WELLS FARGO & COMPANY/MNWFC
WELLS FARGO & COMPANY/MN Income Taxes Disclosure
Note 22: Income Taxes | ||
Table 22.1 presents the components of income before income tax expense.
Table 22.1: Income Before Income Tax Expense
| Year ended December 31, | |||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| U.S. | $ | 23,644 | 22,097 | 20,721 | |||||||||||||
| Non-U.S. | 1,555 | 1,267 | 915 | ||||||||||||||
| Total | $ | 25,199 | 23,364 | 21,636 | |||||||||||||
Table 22.2 presents the components of income tax expense (benefit).
Table 22.2: Income Tax Expense (Benefit)
| Year ended December 31, | |||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Current: | |||||||||||||||||
| U.S. federal (1) | $ | 5,060 | 3,697 | 2,883 | |||||||||||||
| U.S. state and local | 231 | 268 | (453) | ||||||||||||||
| Non-U.S. | 420 | 345 | 227 | ||||||||||||||
| Total current | 5,711 | 4,310 | 2,657 | ||||||||||||||
| Deferred: | |||||||||||||||||
| U.S. federal | (1,670) | (737) | (662) | ||||||||||||||
| U.S. state and local | (157) | (131) | 586 | ||||||||||||||
| Non-U.S. | (43) | (43) | 26 | ||||||||||||||
| Total deferred | (1,870) | (911) | (50) | ||||||||||||||
| Total | $ | 3,841 | 3,399 | 2,607 | |||||||||||||
(1)The amount for the year ended December 31, 2023 does not reflect accounting changes related to our modified retrospective adoption of ASU 2023-02 – Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, effective January 1, 2024. See Note 15 (Securitizations and Variable Interest Entities) for information about tax credit investments.
Table 22.3 reconciles the statutory federal income tax rate to the effective income tax rate.
Table 22.3: Effective Income Tax Expense (Benefit) and Rate
| December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| (in millions) | Amount | Rate | Amount | Rate | Amount | Rate | |||||||||||||||||||||||||||||
| Statutory federal income tax expense and rate | $ | 5,292 | 21.0 | % | $ | 4,855 | 21.0 | % | $ | 4,567 | 21.0 | % | |||||||||||||||||||||||
| Change in tax rate resulting from: | |||||||||||||||||||||||||||||||||||
| State and local taxes on income, net of federal income tax benefit (1) | 563 | 2.2 | 532 | 2.3 | 819 | 3.8 | |||||||||||||||||||||||||||||
| Tax credits, net of investment amortization: | |||||||||||||||||||||||||||||||||||
| Renewable energy (2) | (588) | (2.3) | (450) | (2.0) | (1,014) | (4.7) | |||||||||||||||||||||||||||||
| Affordable housing | (347) | (1.4) | (273) | (1.2) | (278) | (1.3) | |||||||||||||||||||||||||||||
| Other | (154) | (0.6) | (190) | (0.8) | (260) | (1.2) | |||||||||||||||||||||||||||||
| Nontaxable and nondeductible items: | |||||||||||||||||||||||||||||||||||
| Tax-exempt interest | (267) | (1.1) | (326) | (1.4) | (345) | (1.6) | |||||||||||||||||||||||||||||
| Other | (25) | (0.1) | 119 | 0.5 | 140 | 0.7 | |||||||||||||||||||||||||||||
| Changes in prior year unrecognized tax benefits, inclusive of interest | (751) | (3.0) | (819) | (3.5) | (1,042) | (4.8) | |||||||||||||||||||||||||||||
| Other | 118 | 0.5 | (49) | (0.2) | 20 | 0.1 | |||||||||||||||||||||||||||||
| Effective income tax expense and rate | $ | 3,841 | 15.2 | % | $ | 3,399 | 14.7 | % | $ | 2,607 | 12.0 | % | |||||||||||||||||||||||
(1)State and local income taxes in California, New York and New York City contributed to the majority of this category.
(2)The amounts for the year ended December 31, 2023 do not reflect accounting changes related to our modified retrospective adoption of ASU 2023-02 – Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, effective January 1, 2024. See Note 15 (Securitizations and Variable Interest Entities) for information about tax credit investments.
The tax effects of our temporary differences that gave rise to significant portions of our deferred tax assets and liabilities are presented in Table 22.4.
Table 22.4: Net Deferred Taxes
| (in millions) | Dec 31, 2025 | Dec 31, 2024 | |||||||||
| Deferred tax assets | |||||||||||
| Net operating loss and tax credit carryforwards | $ | 6,601 | 4,721 | ||||||||
| Allowance for credit losses | 3,488 | 3,580 | |||||||||
Deferred compensation and employee benefits | 3,328 | 3,194 | |||||||||
| Net unrealized losses on debt securities | 1,418 | 2,881 | |||||||||
| Capitalized research expenses | 1,272 | 1,653 | |||||||||
| Lease liabilities | 1,030 | 1,104 | |||||||||
| Accrued expenses | 903 | 1,187 | |||||||||
| Basis difference in investments | 723 | 720 | |||||||||
| Other | 830 | 1,070 | |||||||||
| Total deferred tax assets | 19,593 | 20,110 | |||||||||
| Deferred tax assets valuation allowance | (314) | (162) | |||||||||
| Deferred tax liabilities | |||||||||||
| Mark to market, net | (10,383) | (12,235) | |||||||||
| Leasing and fixed assets | (3,951) | (2,818) | |||||||||
| Mortgage servicing rights | (1,135) | (1,264) | |||||||||
| Intangible assets | (1,005) | (899) | |||||||||
| Right-of-use assets | (870) | (930) | |||||||||
| Other | (785) | (683) | |||||||||
| Total deferred tax liabilities | (18,129) | (18,829) | |||||||||
| Net deferred tax asset (1) | $ | 1,150 | 1,119 | ||||||||
(1)The net deferred tax asset is included in other assets.
Deferred taxes related to net unrealized gains (losses) on debt securities, net unrealized gains (losses) on derivatives, foreign currency translation, and employee benefit plan adjustments are recognized in accumulated OCI. See Note 24 (Other Comprehensive Income) for additional information.
We have determined that a valuation allowance is required for 2025 in the amount of $314 million, attributable to deferred tax assets for U.S federal and state and non-U.S. jurisdictions where we believe it is more likely than not that these deferred tax assets will not be realized due to lack of sources of taxable income, limitations on carryback of losses or credits and the inability to implement tax planning to realize these deferred tax assets. The U.S. federal valuation allowance represents the effect of renewable energy tax credits, which are expected to be sold for less than the credit amount. We have concluded that it is more likely than not that the remaining deferred tax assets will be realized based on our history of earnings, sources of taxable income in carryback periods, and our ability to implement tax planning strategies.
Table 22.5 presents the components of the deferred tax assets related to net operating loss (NOL) and tax credit carryforwards at December 31, 2025. If not utilized, carryforwards mostly expire in varying amounts through December 31, 2045, with the exception of U.S. federal corporate alternative minimum tax credits that do not expire.
Table 22.5: Deferred Tax Assets Related to Net Operating Loss and Tax Credit Carryforwards
| (in millions) | Dec 31, 2025 | ||||
| U.S. federal tax credits | $ | 6,326 | |||
| U.S. state NOLs and credits | 218 | ||||
| Non-U.S. NOLs and credits | 57 | ||||
| Total net operating loss and tax credit carryforwards | $ | 6,601 | |||
Wells Fargo has determined that it will continue to indefinitely reinvest outside the U.S. all or a portion of the unremitted earnings of certain foreign subsidiaries. We do not intend to distribute these earnings in a manner that would be taxable in the U.S. and intend to limit distributions to non-U.S. earnings previously taxed in the U.S. or, that would qualify for the 100% dividends received deduction. Where we intend to distribute a portion of the unremitted earnings, we have accrued the applicable tax impacts. All other undistributed non-U.S. earnings will continue to be permanently reinvested outside the U.S. and the unrecorded tax liability on these earnings is insignificant.
Table 22.6 presents the change in unrecognized tax benefits.
Table 22.6: Change in Unrecognized Tax Benefits
Year ended December 31, | |||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Balance, beginning of period | $ | 3,105 | 4,114 | 5,437 | |||||||||||||
| Additions: | |||||||||||||||||
| For tax positions related to the current year | 184 | 292 | 246 | ||||||||||||||
| For tax positions related to prior years | 10 | 140 | 352 | ||||||||||||||
| Reductions: | |||||||||||||||||
| For tax positions related to prior years | (742) | (1,354) | (765) | ||||||||||||||
| Lapse of statute of limitations | (27) | (44) | (389) | ||||||||||||||
| Settlements with tax authorities | (2) | (43) | (767) | ||||||||||||||
| Balance, end of period | $ | 2,528 | 3,105 | 4,114 | |||||||||||||
At December 31, 2025, 2024, and 2023, we had approximately $1.7 billion, $2.0 billion, and $2.3 billion, respectively, of unrecognized tax benefits that, if recognized, would affect the effective tax rate. The remaining unrecognized tax benefits relate to income tax positions on temporary differences.
We account for and related to income tax liabilities as a component of income tax expense. As of December 31, 2025 and 2024, we have accrued receivables of approximately $193 million and $53 million, respectively, for interest and penalties. In 2025, 2024, and 2023, we recognized income tax benefit, net of tax, of $144 million, $199 million, and $325 million, respectively, related to interest and penalties.
We are subject to U.S. federal income tax as well as income tax in numerous state and non-U.S. jurisdictions. We are routinely examined by tax authorities in these various jurisdictions. With few exceptions, Wells Fargo and its subsidiaries are not subject to federal, state, local and non-U.S. income tax examinations for taxable years prior to 2015.
Table 22.7 summarizes our major tax jurisdiction examination status as of December 31, 2025.
Table 22.7: Tax Examination Status
| Jurisdiction | Tax Year(s) | Status | ||||||||||||
| United States | 2015-2018 | Administrative appeals | ||||||||||||
| United States | 2019-2022 | Field examination | ||||||||||||
| California | 2017-2020 | Administrative appeals | ||||||||||||
| California | 2021-2023 | Field examination | ||||||||||||
| New York | 2017-2021 | Field examination | ||||||||||||
| New York City | 2017-2021 | Field examination | ||||||||||||
We pay income taxes to various jurisdictions based on our estimated tax liabilities. These estimates may include impacts of net operating losses, tax credit carryforwards, or minimum tax obligations consistent with tax guidance. Tax matters are often subject to examination and may take years to resolve. The final outcome may differ from our estimates and could result in additional tax payments, refunds of prior year overpayments, or the application of overpayments to current year liabilities. Table 22.8 presents our income taxes paid, net of refunds, by tax jurisdiction.
Table 22.8: Net Cash Paid (Refunded) for Income Taxes
| December 31, | |||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
U.S. federal: | |||||||||||||||||
| Cash paid | $ | 560 | 2,000 | 207 | |||||||||||||
| Refunds received | — | (1,986) | (1,307) | ||||||||||||||
| Net cash paid (refunded) | 560 | 14 | (1,100) | ||||||||||||||
U.S. state and local: | |||||||||||||||||
| California | * | 443 | (596) | ||||||||||||||
| New Jersey | * | 95 | 160 | ||||||||||||||
| New York | 84 | 143 | (166) | ||||||||||||||
| New York City | 92 | 257 | (120) | ||||||||||||||
| Other | 236 | 311 | (157) | ||||||||||||||
| Non-U.S.: | |||||||||||||||||
| India | 147 | 107 | * | ||||||||||||||
| United Kingdom | 183 | 148 | * | ||||||||||||||
| Other | 117 | 146 | 193 | ||||||||||||||
| Net cash paid (refunded) | $ | 1,419 | 1,664 | (1,786) | |||||||||||||
* The amount is less than 5% of net cash paid (refunded) for income taxes during the year.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 20, 2024 | |
| 2022 | Feb 21, 2023 | |
| 2021 | Feb 22, 2022 | |
| 2020 | Feb 23, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Feb 27, 2019 | |
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.