WEC ENERGY GROUP, INC.WEC
WEC ENERGY GROUP, INC. Income Taxes Disclosure
INCOME TAXES
We adopted the new disclosure provisions of ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, effective January 1, 2025. See Note 1(q), Income Taxes, for more information on the adoption of this ASU.
Income Tax Expense
The following table is a summary of the components of income tax expense for the years ended December 31:
| (in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Current tax expense (benefit) | ||||||||||||||||||||
| Federal | $ | (242.5) | $ | (178.5) | $ | (36.7) | ||||||||||||||
| State | (8.0) | (128.5) | 21.9 | |||||||||||||||||
Deferred tax expense, net | ||||||||||||||||||||
| Federal | 240.9 | 386.2 | 130.1 | |||||||||||||||||
| State | 135.6 | 152.5 | 99.8 | |||||||||||||||||
| ITCs, net | (8.0) | (9.7) | (10.5) | |||||||||||||||||
| Total income tax expense | $ | 118.0 | $ | 222.0 | $ | 204.6 | ||||||||||||||
Statutory Rate Reconciliation
The provision for income taxes for each of the years ended December 31 differs from the amount of income tax determined by applying the applicable United States statutory federal income tax rate to income before income taxes as a result of the following:
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| (in millions) | Amount | Effective Tax Rate | Amount | Effective Tax Rate | Amount | Effective Tax Rate | ||||||||||||||||||||||||||||||||
Income before income taxes | $ | 1,673.5 | $ | 1,746.3 | $ | 1,536.3 | ||||||||||||||||||||||||||||||||
US federal statutory income tax rate | $ | 351.9 | 21.0 | % | $ | 367.3 | 21.0 | % | $ | 322.6 | 21.0 | % | ||||||||||||||||||||||||||
State and local income taxes net of federal tax effect (1) | 101.2 | 6.0 | % | 108.0 | 6.2 | % | 94.3 | 6.1 | % | |||||||||||||||||||||||||||||
Tax credits | ||||||||||||||||||||||||||||||||||||||
PTCs, net (2) | (261.3) | (15.6) | % | (200.1) | (11.5) | % | (168.2) | (10.9) | % | |||||||||||||||||||||||||||||
| Other | (8.2) | (0.5) | % | (10.0) | (0.6) | % | (10.9) | (0.7) | % | |||||||||||||||||||||||||||||
Nontaxable or nondeductible items | ||||||||||||||||||||||||||||||||||||||
AFUDC-Equity (3) | (21.0) | (1.3) | % | (12.6) | (0.7) | % | (12.4) | (0.8) | % | |||||||||||||||||||||||||||||
| Other | 11.0 | 0.7 | % | 4.0 | 0.2 | % | 4.4 | 0.2 | % | |||||||||||||||||||||||||||||
Changes in unrecognized tax benefits | (2.0) | (0.1) | % | (0.4) | — | % | (1.8) | (0.1) | % | |||||||||||||||||||||||||||||
Other adjustments | ||||||||||||||||||||||||||||||||||||||
Federal excess deferred tax amortization (4) | (43.0) | (2.6) | % | (36.7) | (2.1) | % | (37.6) | (2.4) | % | |||||||||||||||||||||||||||||
| Other, net | (10.6) | (0.5) | % | 2.5 | 0.2 | % | 14.2 | 0.9 | % | |||||||||||||||||||||||||||||
| Total income tax expense | $ | 118.0 | 7.1 | % | $ | 222.0 | 12.7 | % | $ | 204.6 | 13.3 | % | ||||||||||||||||||||||||||
(1) State taxes in Wisconsin made up the majority of the tax effect in this category.
(2) PTCs are an inflation adjusted US federal income tax credit for each kilowatt hour of electricity generated by certain renewable energy projects.
(3) AFUDC-Equity represents the cost of capital (i.e. ROE) that is added to the construction cost of an asset while it is being built. The tax benefit for regulated utilities from AFUDC-Equity is a regulatory gross-up to allow the recovery of income taxes on the equity portion of construction costs, even though it is not a tax deductible expense.
(4) The Tax Legislation required our regulated utilities to remeasure their deferred income taxes and we began to amortize the resulting excess deferred income taxes beginning in 2018, in accordance with normalization requirements. The decrease in income tax expense related to the amortization of the deferred tax benefits is offset by a decrease in revenue as the benefits are returned to customers, resulting in no impact on net income.
Deferred Income Tax Assets and Liabilities
The components of deferred income taxes as of December 31 were as follows:
| (in millions) | 2025 | 2024 | ||||||||||||
| Deferred tax assets | ||||||||||||||
| Tax gross up – regulatory items | $ | 416.9 | $ | 420.1 | ||||||||||
| Future tax benefits | 240.9 | 165.4 | ||||||||||||
| Deferred revenues | 76.8 | 76.0 | ||||||||||||
| Other | 206.1 | 167.9 | ||||||||||||
| Total deferred tax assets | 940.7 | 829.4 | ||||||||||||
| Valuation allowance | (1.1) | (1.1) | ||||||||||||
| Net deferred tax assets | $ | 939.6 | $ | 828.3 | ||||||||||
| Deferred tax liabilities | ||||||||||||||
| Property-related | $ | 5,041.5 | $ | 4,545.2 | ||||||||||
| Investment in affiliates | 1,143.6 | 1,103.9 | ||||||||||||
| Employee benefits and compensation | 229.2 | 231.4 | ||||||||||||
| Deferred costs – plant retirements | 178.0 | 194.3 | ||||||||||||
| Other | 239.0 | 268.2 | ||||||||||||
| Total deferred tax liabilities | 6,831.3 | 6,343.0 | ||||||||||||
| Deferred tax liability, net | $ | 5,891.7 | $ | 5,514.7 | ||||||||||
Consistent with ratemaking treatment, deferred taxes related to our regulated utilities in the table above are offset for temporary differences that have related regulatory assets and liabilities.
The components of net deferred tax assets associated with federal and state tax benefit carryforwards as of December 31, 2025 and 2024 are summarized in the tables below:
2025 (in millions) | Gross Value | Deferred Tax Effect | Valuation Allowance | Earliest Year of Expiration | ||||||||||||||||||||||
Future tax benefits as of December 31, 2025 | ||||||||||||||||||||||||||
| Federal tax credit | $ | — | $ | 206.5 | $ | — | 2042 | |||||||||||||||||||
| State net operating loss | 685.6 | 34.1 | (1.1) | 2032 | ||||||||||||||||||||||
| Other state benefits | — | 0.3 | — | 2029 | ||||||||||||||||||||||
Balance as of December 31, 2025 | $ | 685.6 | $ | 240.9 | $ | (1.1) | ||||||||||||||||||||
2024 (in millions) | Gross Value | Deferred Tax Effect | Valuation Allowance | Earliest Year of Expiration | ||||||||||||||||||||||
Future tax benefits as of December 31, 2024 | ||||||||||||||||||||||||||
| Federal tax credit | $ | — | $ | 157.9 | $ | — | 2042 | |||||||||||||||||||
| State net operating loss | 107.5 | 7.2 | (1.1) | 2032 | ||||||||||||||||||||||
| Other state benefits | — | 0.3 | — | 2028 | ||||||||||||||||||||||
Balance as of December 31, 2024 | $ | 107.5 | $ | 165.4 | $ | (1.1) | ||||||||||||||||||||
Unrecognized Tax Benefits
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| (in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Balance as of January 1 | $ | 4.4 | $ | 4.6 | $ | 6.3 | ||||||||||||||
| Additions for tax positions of prior years | 0.1 | — | 0.2 | |||||||||||||||||
| Reductions for tax positions of prior years | (1.5) | (0.2) | (1.9) | |||||||||||||||||
| Balance as of December 31 | $ | 3.0 | $ | 4.4 | $ | 4.6 | ||||||||||||||
The amount of unrecognized tax benefits as of December 31, 2025 and 2024, excludes deferred tax assets related to uncertainty in income taxes of $0.7 million and $1.0 million, respectively. As of December 31, 2025 and 2024, the net amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate for continuing operations was $2.3 million and $3.4 million, respectively.
Interest accrued related to unrecognized tax benefits is as follows:
| (in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Balance as of January 1 | $ | 0.9 | $ | 0.6 | $ | 0.5 | ||||||||||||||
| Interest expense (income) related to unrecognized tax benefits | (0.6) | 0.3 | 0.1 | |||||||||||||||||
| Balance as of December 31 | $ | 0.3 | $ | 0.9 | $ | 0.6 | ||||||||||||||
For the years ended December 31, 2025, 2024, and 2023, we recognized no penalties related to unrecognized tax benefits in our consolidated income statements. At December 31, 2025 and 2024, we had no amounts accrued for penalties related to unrecognized tax benefits.
We file income tax returns in the United States federal jurisdiction and state tax returns based on income in our major state operating jurisdictions of Wisconsin, Illinois, Michigan, and Minnesota. We also file tax returns in other state and local jurisdictions with varying statutes of limitations. As of December 31, 2025, with a few exceptions, we were subject to examination by federal and state or local tax authorities for the 2021 through 2025 tax years in our major operating jurisdictions as follows:
| Jurisdiction | Years | |||||||
| Federal | 2022–2025 | |||||||
| Illinois | 2021–2025 | |||||||
| Michigan | 2021–2025 | |||||||
| Minnesota | 2021–2025 | |||||||
| Wisconsin | 2021–2025 | |||||||
Cash Received For Income Taxes, Net
The table below is a summary of income taxes paid (received) by jurisdiction for the years ended December 31:
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||||||||
Federal | $ | (256.3) | (1) | $ | (265.0) | (2) | $ | (75.0) | (3) | ||||||||||||||
State | (25.0) | 0.8 | 16.1 | ||||||||||||||||||||
Total income taxes received, net | $ | (281.3) | $ | (264.2) | $ | (58.9) | |||||||||||||||||
(1) Includes $256.3 million related to 2025 and 2024 PTCs that were sold to third parties.
(2) Includes $269.1 million related to 2024 and 2023 PTCs that were sold to third parties.
(3) Includes $75.0 million related to 2023 PTCs that were sold to third parties.
Income taxes received or paid (net of refunds) exceeded 5 percent of total income taxes received or paid (net of refunds) in the following jurisdiction:
| (in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
Wisconsin | $ | (25.0) | $ | — | (1) | $ | 12.0 | |||||||||||||
(1) Jurisdiction below the threshold for the period presented.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 20, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Feb 28, 2017 | |
| 2015 | Feb 26, 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.