PROGRESSIVE CORP/OH/PGR
PROGRESSIVE CORP/OH/ Income Taxes Disclosure
INCOME TAXES
The components of our income tax provision for the years ended December 31, were as follows:
| (millions) | 2025 | 2024 | 2023 | ||||||||
| Current tax provision | |||||||||||
| Federal | $ | 3,042 | $ | 2,247 | $ | 1,102 | |||||
| State | 75 | 58 | 19 | ||||||||
| Total current tax provision | 3,117 | 2,305 | 1,121 | ||||||||
| Deferred tax provision (benefit) | |||||||||||
| Federal | (199) | (70) | (120) | ||||||||
| State | (3) | (2) | 0 | ||||||||
| Total deferred tax provision (benefit) | (202) | (72) | (120) | ||||||||
| Total income tax provision | |||||||||||
| Federal | 2,843 | 2,177 | 982 | ||||||||
| State | 72 | 56 | 19 | ||||||||
| Total income tax provision | $ | 2,915 | $ | 2,233 | $ | 1,001 | |||||
The provision for income taxes in the consolidated statements of comprehensive income differed from the statutory rate for the years ended December 31, as follows:
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
| ($ in millions) | Expense (Benefit) | Rate Impact | Expense (Benefit) | Rate Impact | Expense (Benefit) | Rate Impact | ||||||||||||||||||||
Income from continuing operations before income taxes1 | $ | 14,223 | $ | 10,713 | $ | 4,904 | ||||||||||||||||||||
| Tax at statutory federal rate | $ | 2,987 | 21 | % | $ | 2,250 | 21 | % | $ | 1,030 | 21 | % | ||||||||||||||
| Tax effect of: | ||||||||||||||||||||||||||
State and local income taxes, net of federal income tax effect2 | 57 | 0 | 44 | 0 | 15 | 0 | ||||||||||||||||||||
| Tax credits | (6) | 0 | (7) | 0 | (17) | 0 | ||||||||||||||||||||
| Nontaxable or nondeductible items | (123) | (1) | (54) | 0 | (27) | (1) | ||||||||||||||||||||
| Total income tax provision | $ | 2,915 | 20 | % | $ | 2,233 | 21 | % | $ | 1,001 | 20 | % | ||||||||||||||
1 All income from continuing operations for the periods presented was derived from domestic operations. | ||||||||||||||||||||||||||
2 State taxes in Illinois and Florida made up the majority (greater than 50%) of the tax effect in this category. | ||||||||||||||||||||||||||
Income taxes paid for the years ended December 31, were as follows:
| ($ in millions) | 2025 | 2024 | 2023 | ||||||||
| Income taxes paid: | |||||||||||
| Federal | $ | 3,022 | $ | 2,540 | $ | 800 | |||||
| State | 85 | 45 | 21 | ||||||||
| Total income taxes paid | $ | 3,107 | $ | 2,585 | $ | 821 | |||||
Deferred income taxes reflect the tax effects of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities. The following table shows the components of the net deferred tax assets and liabilities at December 31:
| (millions) | 2025 | 2024 | ||||||
| Federal deferred income tax assets: | ||||||||
| Unearned premiums reserve | $ | 1,056 | $ | 991 | ||||
| Non-deductible accruals | 535 | 274 | ||||||
| Loss and loss adjustment expense reserves | 407 | 342 | ||||||
| Operating lease liabilities | 43 | 41 | ||||||
| Software development costs | 10 | 89 | ||||||
| Hedges on forecasted transactions | 3 | 4 | ||||||
| Net unrealized losses on fixed-maturity securities | 0 | 376 | ||||||
| Other | 58 | 27 | ||||||
| Total federal deferred income tax assets | 2,112 | 2,144 | ||||||
| Federal deferred income tax liabilities: | ||||||||
| Net holding period gains on equity securities | (686) | (588) | ||||||
| Deferred acquisition costs | (429) | (412) | ||||||
| Property and equipment | (94) | (85) | ||||||
| Operating lease assets | (43) | (41) | ||||||
| Investment basis differences | (38) | (22) | ||||||
| Net unrealized gains on fixed-maturity securities | (31) | 0 | ||||||
| Prepaid expenses | (22) | (10) | ||||||
| Loss and loss adjustment expense reserve transition adjustment | 0 | (8) | ||||||
| Other | (21) | (24) | ||||||
| Total federal deferred income tax liabilities | (1,364) | (1,190) | ||||||
| Net federal deferred income taxes | 748 | 954 | ||||||
State deferred income tax assets1 | 38 | 42 | ||||||
State deferred income tax liabilities1 | (1) | 0 | ||||||
| Total | $ | 785 | $ | 996 | ||||
1 State deferred tax assets and liabilities are recorded in other assets and accounts payable, accrued expenses, and other liabilities, respectively, on our consolidated balance sheets.
Although realization of the deferred tax assets is not assured, management believes that it is more likely than not that the deferred tax assets will be realized based on our expectation that we will be able to fully utilize the deductions that are ultimately recognized for tax purposes and, therefore, no valuation allowance was needed at December 31, 2025 or 2024.
At December 31, 2025 and 2024, we had net current income taxes payable of $28 million and $26 million, respectively, which were reported in accounts payable, accrued expenses, and other liabilities on our consolidated balance sheets. This balance, which represented our estimated tax liability for the year less payments made during the year, and less any taxes paid in prior years recoverable through carryback, may fluctuate from period to period due to normal timing differences.
At December 31, 2025 and 2024, we have not recorded any unrecognized tax benefits or related interest and penalties.
For the years ended December 31, 2025, 2024, and 2023, we recognized immaterial amounts of interest and penalties as a component of the income tax provision.
The Progressive Corporation and its subsidiaries file a consolidated federal income tax return. All federal income tax years prior to 2022 are generally closed to examination; however, 2016 remains open for a tax credit partnership investment and 2021 remains open for a capital loss carryback claim. The statute of limitations for state income tax purposes generally remains open for three to four years from the return filing date, depending upon the jurisdiction. There has been no significant state income tax audit activity.
Effective for our 2025 year-end reporting, we adopted the ASU issued by the FASB related to enhanced disclosures on income taxes, on a retrospective basis. Disclosures for 2024 and 2023 have been revised to conform with the current year presentation.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 2, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Feb 26, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Feb 27, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Mar 1, 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.