REGIONS FINANCIAL CORPRF
REGIONS FINANCIAL CORP Income Taxes Disclosure
NOTE 19. INCOME TAXES
The components of income tax expense for the years ended December 31 were as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Current income tax expense: | |||||||||||||||||
| Federal | $ | 388 | $ | 383 | $ | 417 | |||||||||||
| State | 121 | 57 | 84 | ||||||||||||||
| Total current expense | $ | 509 | $ | 440 | $ | 501 | |||||||||||
| Deferred income tax expense (benefit): | |||||||||||||||||
| Federal | $ | 84 | $ | 1 | $ | 25 | |||||||||||
| State | (6) | 20 | 7 | ||||||||||||||
| Total deferred expense | $ | 78 | $ | 21 | $ | 32 | |||||||||||
| Total income tax expense | $ | 587 | $ | 461 | $ | 533 | |||||||||||
Income tax expense does not reflect the tax effects of unrealized losses on securities transferred to held to maturity, unrealized gains and losses on securities available for sale, unrealized gains and losses on derivative instruments and the net change from defined benefit pension plans and other postretirement benefits. Refer to Note 14 for additional information on shareholders' equity and accumulated other comprehensive income (loss).
The Company accounts for investment tax credits from renewable energy sources using the deferral method. Investment tax credits generated totaled $64 million, $179 million and $94 million for 2025, 2024, and 2023, respectively.
Income tax expense and the effective tax rate for financial reporting purposes differs from the amount computed by applying the statutory federal income tax rate of 21 percent. In 2025, the Company adopted accounting guidance that updates
certain disclosure requirements and prior periods have been updated to reflect the current year presentation. A reconciliation between the statutory tax rate and effective tax rate is shown in the following table:
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||||||||||||||
| $ | 576 | 21.0 | % | $ | 494 | 21.0 | % | $ | 547 | 21.0 | % | ||||||||||||||||||||||||
| Increase (decrease) in taxes resulting from: | |||||||||||||||||||||||||||||||||||
State and local income tax, net of federal tax effect (1) | 55 | 2.0 | % | 60 | 2.6 | % | 69 | 2.7 | % | ||||||||||||||||||||||||||
Tax credits: | |||||||||||||||||||||||||||||||||||
Affordable housing and economic development credits, net of amortization (2) | (36) | (1.3) | % | (48) | (1.9) | % | (41) | (1.6) | % | ||||||||||||||||||||||||||
| Other tax credits | (6) | (0.3) | % | (5) | (0.4) | % | (13) | (0.4) | % | ||||||||||||||||||||||||||
Non-taxable and non-deductible items: | |||||||||||||||||||||||||||||||||||
| Tax-exempt interest | (40) | (1.4) | % | (39) | (1.7) | % | (38) | (1.5) | % | ||||||||||||||||||||||||||
| Other non-deductible expenses | 23 | 0.8 | % | 23 | 1.0 | % | 22 | 0.8 | % | ||||||||||||||||||||||||||
| Bank-owned life insurance | (22) | (0.8) | % | (24) | (1.0) | % | (19) | (0.7) | % | ||||||||||||||||||||||||||
| Other, net | 1 | 0.1 | % | (2) | (0.1) | % | 3 | 0.1 | % | ||||||||||||||||||||||||||
Change in UTB | 36 | 1.3 | % | 2 | 0.1 | % | 3 | 0.1 | % | ||||||||||||||||||||||||||
Income tax expense and total effective tax rate | $ | 587 | 21.4 | % | $ | 461 | 19.6 | % | $ | 533 | 20.5 | % | |||||||||||||||||||||||
(1) In 2025, Alabama and Tennessee combined comprise more than half of the tax effect in this category. In both 2024 and 2023, Alabama comprises more than half of the tax effect in this category.
(2) Income tax expense includes gross amortization of affordable housing and economic development projects of $193 million, $188 million, and $166 million for 2025, 2024 and 2023, respectively. See Note 2 for additional information.
Significant components of the Company’s net deferred tax asset at December 31 are listed below:
| 2025 | 2024 | ||||||||||
| (In millions) | |||||||||||
| Deferred tax assets: | |||||||||||
| Unrealized losses included in shareholders' equity | $ | 522 | $ | 976 | |||||||
| Allowance for credit losses | 426 | 433 | |||||||||
| Right of use liability | 128 | 123 | |||||||||
| Accrued expenses | 33 | 48 | |||||||||
| Other | 27 | 18 | |||||||||
Federal and state tax credit carryforwards | 2 | 27 | |||||||||
| Federal and state net operating losses, net of federal tax effect | 19 | 28 | |||||||||
| Total deferred tax assets | 1,157 | 1,653 | |||||||||
| Less: valuation allowance | (18) | (22) | |||||||||
| Total deferred tax assets less valuation allowance | 1,139 | 1,631 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Lease financing | 362 | 413 | |||||||||
| Right of use asset | 121 | 116 | |||||||||
| Mortgage servicing rights | 92 | 96 | |||||||||
| Goodwill and intangibles | 138 | 126 | |||||||||
| Fixed assets | 87 | 7 | |||||||||
| Employee benefits and deferred compensation | 33 | 34 | |||||||||
| Other | 62 | 64 | |||||||||
| Total deferred tax liabilities | 895 | 856 | |||||||||
| Net deferred tax asset | $ | 244 | $ | 775 | |||||||
The Company files U.S. federal, state, and local income tax returns, and as of December 31, 2025 had federal and state net operating loss and tax credit carryforwards, all of which were immaterial. The Company believes that a portion of the state net operating loss carryforwards will not be realized due to certain state statutory limitations. Accordingly, a valuation allowance has been established, which is also immaterial.
The Company is in the IRS’s Compliance Assurance Process program and examinations of the U.S federal consolidated income tax return for tax years through 2023 have been completed. With limited exceptions, the Company is no longer subject to state and local tax examinations for tax years prior to 2022. Currently, there are no material disputed tax positions with federal or state taxing authorities. Accordingly, the Company does not anticipate that any adjustments relating to federal or state tax examinations will result in material changes to its business, financial position, results of operations or cash flows.
As of December 31, 2025, 2024 and 2023, the balance of UTBs, as shown below, would reduce the effective tax rate, if recognized. A reconciliation of the beginning and ending amount of UTB is as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Balance at beginning of year | $ | 12 | $ | 11 | $ | 8 | |||||||||||
| Additions based on tax positions taken in a prior period | 46 | — | 3 | ||||||||||||||
| Additions based on tax positions taken in the current period | 1 | 1 | — | ||||||||||||||
| Reductions based on tax positions taken in a prior period | (3) | — | — | ||||||||||||||
| Settlements | (1) | — | — | ||||||||||||||
| Expiration of statute of limitations | (8) | — | — | ||||||||||||||
| Balance at end of year | $ | 47 | $ | 12 | $ | 11 | |||||||||||
For the year ended December 31, 2025, the Company recognized an $11 million expense for gross interest and penalties related to its UTBs. For the years ended December 31, 2024 and 2023, the Company recognized an immaterial expense (benefit) for gross interest and penalties related to its UTBs. As of December 31, 2025, the Company had liabilities for interest and penalties related to UTBs of $14 million. As of December 31, 2024 and 2023, the Company had an immaterial gross liability for interest and penalties related to UTBs.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2015 | Feb 16, 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.