Public Storage Income Taxes Disclosure
| Year Ended December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||||||
| (Dollar Amounts in Thousands) | ||||||||||||||||||||||||||
| Expected tax expense at statutory rate | $ | 375,859 | 21.0 | % | $ | 438,707 | 21.0 | % | $ | 455,898 | 21.0 | % | ||||||||||||||
State and local income taxes(a) | 6,946 | 0.4 | % | 2,689 | 0.1 | % | 7,871 | 0.4 | % | |||||||||||||||||
Foreign tax expense(b) | 1,776 | 0.1 | % | 1,564 | 0.1 | % | 476 | — | % | |||||||||||||||||
| Tax Credits | (16,585) | (0.9) | % | (17,774) | (0.9) | % | (8,639) | (0.4) | % | |||||||||||||||||
Changes in Valuation Allowance(c) | 8,669 | 0.5 | % | 24,353 | 1.2 | % | 14,631 | 0.7 | % | |||||||||||||||||
| Nontaxable or nondeductible items: | ||||||||||||||||||||||||||
| Nontaxable REIT income | (373,557) | (20.9) | % | (438,739) | (21.0) | % | (451,640) | (20.8) | % | |||||||||||||||||
| Other | (10,336) | (0.6) | % | (6,131) | (0.3) | % | (7,776) | (0.4) | % | |||||||||||||||||
| Income tax provision (benefit) and effective tax rate | $ | (7,228) | (0.4) | % | $ | 4,669 | 0.2 | % | $ | 10,821 | 0.5 | % | ||||||||||||||
(c) Includes $15.8 million related to the reversal of valuation allowance on sale of solar tax credits during the year ended December 31, 2025.
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.