FIFTH THIRD BANCORP
For the period ended Dec 31, 2025. Filed Feb 24, 2026.
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FY2025 · Filed Feb 24, 2026
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Income Taxes
- Income Taxes
The Bancorp and its subsidiaries file a consolidated federal income tax return. The following is a summary of income before income taxes included in the Consolidated Statements of Income for the years ended December 31:
| ($ in millions) | 2025 | 2024 | 2023 |
|---|---|---|---|
| Domestic income before income taxes | $3,211 | 2,919 | 2,943 |
| Foreign income (loss) before income taxes | — | (3) | 45 |
| Income before income taxes | $3,211 | 2,916 | 2,988 |
The following is a summary of applicable income taxes included in the Consolidated Statements of Income for the years ended December 31:
| ($ in millions) | 2025 | 2024 | 2023 |
|---|---|---|---|
| Current income tax expense: | |||
| U.S. Federal income taxes | $476 | 452 | 647 |
| State and local income taxes | 76 | 75 | 96 |
| Foreign income taxes | (3) | 3 | 2 |
| Total current income tax expense | 549 | 530 | 745 |
| Deferred income tax expense (benefit): | |||
| U.S. Federal income taxes | 129 | 84 | (81) |
| State and local income taxes | 12 | (13) | (23) |
| Foreign income taxes | (1) | 1 | (2) |
| Total deferred income tax expense (benefit) | 140 | 72 | (106) |
| Applicable income tax expense | $689 | 602 | 639 |
The current U.S. Federal income taxes above include proportional amortization of qualifying CDC investments of $220 million for the year ended December 31, 2025 and $200 million for both the years ended December 31, 2024 and 2023.
The following is a reconciliation between the statutory U.S. Federal income tax rate and the Bancorp’s effective tax rate for the years ended December 31:
| 2025(a) | 2024(b) | 2023(c) | |||||||
| ($ in millions) | Amount | Percent | Amount | Percent | Amount | Percent | |||
|---|---|---|---|---|---|---|---|---|---|
| Statutory tax rate | $674 | 21.0% | $612 | 21.0% | $627 | 21.0% | |||
| Increase (decrease) resulting from: | |||||||||
| State and local income taxes, net of federal benefit | 84 | 2.6 | 58 | 2.0 | 71 | 2.4 | |||
| Foreign tax effects | (2) | (0.1) | (4) | (0.2) | (1) | — | |||
| Tax credits: | |||||||||
| Tax credits and other tax benefits from CDC investments, net of proportional amortization | (39) | (1.2) | (43) | (1.5) | (31) | (1.0) | |||
| Other tax credits | (9) | (0.3) | (7) | (0.3) | (21) | (0.7) | |||
| Nontaxable or nondeductible items: | |||||||||
| Tax-exempt income | (26) | (0.8) | (27) | (0.9) | (25) | (0.8) | |||
| Other | 21 | 0.7 | 24 | 0.8 | 28 | 0.9 | |||
| Changes in unrecognized tax benefits | (15) | (0.5) | (10) | (0.3) | (10) | (0.4) | |||
| Other adjustments | 1 | — | (1) | — | 1 | — | |||
| Effective tax rate | $689 | 21.4% | $602 | 20.6% | $639 | 21.4% | |||
(a)State taxes in California, Illinois, New York and Florida made up greater than 50% of state and local income taxes.
(b)State taxes in California, New York, Illinois and Florida made up greater than 50% of state and local income taxes.
(c)State taxes in Illinois, California, New York, Florida and New Jersey made up greater than 50% of state and local income taxes.
The Bancorp adopted ASU 2023-02 on January 1, 2024 which expanded the permitted usage of the proportional amortization method to include additional tax credit programs beyond qualifying LIHTC structures if certain conditions are met. As a result, tax credits and other tax benefits from CDC investments, net of proportional amortization in the rate reconciliation table for the years ended December 31, 2025 and 2024 include Low-Income Housing, New Markets and Rehabilitation Investment tax credits and other related tax benefits, net of proportional amortization from those investments. For the year ended December 31, 2023, prior to the adoption of ASU 2023-02, tax credits and other tax benefits from CDC investments, net of proportional amortization only include the tax credits and other related tax benefits pertaining to investments in the Low-Income Housing tax credit program, with the credits arising from the Bancorp’s investments in the New Markets and Rehabilitation Investment tax credit programs presented as a component of other tax credits. Other tax credits in the rate reconciliation table
172 Fifth Third Bancorp also include the Increasing Research Activities and Qualified Zone Academy Bond tax credits. Tax-exempt income in the rate reconciliation table includes interest on municipal bonds, interest on tax-exempt lending, and income on life insurance policies held by the Bancorp.
The following is a summary of the Bancorp’s income taxes paid, net of refunds received, for the years ended December 31:
| ($ in millions) | 2025(a) | 2024(b) | 2023 | ||
|---|---|---|---|---|---|
| U.S. Federal income taxes | $100 | 131 | 529 | ||
| State and local income taxes | 87 | 61 | 111 | ||
| Foreign income taxes | (2) | 1 | 15 | ||
| Total income taxes paid, net of refunds received | $185 | 193 | 655 |
(a)Includes $16, $11 and $11 of income taxes paid, net of refunds received, to the states of Illinois, California and New York, respectively.
(b)Includes $12 of income taxes paid, net of refunds received, to the state of New York.
The following table provides a reconciliation of the beginning and ending amounts of the Bancorp’s unrecognized tax benefits:
| ($ in millions) | 2025 | 2024 | 2023 |
|---|---|---|---|
| Unrecognized tax benefits at January 1 | $101 | 97 | 94 |
| Gross increases for tax positions taken during prior period | 2 | 12 | 14 |
| Gross decreases for tax positions taken during prior period | (11) | (7) | (5) |
| Gross increases for tax positions taken during current period | 7 | 21 | 15 |
| Settlements with taxing authorities | (1) | (1) | (1) |
| Lapse of applicable statute of limitations | (11) | (21) | (20) |
| Unrecognized tax benefits at December 31(a) | $87 | 101 | 97 |
(a)All amounts represent unrecognized tax benefits that, if recognized, would affect the annual effective tax rate.
The Bancorp’s unrecognized tax benefits as of December 31, 2025, 2024 and 2023 primarily related to state income tax exposures from taking tax positions where the Bancorp believes it is likely that, upon examination, a state would take a position contrary to the position taken by the Bancorp.
Deferred income taxes are comprised of the following items at December 31:
| ($ in millions) | 2025 | 2024 |
|---|---|---|
| Deferred tax assets: | ||
| Other comprehensive income | $973 | 1,459 |
| Allowance for loan and lease losses | 473 | 494 |
| Loan origination fees and costs | 188 | 199 |
| Deferred compensation | 117 | 115 |
| Reserves | 33 | 38 |
| Reserves for unfunded commitments | 33 | 28 |
| State deferred taxes | 25 | 35 |
| State net operating loss carryforwards | 10 | 6 |
| Federal net operating loss carryforwards | 1 | 7 |
| Other | 103 | 138 |
| Total deferred tax assets | $1,956 | 2,519 |
| Deferred tax liabilities: | ||
| Lease financing | $660 | 583 |
| MSRs and related economic hedges | 161 | 153 |
| Bank premises and equipment | 111 | 76 |
| Goodwill and intangible assets | 61 | 64 |
| Other | 101 | 216 |
| Total deferred tax liabilities | $1,094 | 1,092 |
| Total net deferred tax asset | $862 | 1,427 |
At December 31, 2025 and 2024, the Bancorp recorded deferred tax assets of $10 million and $6 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 $6 million and $7 million at December 31, 2025 and 2024, respectively. If these carryforwards are not utilized, they will expire in varying amounts through 2044.
The Bancorp has determined that a valuation allowance is not needed against the remaining deferred tax assets as of December 31, 2025 or 2024. 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
173 Fifth Third Bancorp tax assets recorded at December 31, 2025 and 2024 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 2020 through 2025. 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, 2025, 2024 and 2023, the Bancorp recognized $2 million, $1 million and $2 million, respectively, of interest expense in connection with income taxes. At December 31, 2025 and 2024, the Bancorp had accrued interest liabilities, net of the related tax benefits, of $13 million and $11 million, respectively. No material liabilities were recorded for penalties related to income taxes.
Retained earnings at both December 31, 2025 and 2024 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.
174 Fifth Third Bancorp
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