PRUDENTIAL FINANCIAL INCPRU
PRUDENTIAL FINANCIAL INC Income Taxes Disclosure
INCOME TAXES
The following schedule discloses significant components of income tax expense (benefit) for each year presented:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in millions) | ||||||||||||||||||||
| Current tax expense (benefit): | ||||||||||||||||||||
| U.S. | $ | 60 | $ | 495 | $ | (4) | ||||||||||||||
| State and local | 16 | 35 | 25 | |||||||||||||||||
| Foreign | 579 | 755 | 667 | |||||||||||||||||
| Total current tax expense (benefit) | 655 | 1,285 | 688 | |||||||||||||||||
| Deferred tax expense (benefit): | ||||||||||||||||||||
U.S.(1) | (125) | (545) | 323 | |||||||||||||||||
| State and local | 2 | (1) | 0 | |||||||||||||||||
Foreign(1) | 521 | (232) | (398) | |||||||||||||||||
| Total deferred tax expense (benefit) | 398 | (778) | (75) | |||||||||||||||||
Total income tax expense (benefit) on income (loss) before equity in earnings of joint ventures and other operating entities | 1,053 | 507 | 613 | |||||||||||||||||
Income tax expense (benefit) on equity in earnings of joint ventures and other operating entities | 40 | 41 | 34 | |||||||||||||||||
| Income tax expense (benefit) on discontinued operations | 0 | 0 | 0 | |||||||||||||||||
| Income tax expense (benefit) reported in equity related to: | ||||||||||||||||||||
| Other comprehensive income (loss) | 1,003 | 364 | (837) | |||||||||||||||||
| Total income taxes | $ | 2,096 | $ | 912 | $ | (190) | ||||||||||||||
__________
(1)The U.S. deferred tax includes a benefit of $318 million, which is fully offset by a corresponding charge in foreign deferred taxes related to one of the Company’s Bermuda operating insurance companies. These amounts are due to changes in Bermuda tax law in 2025. Overall, there is no impact on total taxes, as all earnings of the Bermuda entity are subject to U.S. taxation at a rate of 21%
Reconciliation of Expected Tax at Statutory Rates to Reported Income Tax Expense (Benefit)
The differences between income taxes expected at the U.S. federal statutory income tax rate of 21% applicable for 2025 and the reported income tax expense (benefit) are summarized as follows:
| As of December 31, | ||||||||||||||
| 2025 | ||||||||||||||
($ in millions) | ||||||||||||||
Expected federal income tax expense/(benefit) | $ | 978 | 21.0 | % | ||||||||||
State taxes (net of federal benefit) | 11 | 0.2 | % | |||||||||||
Tax credits | (125) | (2.7) | % | |||||||||||
Foreign tax credits | (52) | (1.1) | % | |||||||||||
General business credits | (73) | (1.6) | % | |||||||||||
Effect of cross-border tax laws | (143) | (3.1) | % | |||||||||||
GILTI | 48 | 1.0 | % | |||||||||||
Change in tax law—Bermuda | (318) | (6.8) | % | |||||||||||
Full inclusion—Bermuda | 112 | 2.4 | % | |||||||||||
Other | 15 | 0.3 | % | |||||||||||
Nontaxable or nondeductible items | (137) | (2.9) | % | |||||||||||
Nontaxable investment income | (160) | (3.4) | % | |||||||||||
Nondeductible expenses | 23 | 0.5 | % | |||||||||||
Other reconciling items | (122) | (2.6) | % | |||||||||||
Foreign tax effects | 585 | 12.6 | % | |||||||||||
| Japan | 210 | 4.5 | % | |||||||||||
National & local tax rate difference than U.S. | 143 | 3.1 | % | |||||||||||
| Other | 67 | 1.4 | % | |||||||||||
| Brazil | 169 | 3.6 | % | |||||||||||
National tax rate difference than U.S. | 80 | 1.7 | % | |||||||||||
Change in tax law | 72 | 1.5 | % | |||||||||||
| Other | 17 | 0.4 | % | |||||||||||
| Bermuda | 194 | 4.2 | % | |||||||||||
National tax rate difference than U.S. | (112) | (2.4) | % | |||||||||||
Change in tax law | 318 | 6.8 | % | |||||||||||
| Other | (12) | (0.3) | % | |||||||||||
Other foreign jurisdictions | 12 | 0.3 | % | |||||||||||
Changes in unrecognized tax benefits | 6 | 0.1 | % | |||||||||||
Total | $ | 1,053 | 22.6 | % | ||||||||||
The following is a description of items that impacted the difference between the Company’s statutory U.S. federal income tax rate of 21% applicable for 2025 and the Company’s effective tax rate:
State and Local Income Taxes. State income tax in Illinois represents the majority of the State and local income tax category. Note that in most jurisdictions, the Company’s insurance operations are subject to state premium taxes in lieu of state income taxes. Premium taxes are recorded as a general expense.
General Business Credits. These amounts include U.S. tax credits for Low-income Housing. In August 2022, the Inflation Reduction Act was enacted which included provisions that allow for the transfer of certain federal clean energy tax credits (Federal Transferable Tax Credits). During 2025, the Company paid $192 million to purchase $200 million of 2025 Federal Transferable Energy Tax Credits. This amount paid has been included in payments for income taxes, and the difference between tax credits purchased and amounts paid are included as a component of the income tax provision.
Non-Taxable Investment Income. The U.S. DRD reduces the amount of dividend income subject to U.S. tax and is included in the non-taxable investment income shown in the table above. More specifically, the U.S. DRD constitutes $54 million of the total $160 million of 2025 non-taxable investment income. The DRD for the current period was estimated using information from 2024, current year investment results, and current year’s equity market performance. The actual current year DRD can vary based on factors such as, but not limited to, changes in the amount of dividends received that are eligible for the DRD, changes in the amount of distributions received from fund investments, changes in the account balances of variable life and annuity contracts, and the Company’s taxable income before the DRD.
GILTI. The GILTI provision applies a minimum U.S. tax to earnings of consolidated foreign subsidiaries in excess of a 10% deemed return on tangible assets of foreign subsidiaries by imposing the U.S. tax rate to 50% of earnings of such foreign affiliates and provides for a partial foreign tax credit for foreign income taxes. In years that the PFI consolidated federal income tax return reports a net operating loss or has a loss attributable to U.S. sources of operations, including as a result of loss carrybacks, the GILTI provision would limit the amount of deductions or credits permissible against GILTI.
On July 20, 2020, the U.S. Treasury and the Internal Revenue Service issued Final Regulations (Treasury Decision 9902) pursuant to Internal Revenue Code Section 951A which allow an annual election to exclude from the U.S. tax return certain GILTI amounts when the taxes paid by a foreign affiliate exceed 18.9% (90% of U.S. statutory rate of 21%) of the GILTI amount for that foreign affiliate (the “high-tax exception”). These regulations are effective for the 2021 taxable year with an election to apply to any taxable year beginning after 2017. In many of the countries in which the Company operates, including Japan and Brazil, there are differences between local tax rules used to determine the tax base and the U.S. tax principles used to determine GILTI. Also, the Company’s Japan affiliates have a different tax year than the U.S. calendar tax year used to determine GILTI. Therefore, while many of the countries, including Japan and Brazil, have a statutory tax rate above the 18.9% threshold, separate affiliates may not meet the 18.9% threshold each year and, as such, may not qualify for this annual exclusion. Primarily as result of these differences, the Company recorded a $48 million income tax expense in 2025. The Company anticipates making the high-tax exception election for the 2025 tax year for its foreign affiliates that meet the 18.9% threshold.
Changes in Tax Law. In December 2023, the Government of Bermuda enacted a corporate income tax, which imposes a 15% income tax, less applicable foreign tax credits, on companies that are organized or operate within Bermuda that are within the scope of the Organization of Economic Cooperation and Development (“OECD”) Pillar Two rules. The Bermuda corporate income tax is effective for tax years beginning on January 1, 2025. The Company intends to make an election to exclude the income of a Bermuda entity that is a controlled foreign corporation within the meaning of the U.S. tax rules from the Bermuda corporate income tax for fiscal years ending prior to January 1, 2027. Certain changes enacted in 2025 to the Bermuda corporate income tax provide for both foreign tax credits for controlled foreign company regime taxes imposed in respect of the income of Bermuda entities which may be claimed against Bermuda income tax liability as well as certain other tax credits. In 2025, the Company recorded an adjustment of $318 million net tax charge as a Change in Tax Laws in Bermuda, which was entirely offset by a corresponding $318 million tax benefit reflected in the Effect of Cross-border Tax Laws. In connection with this change, the Company also decreased the local Bermuda DTA initially recorded in 2023 and the corresponding valuation allowance, which has also been reflected within the Change in Tax Laws in Bermuda.
H.R.1, also referred to as the “One Big Beautiful Bill Act” (the “Tax Act of 2025”), was enacted into law on July 4, 2025. The legislation introduces changes to the U.S. international tax regime, including a reduction in the Section 250 deduction for GILTI (now referred to as Net Controlled Foreign Corporation Tested Income (“NCTI”)) from 50% to 40% beginning in 2026, resulting in an increase to the corporate tax rate on NCTI from 10.5% to 12.6%. The legislation also reduces the foreign tax credit limitation related to NCTI from 20% to 10% and makes changes to the related expense allocation. While the Company continues to evaluate the impact of the Tax Act of 2025 on its future consolidated financial statements and related disclosures, the Company does not anticipate that the provisions of the Tax Act of 2025 will have a material impact on its total tax positions in 2026 and forward.
In March 2025, Japan enacted a 4% Special Defense Corporation Tax, effective for tax years beginning on or after April 1, 2026, that raises the corporate income tax rate for the Company’s Japan insurance companies from 28.00% to 28.93%. As a result, the Company recorded $37 million income tax expense in 2025 which is included in “other” under the foreign tax effects category for Japan.
In November 2025, Brazil enacted Law No. 15,270, effective January 1, 2026, which includes the introduction of a 10% withholding tax on dividends paid to non-residents. The withholding tax applies to dividends declared after December 31, 2025. As a result, a deferred tax expense of approximately $72 million is reflected as Change in Tax Law for Brazil for 2025.
Other reconciling items. This line item represents reconciling items that are individually less than 5% of the computed expected federal income tax expense (benefit) and have therefore been aggregated for purposes of this reconciliation in accordance with relevant disclosure guidance.
The differences between income taxes expected at the U.S. federal statutory income tax rate of 21% applicable for 2024 and 2023, and the reported income tax expense (benefit) are summarized as follows:
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
($ in millions) | |||||||||||
| Expected federal income tax expense (benefit) | $ | 674 | $ | 645 | |||||||
| Non-taxable investment income | (168) | (162) | |||||||||
| Foreign taxes at other than U.S. rate | 189 | 191 | |||||||||
| Low-income housing and other tax credits | (94) | (106) | |||||||||
| Changes in tax law | 50 | (99) | |||||||||
| GILTI | (24) | 5 | |||||||||
| Sale of subsidiary | (10) | 0 | |||||||||
| Non-deductible expenses | 39 | 29 | |||||||||
| Change in valuation allowance | (45) | 111 | |||||||||
State taxes (net of federal benefit) | 26 | 20 | |||||||||
| Other | (130) | (21) | |||||||||
| Reported income tax expense (benefit) | $ | 507 | $ | 613 | |||||||
| Effective tax rate | 15.8 | % | 20.0 | % | |||||||
The following is a description of items that had a significant impact on the difference between the Company’s statutory U.S. federal income tax rate of 21% applicable for 2024 and 2023, and the Company’s effective tax rate during the periods presented:
Non-Taxable Investment Income. The DRD reduces the amount of dividend income subject to U.S. tax and is included in the non-taxable investment income shown in the table above. More specifically, the U.S. DRD constitutes $55 million of the total $168 million of 2024 non-taxable investment income, and $62 million of the total $162 million of 2023 non-taxable investment income. The DRD for both years was estimated using information from the prior year, the current year investment results, and the current year’s equity market performance.
Foreign Taxes at Other Than U.S. Rates. The combined statutory income tax rate in the Company’s largest non-U.S. tax jurisdiction is approximately 28%, plus local taxes in Japan as compared to the U.S. federal income tax rate of 21% applicable for 2024 and 2023.
Low-Income Housing and Other Tax Credits. These amounts include U.S. tax credits for Low-income Housing as well as foreign tax credits.
Changes in Tax Law. In December 2023, the Government of Bermuda enacted a corporate income tax, which imposes a 15% income tax, less applicable foreign tax credits, on companies that are organized or operate within Bermuda that are within the scope of the OECD Pillar Two rules. The Bermuda corporate income tax will be effective for tax years beginning on January 1, 2025. The Company intends to make an election to exclude the income of a Bermuda entity that is a controlled foreign corporation within the meaning of the U.S. tax rules from the Bermuda corporate income tax for fiscal years ending prior to January 1, 2027. In 2023, the Company reflected a $99 million net tax benefit as a result of the change in Bermuda tax law, which was entirely offset by a corresponding change in valuation allowance. In 2024, the Company recorded an adjustment of $50 million net tax expense, which was entirely offset by a corresponding change in valuation allowance.
GILTI. In 2024, the Company received IRS consent to change its tax accounting method for certain products in its Japan operations which resulted in a reduction of the 2022 GILTI tax liability. The Company made the high-tax exception election for the 2023 and 2024 tax years.
Other. This line item represents reconciling items that are individually less than 5% of the computed expected federal income tax expense (benefit) and have therefore been aggregated for purposes of this reconciliation in accordance with relevant disclosure guidance.
Schedule of Deferred Tax Assets and Deferred Tax Liabilities
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (in millions) | ||||||||||||||
| Deferred tax assets: | ||||||||||||||
| Net unrealized investment losses | $ | 6,938 | $ | 6,987 | ||||||||||
| Policyholders’ dividends | 171 | 55 | ||||||||||||
| Net operating and capital loss carryforwards | 269 | 360 | ||||||||||||
| Employee benefits | 360 | 271 | ||||||||||||
| Investments | 2,862 | 2,448 | ||||||||||||
| Goodwill and other intangibles | 287 | 313 | ||||||||||||
| Deferred tax assets before valuation allowance | 10,887 | 10,434 | ||||||||||||
| Valuation allowance | (212) | (238) | ||||||||||||
| Deferred tax assets after valuation allowance | 10,675 | 10,196 | ||||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Insurance reserves | 6,991 | 4,629 | ||||||||||||
| Deferred policy acquisition costs | 3,951 | 3,851 | ||||||||||||
| Value of business acquired | 142 | 147 | ||||||||||||
| Other | 687 | 1,261 | ||||||||||||
| Deferred tax liabilities | 11,771 | 9,888 | ||||||||||||
Net deferred tax asset (liability)(1) | $ | (1,096) | $ | 308 | ||||||||||
__________
(1) As of December 31, 2025, includes net deferred tax assets of $490 million and $0 million related to the Company’s U.S. operations and Bermuda operations, respectively. As of December 31, 2024, includes net deferred tax assets of $840 million and $401 million related to the Company’s U.S. operations and Bermuda operations, respectively.
The application of U.S. GAAP requires the Company to evaluate the recoverability of deferred tax assets and establish a valuation allowance if necessary to reduce the deferred tax asset to an amount that is more likely than not expected to be realized. Considerable judgment is required in determining whether a valuation allowance is necessary, and if so, the amount of such valuation allowance. In evaluating the need for a valuation allowance, the Company considers many factors, including: (1) the nature of the deferred tax assets and liabilities; (2) whether they are ordinary or capital; (3) in which tax jurisdictions they were generated and the timing of their reversal; (4) taxable income in prior carryback years as well as projected taxable earnings exclusive of reversing temporary differences and carryforwards; (5) the length of time that carryovers can be utilized in the various taxing jurisdictions; (6) any unique tax rules that would impact the utilization of the deferred tax assets; and (7) any tax planning strategies that the Company would employ to avoid a tax benefit from expiring unused. Although realization is not assured, management believes it is more likely than not that the deferred tax assets, net of valuation allowances, will be realized.
Changes in market conditions, including the significant rise in interest rates since the beginning of 2022, resulted in the recording of deferred tax assets related to net unrealized tax capital losses in the Company’s U.S. businesses. When assessing recoverability of these deferred tax assets, the Company considers its ability and intent to hold the underlying securities to recovery in value, if necessary, as well as other factors as noted above. As of December 31, 2025, based on all available
evidence, the Company concluded that the deferred tax assets related to the unrealized tax capital losses on the available-for-sale and trading securities portfolios are, more likely than not, expected to be realized.
A valuation allowance has been recorded against deferred tax assets related to certain federal, state and local taxes and foreign operations. Adjustments to the valuation allowance are made to reflect changes in management’s assessment of the amount of the deferred tax asset that is realizable and the amount of deferred tax asset actually realized during the year. The valuation allowance includes amounts recorded in connection with deferred tax assets as follows:
| Federal | State | Foreign Operations | Total | |||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | 25 | $ | 132 | $ | 133 | $ | 290 | ||||||||||||||||||
| Charged to costs and expenses | (2) | 0 | 7 | 5 | ||||||||||||||||||||||
| Other adjustments | 0 | (4) | (53) | (57) | ||||||||||||||||||||||
| Balance at December 31, 2024 | 23 | 128 | 87 | 238 | ||||||||||||||||||||||
| Charged to costs and expenses | (1) | 4 | 16 | 19 | ||||||||||||||||||||||
| Other adjustments | 0 | 0 | (45) | (45) | ||||||||||||||||||||||
| Balance at December 31, 2025 | $ | 22 | $ | 132 | $ | 58 | $ | 212 | ||||||||||||||||||
The following table sets forth the amount and expiration dates of federal, state and foreign operating, capital loss and tax credit carryforwards for tax purposes, as of the periods indicated:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (in millions) | ||||||||||||||
| Federal net operating and capital loss carryforwards | $ | 0 | $ | 23 | ||||||||||
| State net operating and capital loss carryforwards(1) | $ | 1,993 | $ | 1,888 | ||||||||||
| Foreign net operating and capital loss carryforwards(2) | $ | 926 | $ | 907 | ||||||||||
| Federal foreign tax credit carryforwards(3) | $ | 16 | $ | 15 | ||||||||||
__________
(1)Certain state net operating loss carryforwards expire between 2026 and 2045, whereas others have an unlimited carryforward.
(2)$349 million expires between 2026 and 2042 and $150 million has an unlimited carryforward.
(3)Expires between 2028 and 2035. These relate to foreign non-general basket tax credits.
Consistent with the U.S. Tax Cuts and Jobs Act of 2017 (“Tax Act of 2017”), the Company provides applicable U.S. income tax for all unremitted earnings of the Company’s foreign affiliates. For certain foreign affiliates organized in withholding tax jurisdictions or that may be subject to other foreign country tax upon a remittance, the Company considers the unremitted foreign earnings of those affiliates to be indefinitely reinvested, and therefore does not provide for the withholding tax when calculating its current and deferred tax obligations. For certain other foreign affiliates organized in withholding tax jurisdictions or that may be subject to other foreign country tax upon a remittance, the Company does not consider unremitted earnings indefinitely reinvested, and therefore provides for foreign withholding tax when calculating its current and deferred tax obligations. The following table summarizes the Company’s indefinite reinvestment assertions for jurisdictions in which the Company operates that impose a withholding tax on dividends that is not eliminated by a tax treaty or may be subject to other foreign country tax upon a remittance:
Unremitted earnings are indefinitely reinvested | Unremitted earnings are not indefinitely reinvested | ||||
Insurance operations in Chile and China and non-insurance operation in Korea. | Insurance operations in Argentina, Brazil, India, Indonesia, Ghana, Kenya, and South Africa, and non-insurance operations in China, India, Italy, France, and Luxembourg. | ||||
The Company no longer has a permanent reinvestment assertion related to earnings of affiliates in Italy, France, Germany, and Luxembourg. This change had no net impact to the Company's financial results. The Company made no changes with respect to its repatriation assumptions in 2023 and 2024.
The following table sets forth the undistributed earnings of foreign subsidiaries, where the Company assumes indefinite reinvestment of such earnings and for which, in 2025, 2024 and 2023, foreign deferred withholding or other foreign income taxes have not been provided. The net tax liability that may arise if the 2025 earnings were remitted which includes any foreign exchange impacts, is immaterial.
| At December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in millions) | ||||||||||||||||||||
| Undistributed earnings of foreign subsidiaries (assuming indefinite reinvestment only for Withholding or other non-U.S. Taxes) | $ | 417 | $ | 351 | $ | 291 | ||||||||||||||
The Company’s “Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities” includes income (loss) from domestic operations of $2,184 million, $2,077 million and $1,341 million and income (loss) from foreign operations of $2,473 million, $1,132 million and $1,731 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Income Taxes Paid
Income taxes paid during the year are disclosed in the table below and include tax installments made for the current year as well as tax payments and refunds related to prior periods.
Year Ended December 31, | ||||||||
| 2025 | ||||||||
| (in millions) | ||||||||
| Federal (1) | $ | 808 | ||||||
State | 32 | |||||||
Foreign | 558 | |||||||
Japan | 423 | |||||||
Brazil | 79 | |||||||
Other Foreign Jurisdictions | 56 | |||||||
Total taxes paid, net of refunds | $ | 1,398 | ||||||
__________
(1)Includes $188 million refund related to prior years and $192 million paid for Transferable Energy tax credits..
Tax Audit and Unrecognized Tax Benefits
The Company’s liability for income taxes includes the liability for unrecognized tax benefits and interest that relate to tax years still subject to review by the IRS or other taxing authorities. The completion of review or the expiration of the Federal statute of limitations for a given audit period could result in an adjustment to the liability for income taxes.
The following table reconciles the total amount of unrecognized tax benefits at the beginning and end of the periods indicated:
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in millions) | ||||||||||||||||||||
| Balance at January 1, | $ | 132 | $ | 133 | $ | 84 | ||||||||||||||
| Increases in unrecognized tax benefits—prior years | 1 | 4 | 13 | |||||||||||||||||
| (Decreases) in unrecognized tax benefits—prior years | (3) | (5) | 0 | |||||||||||||||||
| Increases in unrecognized tax benefits—current year | 0 | 0 | 36 | |||||||||||||||||
| (Decreases) in unrecognized tax benefits—current year | 0 | 0 | 0 | |||||||||||||||||
| Settlements with taxing authorities | (5) | 0 | 0 | |||||||||||||||||
| Balance at December 31, | $ | 125 | $ | 132 | $ | 133 | ||||||||||||||
| Unrecognized tax benefits that, if recognized, would favorably impact the effective rate | $ | 125 | $ | 132 | $ | 133 | ||||||||||||||
The Company classifies all interest and penalties related to tax uncertainties as income tax expense (benefit). The amounts recognized in the consolidated financial statements for tax-related interest and penalties for the years ended December 31 are as follows:
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in millions) | ||||||||||||||||||||
| Interest and penalties recognized in the Consolidated Statements of Operations | $ | 1 | $ | 10 | $ | 7 | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (in millions) | ||||||||||||||
| Interest and penalties recognized in liabilities in the Consolidated Statements of Financial Position | $ | 33 | $ | 33 | ||||||||||
Listed below are the tax years that remain subject to examination, by major tax jurisdiction, as of December 31, 2025:
| Major Tax Jurisdiction | Open Tax Years | |||||||
| United States | 2014-2025 | |||||||
| Japan | Fiscal years ended March 31, 2021-2025 | |||||||
The Company participates in the IRS’s Compliance Assurance Program. Under this program, the IRS assigns an examination team to review completed transactions as they occur in order to reach agreement with the Company on how they should be reported in the relevant tax returns. If disagreements arise, accelerated resolutions programs are available to resolve the disagreements in a timely manner.
The U.S. federal tax law provides that an election may be made pursuant to Internal Revenue Code Section 952 (the “952 election”) to subject earnings from certain insurance operations to tax in the U.S. in the tax year earned, net of related foreign tax credits. The Company made the 952 election effective for the 2017 and later tax years with respect to its affiliates incorporated in Brazil. In October 2019, the IRS issued a legal memorandum applicable to all taxpayers in which the IRS argues that the election became inoperable in 1998. The Company disagrees with the IRS’s position. The Company and the IRS have not been able to resolve this disagreement through the IRS Independent Office of Appeals. The Company is considering all of its options for a resolution of the matter.
Some of the Company’s affiliates in Japan file a consolidated tax return, while others file separate tax returns. The Company’s affiliates in Japan are subject to audits by the local taxing authority. The general statute of limitations is five years from when the return is filed. During 2023, the Japanese National Tax Service concluded tax audits of The Gibraltar Life Insurance Company, Ltd. (“Gibraltar Life”) for the three tax years ending March 31, 2022 and The Prudential Gibraltar Financial Life Insurance Company, Ltd. (“PGFL”) for the four tax years ending March 31, 2022. The tax authority also conducted tax audits of some non-insurance companies during the reporting period. The audits had no material impact on the Company’s results.
In August 2020, the Company sold an affiliate in South Korea, Prudential of Korea, that was subject to routine tax audits by the local taxing authority for 2017, 2016, and 2015 tax years. In November 2023, the disputed issue on the treatment of foreign tax credits was decided in favor of Prudential of Korea at the Tax Tribunal appeal and therefore had no material impact on the Company’s results.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 12, 2026 | Showing above |
| 2024 | Feb 13, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 16, 2023 | |
| 2021 | Feb 17, 2022 | |
| 2020 | Feb 19, 2021 | |
| 2019 | Feb 14, 2020 | |
| 2018 | Feb 15, 2019 | |
| 2017 | Feb 16, 2018 | |
| 2016 | Feb 17, 2017 | |
| 2015 | Feb 19, 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.