FIFTH THIRD BANCORP

21. Income Taxes

The Bancorp and its subsidiaries file a consolidated federal income tax return. The following is a summary of applicable income taxes included in the Consolidated Statements of Income for the years ended December 31:

The current U.S. Federal income taxes above include proportional amortization for qualifying LIHTC investments of $200 million, $189 million and $163 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The following is a reconciliation between the statutory U.S. Federal income tax rate and the Bancorp’s effective tax rate for the years ended December 31:

Other tax credits in the rate reconciliation table include New Markets, Rehabilitation Investment, Increasing Research Activities and Qualified Zone Academy Bond tax credits. Tax-exempt income in the rate reconciliation table includes interest on municipal bonds, interest on tax-exempt lending and income on life insurance policies held by the Bancorp.

The following table provides a reconciliation of the beginning and ending amounts of the Bancorp’s unrecognized tax benefits:

(a)All amounts represent unrecognized tax benefits that, if recognized, would affect the annual effective tax rate.

The Bancorp’s unrecognized tax benefits as of December 31, 2023, 2022 and 2021 primarily related to state income tax exposures from taking tax positions where the Bancorp believes it is likely that, upon examination, a state would take a position contrary to the position taken by the Bancorp.

While it is reasonably possible that the amount of the unrecognized tax benefits with respect to certain of the Bancorp’s uncertain tax positions could increase or decrease during the next twelve months, the Bancorp believes it is unlikely that its unrecognized tax benefits will change by a material amount during the next twelve months.

181 Fifth Third Bancorp

Deferred income taxes are comprised of the following items at December 31:

At December 31, 2023 and 2022, the Bancorp’s deferred income taxes included deferred tax assets of $11 million and $14 million, respectively, related to state net operating loss carryforwards. The deferred tax assets relating to state net operating losses are presented net of specific valuation allowances of $5 million at both December 31, 2023 and 2022. If these carryforwards are not utilized, they will expire in varying amounts through 2043.

The Bancorp has determined that a valuation allowance is not needed against the remaining deferred tax assets as of December 31, 2023 or 2022. The Bancorp considered all of the positive and negative evidence available to determine whether it is more likely than not that the deferred tax assets will ultimately be realized and, based upon that evidence, the Bancorp believes it is more likely than not that the deferred tax assets recorded at December 31, 2023 and 2022 will ultimately be realized. The Bancorp reached this conclusion as it is expected that the Bancorp’s remaining deferred tax assets will be realized through the reversal of its existing taxable temporary differences, its projected future taxable income and tax-planning strategies.

The statute of limitations for the Bancorp’s federal income tax returns remains open for tax years 2019 through 2023. On occasion, as various state and local taxing jurisdictions examine the returns of the Bancorp and its subsidiaries, the Bancorp may agree to extend the statute of limitations for a reasonable period of time. Otherwise, the statutes of limitations for state income tax returns remain open only for tax years in accordance with each state’s statutes.

Any interest and penalties incurred in connection with income taxes are recorded as a component of applicable income tax expense in the Consolidated Financial Statements. During the years ended December 31, 2023, 2022 and 2021, the Bancorp recognized $2 million, $1 million and $1 million, respectively, of interest expense in connection with income taxes. At December 31, 2023 and 2022, the Bancorp had accrued interest liabilities, net of the related tax benefits, of $10 million and $8 million, respectively. No material liabilities were recorded for penalties related to income taxes.

Retained earnings at both December 31, 2023 and 2022 included $157 million in allocations of earnings for bad debt deductions of former thrift subsidiaries for which no income tax has been provided. Under current tax law, if certain of the Bancorp’s subsidiaries use these bad debt reserves for purposes other than to absorb bad debt losses, they will be subject to federal income tax at the current corporate tax rate.

182 Fifth Third Bancorp