PG&E CorpPCG
PG&E Corp Income Taxes Disclosure
INCOME TAXES
PG&E Corporation and the Utility use the asset and liability method of accounting for income taxes. The income tax provision includes current and deferred income taxes resulting from operations during the year. PG&E Corporation and the Utility estimate current period tax expense in addition to calculating deferred tax assets and liabilities. Deferred tax assets and liabilities result from temporary tax and accounting timing differences, such as those arising from depreciation expense or tax carryforwards.
PG&E Corporation and the Utility recognize a tax benefit if it is more likely than not that a tax position taken or expected to be taken in a tax return will be sustained upon examination by taxing authorities based on the technical merits of the position. The tax benefit recognized in the financial statements is measured based on the largest amount of benefit that is greater than 50% likely of being realized upon settlement. As such, the difference between a tax position taken or expected to be taken in a tax return in future periods and the benefit recognized and measured pursuant to this guidance in the financial statements represents an unrecognized tax benefit.
In general, investment tax credits are deferred and amortized to income over time. PG&E Corporation amortizes its investment tax credits over the projected investment recovery period. The Utility amortizes its investment tax credits over the life of the related property in accordance with regulatory treatment.
PG&E Corporation files a consolidated U.S. federal income tax return that includes the Utility and domestic subsidiaries in which its ownership is 80% or more. PG&E Corporation files a combined state income tax return in California. PG&E Corporation and the Utility are parties to a tax-sharing agreement under which the Utility determines its income tax provision (benefit) on a stand-alone basis.
The significant components of income tax expense (benefit) were as follows:
| PG&E Corporation | Utility | ||||||||||||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||
| Current: | |||||||||||||||||||||||||||||||||||
| Federal | $ | (1) | $ | 2 | $ | (1) | $ | (1) | $ | 2 | $ | (1) | |||||||||||||||||||||||
| State | 50 | (78) | — | 89 | (78) | — | |||||||||||||||||||||||||||||
| Deferred: | |||||||||||||||||||||||||||||||||||
| Federal | (225) | (137) | (1,047) | (171) | (72) | (981) | |||||||||||||||||||||||||||||
| State | (102) | 15 | (507) | (109) | 45 | (477) | |||||||||||||||||||||||||||||
| Federal tax credits | (2) | (2) | (2) | (2) | (2) | (2) | |||||||||||||||||||||||||||||
Total income tax benefit | $ | (280) | $ | (200) | $ | (1,557) | $ | (194) | $ | (105) | $ | (1,461) | |||||||||||||||||||||||
The following tables describe net deferred income tax assets and liabilities:
| PG&E Corporation | Utility | ||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Deferred income tax assets: | |||||||||||||||||||||||
| Tax carryforwards | $ | 9,752 | $ | 9,429 | $ | 9,199 | $ | 8,955 | |||||||||||||||
| Compensation | 211 | 171 | 127 | 86 | |||||||||||||||||||
| GHG allowances | 457 | 471 | 457 | 471 | |||||||||||||||||||
Wildfire-related claims (1) | 227 | 295 | 227 | 295 | |||||||||||||||||||
Operating lease liability | 111 | 78 | 111 | 78 | |||||||||||||||||||
| Transmission tower wireless license | 251 | 251 | 251 | 251 | |||||||||||||||||||
| Bad debt | 137 | 127 | 137 | 127 | |||||||||||||||||||
Other (2) | 127 | 140 | 156 | 137 | |||||||||||||||||||
| Total deferred income tax assets | $ | 11,273 | $ | 10,962 | $ | 10,665 | $ | 10,400 | |||||||||||||||
| Deferred income tax liabilities: | |||||||||||||||||||||||
| Property-related basis difference | 12,357 | 11,021 | 12,344 | 11,009 | |||||||||||||||||||
| Regulatory balancing accounts | 487 | 878 | 487 | 878 | |||||||||||||||||||
Income tax regulatory asset (3) | 1,723 | 1,335 | 1,723 | 1,335 | |||||||||||||||||||
| Debt financing costs | 353 | 390 | 353 | 390 | |||||||||||||||||||
| Operating lease ROU asset | 111 | 78 | 111 | 78 | |||||||||||||||||||
| Environmental reserve | 288 | 248 | 288 | 248 | |||||||||||||||||||
Other (4) | 89 | 94 | 91 | 94 | |||||||||||||||||||
| Total deferred income tax liabilities | $ | 15,408 | $ | 14,044 | $ | 15,397 | $ | 14,032 | |||||||||||||||
| Total net deferred income tax liabilities | $ | 4,135 | $ | 3,082 | $ | 4,732 | $ | 3,632 | |||||||||||||||
(1) Amounts primarily relate to wildfire-related claims, net of recoveries, and legal and other costs related to various wildfires that have occurred in the Utility’s service area over the past several years.
(2) Amounts include benefits, state taxes, and customer advances for construction.
(3) Represents the tax gross up portion of the deferred income tax for the cumulative differences between amounts recognized for ratemaking purposes and amounts recognized for tax.
(4) Amounts primarily include property taxes.
The following tables reconcile income tax expense at the federal statutory rate to the income tax provision:
| PG&E Corporation | |||||||||||||||||||||||||||||||||||
| Year Ended December 31, | |||||||||||||||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||
| Federal statutory income tax rate | 21.0 | % | $ | 486 | 21.0 | % | $ | 478 | 21.0 | % | $ | 144 | |||||||||||||||||||||||
| Increase (decrease) in income tax rate resulting from: | |||||||||||||||||||||||||||||||||||
State income tax (net of federal benefit) (1) | (1.8) | (41) | (2.0) | (45) | (57.9) | (397) | |||||||||||||||||||||||||||||
Effect of regulatory treatment of fixed asset differences (2) | (34.2) | (790) | (28.9) | (657) | (62.4) | (428) | |||||||||||||||||||||||||||||
Changes in valuation allowance | 0.8 | 18 | (0.9) | (20) | 0.7 | 5 | |||||||||||||||||||||||||||||
Nontaxable or nondeductible items | 2.2 | 51 | 0.8 | 19 | 0.2 | 1 | |||||||||||||||||||||||||||||
| Tax credits | (1.1) | (26) | (1.0) | (22) | (3.4) | (24) | |||||||||||||||||||||||||||||
| Changes in unrecognized tax benefits | 0.1 | 3 | 2.1 | 46 | 0.2 | 2 | |||||||||||||||||||||||||||||
Fire Victim Trust (3) | — | — | — | — | (126.9) | (869) | |||||||||||||||||||||||||||||
| Other, net | 0.9 | 19 | 0.1 | 1 | 1.3 | 9 | |||||||||||||||||||||||||||||
| Effective tax rate | (12.1) | % | $ | (280) | (8.8) | % | $ | (200) | (227.2) | % | $ | (1,557) | |||||||||||||||||||||||
(1) Includes the effect of state flow-through ratemaking treatment.
(2) Includes the effect of federal flow-through ratemaking treatment for certain property-related costs. For these temporary tax differences, PG&E Corporation and the Utility recognize the deferred tax impact in the current period and record offsetting regulatory assets and liabilities. Therefore, PG&E Corporation’s and the Utility’s effective tax rates are impacted as these differences arise and reverse. PG&E Corporation and the Utility recognize such differences as regulatory assets or liabilities as it is probable that these amounts will be recovered from or returned to customers in future rates.
(3) Includes an adjustment for the tax benefit of the sale of shares by the Fire Victim Trust in 2023.
| Utility | |||||||||||||||||||||||||||||||||||
| Year Ended December 31, | |||||||||||||||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||
| Federal statutory income tax rate | 21.0 | % | $ | 606 | 21.0 | % | $ | 547 | 21.0 | % | $ | 228 | |||||||||||||||||||||||
| Increase (decrease) in income tax rate resulting from: | |||||||||||||||||||||||||||||||||||
State income tax (net of federal benefit) (1) | (0.6) | (16) | (0.8) | (22) | (34.4) | (373) | |||||||||||||||||||||||||||||
Effect of regulatory treatment of fixed asset differences (2) | (27.4) | (790) | (25.2) | (657) | (39.5) | (428) | |||||||||||||||||||||||||||||
| Changes in valuation allowance | — | — | — | — | 0.1 | 1 | |||||||||||||||||||||||||||||
| Nontaxable or nondeductible items | 1.1 | 30 | 0.4 | 12 | — | — | |||||||||||||||||||||||||||||
| Tax credits | (0.9) | (26) | (0.9) | (22) | (2.2) | (24) | |||||||||||||||||||||||||||||
Changes in unrecognized tax benefits | 0.1 | 3 | 1.9 | 49 | 0.2 | 2 | |||||||||||||||||||||||||||||
Fire Victim Trust (3) | — | — | — | — | (80.2) | (869) | |||||||||||||||||||||||||||||
| Other, net | — | (1) | (0.4) | (12) | 0.2 | 2 | |||||||||||||||||||||||||||||
| Effective tax rate | (6.7) | % | $ | (194) | (4.0) | % | $ | (105) | (134.8) | % | $ | (1,461) | |||||||||||||||||||||||
(1) Includes the effect of state flow-through ratemaking treatment.
(2) Includes the effect of federal flow-through ratemaking treatment for certain property-related costs. For these temporary tax differences, PG&E Corporation and the Utility recognize the deferred tax impact in the current period and record offsetting regulatory assets and liabilities. Therefore, PG&E Corporation’s and the Utility’s effective tax rates are impacted as these differences arise and reverse. PG&E Corporation and the Utility recognize such differences as regulatory assets or liabilities as it is probable that these amounts will be recovered from or returned to customers in future rates.
(3) Includes an adjustment for the tax benefit of the sale of shares by the Fire Victim Trust in 2023.
Unrecognized Tax Benefits
The following table reconciles the changes in unrecognized tax benefits:
| PG&E Corporation | Utility | ||||||||||||||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||
| Balance at beginning of year | $ | 454 | $ | 616 | $ | 570 | $ | 454 | $ | 616 | $ | 570 | |||||||||||||||||||||||
| Additions for tax position taken during a prior year | 5 | — | 1 | 5 | — | 1 | |||||||||||||||||||||||||||||
| Reductions for tax position taken during a prior year | (7) | (257) | — | (7) | (257) | — | |||||||||||||||||||||||||||||
| Additions for tax position taken during the current year | 665 | 95 | 45 | 665 | 95 | 45 | |||||||||||||||||||||||||||||
Balance at end of year | $ | 1,117 | $ | 454 | $ | 616 | $ | 1,117 | $ | 454 | $ | 616 | |||||||||||||||||||||||
The component of unrecognized tax benefits that, if recognized, would affect the effective tax rate at December 31, 2025 for PG&E Corporation and the Utility was $102 million.
PG&E Corporation’s and the Utility’s unrecognized tax benefits may change significantly within the next 12 months based on tax audit progress.
Interest income, interest expense and penalties associated with income taxes are reflected in income tax expense on the Consolidated Statements of Income. For the years ended December 31, 2025, 2024, and 2023, these amounts were immaterial.
Tax Audits
PG&E Corporation’s tax returns have been accepted through 2015 for federal income tax purposes. The IRS is auditing PG&E Corporation’s tax returns for 2015 through 2018. The most significant unresolved matter relates to the deductibility of approximately $850 million in costs for San Bruno related safety spend, which the CPUC did not allow the Utility to recover through rates, and $400 million in customer bill credits. PG&E Corporation records an income tax benefit related to a deduction for an uncertain tax position when it determines it is more likely than not that the uncertain tax position will ultimately be sustained. On June 4, 2024, the Office of Chief Counsel of the IRS issued a technical advice memorandum taking the position that the costs the Utility incurred for San Bruno related to safety spend and customer bill credits are nondeductible fines or penalties. PG&E Corporation decreased its Income tax benefit by $70 million related to state and federal income taxes in 2024. PG&E Corporation intends to defend itself vigorously as to all costs in this matter.
Carryforwards
The following table describes PG&E Corporation’s operating loss and tax credit carryforward balances:
| (in millions) | December 31, 2025 | Expiration Year | |||||||||
| Federal: | |||||||||||
| Net operating loss carryforward - Pre-2018 | $ | 3,307 | 2031 - 2036 | ||||||||
| Net operating loss carryforward - Post-2017 | 34,957 | N/A | |||||||||
| Tax credit carryforward | 226 | Various | |||||||||
| State: | |||||||||||
| Net operating loss carryforward | $ | 34,143 | 2039 - 2041 | ||||||||
| Tax credit carryforward | 167 | Various | |||||||||
PG&E Corporation does not believe that the Chapter 11 Cases resulted in loss of or limitation on the utilization of any of the tax carryforwards. PG&E Corporation will continue to monitor the status of tax carryforwards.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 12, 2026 | Showing above |
| 2024 | Feb 13, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 10, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 18, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Feb 9, 2018 | |
| 2016 | Feb 16, 2017 | |
| 2015 | Feb 18, 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.