PORTLAND GENERAL ELECTRIC CO /OR/ Income Taxes Disclosure
NOTE 12: INCOME TAXES
Income tax expense/(benefit) consists of the following (in millions):
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Years Ended December 31, |
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2025 |
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2024 |
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2023 |
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Current: |
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Federal |
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$ |
3 |
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$ |
2 |
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$ |
11 |
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State and local |
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13 |
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12 |
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26 |
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16 |
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14 |
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37 |
|
Deferred: |
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Federal |
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19 |
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(2 |
) |
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4 |
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State and local |
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26 |
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25 |
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4 |
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45 |
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23 |
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8 |
|
Investment Tax Credits |
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(8 |
) |
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— |
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— |
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Income tax expense |
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$ |
53 |
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$ |
37 |
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$ |
45 |
|
The significant differences between the U.S. Federal statutory rate and PGE’s Effective tax rate for financial reporting purposes are as follows:
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Years Ended December 31, |
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2025 |
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2024 |
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2023 |
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Income before income taxes |
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$ |
359 |
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$ |
350 |
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$ |
273 |
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Federal statutory tax rate |
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76 |
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21.0 |
% |
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74 |
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21.0 |
% |
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57 |
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21.0 |
% |
State and local taxes, net of federal tax benefit (1) |
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30 |
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8.4 |
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28 |
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8.0 |
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25 |
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9.0 |
|
Federal tax credits (2): |
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Energy-related tax credits |
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(48 |
) |
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(13.3 |
) |
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(58 |
) |
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(16.6 |
) |
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(27 |
) |
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(10.0 |
) |
Research and development tax credits |
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(1 |
) |
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(0.3 |
) |
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(2 |
) |
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(0.6 |
) |
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(2 |
) |
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(0.7 |
) |
Other credits |
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— |
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— |
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— |
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— |
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— |
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(0.1 |
) |
Nontaxable or Nondeductible Items: |
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Executive Compensation (3) |
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4 |
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1.1 |
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4 |
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1.4 |
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1 |
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0.5 |
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Other |
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— |
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— |
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1 |
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0.2 |
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— |
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— |
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Changes in Unrecognized Tax Benefits |
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— |
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— |
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1 |
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0.2 |
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1 |
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0.3 |
|
Effect of ratemaking on income tax accounting (4) |
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(8 |
) |
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(2.1 |
) |
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(11 |
) |
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(2.9 |
) |
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(10 |
) |
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(3.6 |
) |
Effective tax rate |
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$ |
53 |
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|
14.8 |
% |
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$ |
37 |
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|
10.7 |
% |
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$ |
45 |
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|
16.4 |
% |
Deferred income tax assets and liabilities consist of the following (in millions):
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As of December 31, |
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2025 |
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2024 |
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Deferred income tax assets: |
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Employee benefits |
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$ |
79 |
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$ |
89 |
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Regulatory liabilities |
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21 |
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28 |
|
Tax credits, net of transfer discount |
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61 |
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69 |
|
Deferred investment tax credits |
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73 |
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14 |
|
Price risk management |
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50 |
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51 |
|
Total deferred income tax assets |
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284 |
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|
251 |
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Deferred income tax liabilities: |
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Depreciation and amortization |
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711 |
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|
633 |
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Regulatory assets |
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156 |
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169 |
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Other |
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18 |
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|
13 |
|
Total deferred income tax liabilities |
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|
885 |
|
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|
815 |
|
Deferred income tax liability, net |
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$ |
601 |
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$ |
564 |
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As of December 31, 2025, PGE has federal credit carryforwards of $69 million. These credits primarily consist of PTCs, which will expire at various dates through 2045. In determining the need for a valuation allowance, PGE considered anticipated proceeds from the sale of tax credits. However, PGE believes it is more likely than not that its deferred income tax assets as of December 31, 2025 and 2024 will be realized. Accordingly, no material valuation allowance has been recorded. As of December 31, 2025, and 2024, PGE had no material unrecognized tax benefits.
On April 17, 2024, PGE received approval from the OPUC to transfer 2024 and 2025 PTCs and record any difference between the full value and the discounted value as a deferred regulatory asset. On August 20, 2025 and December 15, 2025, PGE received approval from the OPUC to transfer 2025 ITCs and return the net proceeds from the sale to PGE customers. PGE transferred tax credits, net of discounts, of $179 million and $112 million for cash proceeds in 2025 and 2024, respectively. The 2025 proceeds included $37 million from PTC sales and $142 million from ITC sales, net of discounts.
PGE and its subsidiaries file a consolidated federal income tax return. The Company also files income tax returns in the states of Oregon, California, and Montana, and in certain local jurisdictions. The Company files in other states to maintain compliance with remote worker rules and regulations. These additional state filings are not significant to the consolidated financial statements. The Internal Revenue Service has completed its examination of all tax years through 2010 and all issues were resolved related to those years. The Company does not believe that any open tax years for federal or state income taxes could result in any adjustments that would be significant to the consolidated financial statements.
Supplemental cash flow information related to cash paid for income taxes consists of the following (in millions):
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Years Ended December 31, |
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2025 |
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2024 |
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2023 |
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Cash paid (received) for income taxes, net: |
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Federal |
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Federal income taxes paid |
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$ |
4 |
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$ |
4 |
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$ |
10 |
|
Tax credit sales |
|
|
(179 |
) |
|
|
(112 |
) |
|
|
(23 |
) |
State and local |
|
|
|
|
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Oregon |
|
|
12 |
|
|
|
17 |
|
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21 |
|
Other |
|
|
1 |
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|
1 |
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|
4 |
|
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 17, 2026 | Showing above |
| 2024 | Feb 14, 2025 | |
| 2023 | Feb 20, 2024 | |
| 2022 | Feb 16, 2023 | |
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.