Vistra Corp.VST
Vistra Corp. Income Taxes Disclosure
INCOME TAXES
Vistra files a U.S. federal income tax return that includes the results of its consolidated subsidiaries. Vistra serves as the corporate parent of the Vistra consolidated group. Pursuant to applicable U.S. Department of the Treasury regulations and published guidance of the IRS, corporations that are members of a consolidated group have joint and several liability for the taxes of such group.
Income Tax Expense (Benefit)
The components of our income tax expense (benefit) are as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Current: | |||||||||||||||||
| U.S. Federal | $ | (3) | $ | 2 | $ | (1) | |||||||||||
| State | 46 | 46 | 52 | ||||||||||||||
| Total current | 43 | 48 | 51 | ||||||||||||||
| Deferred: | |||||||||||||||||
| U.S. Federal | 149 | 561 | 421 | ||||||||||||||
| State | (13) | 46 | 36 | ||||||||||||||
| Total deferred | 136 | 607 | 457 | ||||||||||||||
| Total | $ | 179 | $ | 655 | $ | 508 | |||||||||||
Reconciliation of income taxes computed at the U.S. federal statutory rate to income tax expense (benefit) recorded:
| Year Ended December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||
| Income (loss) before income taxes | $ | 1,123 | $ | 3,467 | $ | 2,000 | |||||||||||||||||||||||||||||
| Income taxes at the U.S. federal statutory rate of 21% | 236 | 21.0 | % | 728 | 21.0 | % | 420 | 21.0 | % | ||||||||||||||||||||||||||
| State and local taxes, net of federal benefit (a) | 26 | 2.3 | % | 68 | 2.0 | % | 71 | 3.6 | % | ||||||||||||||||||||||||||
| Nontaxable or nondeductible items: | |||||||||||||||||||||||||||||||||||
| Nondeductible TRA accretion | (1) | (0.1) | % | 2 | 0.1 | % | 41 | 2.1 | % | ||||||||||||||||||||||||||
| Equity awards | (145) | (12.9) | % | (53) | (1.6) | % | (3) | (0.2) | % | ||||||||||||||||||||||||||
| Nondeductible 162(m) compensation | 75 | 6.7 | % | 29 | 0.8 | % | 13 | 0.7 | % | ||||||||||||||||||||||||||
| Transferable PTC revenues | (46) | (4.1) | % | (117) | (3.4) | % | (2) | (0.1) | % | ||||||||||||||||||||||||||
| Other nontaxable or nondeductible items | 7 | 0.6 | % | 2 | 0.1 | % | 2 | 0.1 | % | ||||||||||||||||||||||||||
| Changes in valuation allowance | — | — | % | (3) | (0.1) | % | — | — | % | ||||||||||||||||||||||||||
| Changes in unrecognized tax benefit | — | — | % | — | — | % | (35) | (1.8) | % | ||||||||||||||||||||||||||
Tax credits | (3) | (0.3) | % | — | — | % | (1) | (0.1) | % | ||||||||||||||||||||||||||
| Other | 30 | 2.7 | % | (1) | — | % | 2 | 0.1 | % | ||||||||||||||||||||||||||
| Total | $ | 179 | 15.9 | % | $ | 655 | 18.9 | % | $ | 508 | 25.4 | % | |||||||||||||||||||||||
____________
(a)State and local taxes in Texas, Pennsylvania, and Illinois comprise the majority of this category.
Income Taxes Paid (Net of Refunds)
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in millions) | ||||||||||||||||||||
| US Federal | $ | 11 | $ | 5 | $ | — | (a) | |||||||||||||
US state and local | ||||||||||||||||||||
| California | 11 | 3 | 5 | |||||||||||||||||
| Illinois | — | (a) | 14 | 15 | ||||||||||||||||
| Massachusetts | — | (a) | 4 | 3 | ||||||||||||||||
| Ohio Municipalities | 21 | — | (a) | — | (a) | |||||||||||||||
| Pennsylvania | 28 | 6 | 5 | |||||||||||||||||
| Texas | 19 | 17 | — | (a) | ||||||||||||||||
| Other | 7 | 6 | 3 | |||||||||||||||||
Total US state and local | $ | 86 | $ | 50 | $ | 31 | ||||||||||||||
Total | $ | 97 | $ | 55 | $ | 31 | ||||||||||||||
____________
(a)Income taxes paid did not meet the 5% disaggregation threshold for the periods presented.
Deferred Income Tax Balances
Deferred income taxes provided for temporary differences based on tax laws in effect at December 31, 2025 and 2024 are as follows:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (in millions) | |||||||||||
| Noncurrent Deferred Income Tax Assets | |||||||||||
| Tax credit carryforwards | $ | 89 | $ | 86 | |||||||
| Loss carryforwards | 1,078 | 949 | |||||||||
| Identifiable intangible assets | 326 | 340 | |||||||||
| Long-term debt | 130 | 225 | |||||||||
| Employee benefit obligations | 133 | 133 | |||||||||
| Commodity contracts and interest rate swaps | 661 | 383 | |||||||||
| Other | 37 | 36 | |||||||||
| Total deferred tax assets | $ | 2,454 | $ | 2,152 | |||||||
| Noncurrent Deferred Income Tax Liabilities | |||||||||||
| Property, plant, and equipment | 3,191 | 2,765 | |||||||||
| Total deferred tax liabilities | 3,191 | 2,765 | |||||||||
| Valuation allowance | 73 | 75 | |||||||||
| Net Deferred Income Tax Liability | $ | (810) | $ | (688) | |||||||
As of December 31, 2025, we had total net deferred tax liabilities of approximately $810 million that were substantially comprised of book and tax basis differences related to our generation and mining property, plant, and equipment, partially offset by federal and state net operating loss (NOL) carryforwards. As of December 31, 2025, we assessed the need for a valuation allowance related to our deferred tax asset and considered both positive and negative evidence related to the likelihood of realization of the deferred tax assets. We have identified positive evidence in the form of cumulative income on an unadjusted basis over the preceding 12 quarters. We evaluated historical earnings, performed scheduling of the reversal of temporary differences, and considered other positive and negative evidence. In connection with our analysis, we concluded that it is more likely than not that the federal deferred tax assets will be fully utilized by future taxable income, and thus no valuation allowance was required.
As of December 31, 2025, we had $3.8 billion pre-tax net operating loss (NOL) carryforwards for federal income tax purposes that will begin to expire in 2031.
The income tax effects of the components included in accumulated other comprehensive income totaled net deferred tax assets of zero and net deferred tax liabilities $4 million at December 31, 2025 and 2024, respectively.
OBBBA and CAMT
In July 2025, the legislation known as the OBBBA was signed into law and we have accounted for the effects in our consolidated financial statements. Key changes include the immediate expensing of domestic research and development costs, the reinstatement of 100% bonus depreciation, and increases in the limitation of interest deductibility. Certain provisions of the OBBBA will change the timing of cash tax payments in the current fiscal year and future year periods, however the legislation did not have a material impact on our effective income tax rate. We do not expect Vistra to be subject to the corporate alternative minimum tax (CAMT) in the 2025 tax year as it applies only to corporations with a three-year average annual adjusted financial statement income in excess of $1 billion. We have taken the CAMT and forecasted OBBBA impacts into account when forecasting cash taxes.
Liability for Uncertain Tax Positions
Accounting guidance related to uncertain tax positions requires that all tax positions subject to uncertainty be reviewed and assessed with recognition and measurement of the tax benefit based on a "more-likely-than-not" standard with respect to the ultimate outcome, regardless of whether this assessment is favorable or unfavorable.
We classify interest and penalties related to uncertain tax positions as current income tax expense. The amounts were immaterial for the years ended December 31, 2025, 2024 and 2023. The following table summarizes the changes to the uncertain tax positions, reported in accumulated deferred income taxes and other current liabilities in the consolidated balance sheets for the years ended December 31, 2025, 2024 and 2023.
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Balance at beginning of period, excluding interest and penalties | $ | 4 | $ | — | $ | 36 | |||||||||||
| Additions based on tax positions related to prior years | — | 4 | — | ||||||||||||||
| Reductions based on tax positions related to prior years | — | — | — | ||||||||||||||
| Reductions related to the lapse of the tax statute of limitations | — | — | (35) | ||||||||||||||
| Settlements with taxing authorities | — | — | (1) | ||||||||||||||
| Balance at end of period, excluding interest and penalties | $ | 4 | $ | 4 | $ | — | |||||||||||
Vistra and its subsidiaries file income tax returns in U.S. federal, state and foreign jurisdictions and are, at times, subject to examinations by the IRS and other taxing authorities. Uncertain tax positions totaled $4 million and $4 million as of December 31, 2025 and 2024, respectively. Of the amounts recorded as unrecognized tax benefits, an insignificant portion would impact our effective tax rate if recognized.
Tax Matters Agreement
On the Effective Date, we entered into the Tax Matters Agreement with EFH Corp. whereby the parties have agreed to take certain actions and refrain from taking certain actions in order to preserve the intended tax treatment of the Spin-Off and to indemnify the other parties to the extent a breach of such agreement results in additional taxes to the other parties.
Among other things, the Tax Matters Agreement allocates the responsibility for taxes for periods prior to the Spin-Off between EFH Corp. and us. For periods prior to the Spin-Off: (a) Vistra is generally required to reimburse EFH Corp. with respect to any taxes paid by EFH Corp. that are attributable to us and (b) EFH Corp. is generally required to reimburse us with respect to any taxes paid by us that are attributable to EFH Corp.
We are also required to indemnify EFH Corp. against taxes, under certain circumstance, if the IRS or another taxing authority successfully challenges the amount of gain relating to the PrefCo Preferred Stock Sale or the amount or allowance of EFH Corp.'s net operating loss deductions.
Subject to certain exceptions, the Tax Matters Agreement prohibits us from taking certain actions that could reasonably be expected to undermine the intended tax treatment of the Spin-Off or to jeopardize the conclusions of the private letter ruling we obtained from the IRS or opinions of counsel received by us or EFH Corp., in each case, in connection with the Spin-Off. Certain of these restrictions apply for two years after the Spin-Off.
Under the Tax Matters Agreement, we may engage in an otherwise restricted action if (a) we obtain written consent from EFH Corp., (b) such action or transaction is described in or otherwise consistent with the facts in the private letter ruling we obtained from the IRS in connection with the Spin-Off, (c) we obtain a supplemental private letter ruling from the IRS, or (d) we obtain an unqualified opinion of a nationally recognized law or accounting firm that is reasonably acceptable to EFH Corp. that the action will not affect the intended tax treatment of the Spin-Off.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Feb 26, 2018 | |
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.