025 | 2024 | 2023 | |||||||||||||||||
| Current: | ||||||||||||||||||||
| Federal | $ | 142 | $ | 157 | $ | 194 | ||||||||||||||
| Foreign | 6 | 5 | 4 | |||||||||||||||||
| State | 27 | 38 | 37 | |||||||||||||||||
| Total current | 175 | 200 | 235 | |||||||||||||||||
| Deferred: | ||||||||||||||||||||
| Federal | 45 | (26) | (25) | |||||||||||||||||
| State | (2) | (16) | (11) | |||||||||||||||||
| Total deferred | 43 | (42) | (36) | |||||||||||||||||
| Total | $ | 218 | $ | 158 | $ | 199 | ||||||||||||||
Expense from foreign income taxes includes foreign subsidiaries/branches that operate in Canada, Puerto Rico, and the U.S. Virgin Islands.
OMH's and OMFC’s reconciliations of the U.S. statutory federal income tax rate to the effective income tax rate were as follows:
| Years Ended December 31, | 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||
| Statutory federal income tax rate | $ | 210 | 21.00 | % | $ | 140 | 21.00 | % | $ | 176 | 21.00 | % | ||||||||||||||||||||||||||
State income taxes, net of federal* | 24 | 2.39 | 12 | 1.80 | 21 | 2.55 | ||||||||||||||||||||||||||||||||
Tax credits | (15) | (1.52) | (4) | (0.66) | (8) | (0.94) | ||||||||||||||||||||||||||||||||
Changes in unrecognized tax benefits | (5) | (0.47) | 6 | 0.95 | 5 | 0.45 | ||||||||||||||||||||||||||||||||
Nontaxable or nondeductible items | 3 | 0.29 | 4 | 0.56 | 7 | 0.88 | ||||||||||||||||||||||||||||||||
| Change in valuation allowance | 3 | 0.29 | (2) | (0.37) | 5 | 0.61 | ||||||||||||||||||||||||||||||||
| Other, net | (2) | (0.15) | 2 | 0.35 | (7) | (0.95) | ||||||||||||||||||||||||||||||||
| Effective income tax rate | $ | 218 | 21.83 | % | $ | 158 | 23.63 | % | $ | 199 | 23.60 | % | ||||||||||||||||||||||||||
* State taxes in California, Pennsylvania, Illinois and New York comprise the majority of the state tax effect in 2025, California, Illinois, Pennsylvania, New York, Florida and New Jersey comprise the majority in 2024, and California, Pennsylvania, Illinois, New York, Florida, and New Jersey comprise the majority in 2023.
A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits (all of which would affect the effective income tax rate if recognized) is as follows:
| (dollars in millions) | ||||||||||||||||||||
| Years Ended December 31, | 2025 | 2024 | 2023 | |||||||||||||||||
| Balance at beginning of year | $ | 20 | $ | 11 | $ | 6 | ||||||||||||||
Increases (decreases) in tax positions for prior years | (5) | 10 | — | |||||||||||||||||
Increases in tax positions for current years | 2 | 2 | 6 | |||||||||||||||||
| Lapse in statute of limitations | (1) | (2) | (1) | |||||||||||||||||
| Settlements with tax authorities | (2) | (1) | — | |||||||||||||||||
| Balance at end of year | $ | 14 | $ | 20 | $ | 11 | ||||||||||||||
Our gross unrecognized tax benefits include related interest and penalties. We accrue interest and penalties related to uncertain tax positions in income tax expense.
We are periodically subject to examination by various tax authorities. We are currently under examination for the years 2021 to 2023. Management believes it has adequately provided for taxes for such years.
Components of deferred tax assets and liabilities were as follows:
| (dollars in millions) | ||||||||||||||
| December 31, | 2025 | 2024 | ||||||||||||
| Deferred tax assets: | ||||||||||||||
| Allowance for loan losses | $ | 714 | $ | 672 | ||||||||||
| Net operating losses and tax credits | 53 | 52 | ||||||||||||
| Capitalized research and experimental costs | 6 | 40 | ||||||||||||
| Insurance reserves | 34 | 31 | ||||||||||||
| Pension/employee benefits | 31 | 28 | ||||||||||||
Fair value of equity and securities investments | 7 | 17 | ||||||||||||
| Other | 58 | 54 | ||||||||||||
| Total | 903 | 894 | ||||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Goodwill | 232 | 208 | ||||||||||||
| Deferred loan fees | 61 | 57 | ||||||||||||
| Debt fair value adjustment | 42 | 43 | ||||||||||||
| Fixed assets | 32 | 2 | ||||||||||||
| Other | 42 | 30 | ||||||||||||
| Total | 409 | 340 | ||||||||||||
| Net deferred tax assets before valuation allowance | 494 | 554 | ||||||||||||
| Valuation allowance | (30) | (37) | ||||||||||||
| Net deferred tax assets | $ | 464 | $ | 517 | ||||||||||
The gross deferred tax liabilities are expected to reverse in time, and projected taxable income is expected to be sufficient to create positive taxable income, which will allow for the realization of all of our gross federal deferred tax assets and a portion of the state deferred tax assets.
At December 31, 2025, we had state net operating loss carryforwards of $919 million compared to $789 million at December 31, 2024. The state net operating loss carryforwards mostly expire between 2036 and 2046, except for some states which conform to the federal rules for indefinite carryforward. We had a valuation allowance on our gross state deferred tax assets, net of deferred federal tax benefit, of $19 million and $29 million at December 31, 2025 and 2024, respectively. The total valuation allowance was established based on management’s determination that the deferred tax assets are more likely than not to not be realized.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 6, 2026 | Showing above |
| 2024 | Feb 7, 2025 | |
| 2023 | Feb 13, 2024 | |
| 2022 | Feb 10, 2023 | |
| 2021 | Feb 11, 2022 | |
| 2020 | Feb 9, 2021 | |
| 2019 | Feb 14, 2020 | |
| 2018 | Feb 15, 2019 | |
| 2017 | Feb 21, 2018 | |
| 2016 | Feb 21, 2017 | |
| 2015 | Feb 29, 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.